Until 26 May, you have the opportunity to respond to the R&D tax relief advance clearances consultation.
As predicted, the recent changes to the R&D tax relief schemes are an indicator of future upheavals, all with the aim of increasing compliance and cutting back on fraudulent claims.
It is important to understand the latest proposals and put together a response before the deadline, should you wish to shape the future of R&D tax relief.
What changes are being considered?
The biggest change centres on the Advance Assurance Scheme (AAS) and a proposed broadening of its implementation.
HM Revenue and Customs (HMRC) are framing the change as a way of removing the uncertainty around R&D tax relief claims by suggesting that a business could know before they submit whether the claim will be accepted.
The consultation is currently considering who may be eligible for a voluntary AAS or whether AAS should become the norm for R&D tax relief claims.
Functionally, one can see the AAS as a continuation of the Additional Information Form (AIF) and the Advanced Notification Form (ANF), as both also sought to gather information ahead of time to standardise the submission of R&D tax relief claims.
While the biggest concern may seem like the addition of yet more paperwork and processing, there are more ominous changes being considered.
A potential minimum spend for R&D is being considered, which could restrict access to relief for those with smaller qualifying expenditure.
Smaller claims tend to have a greater risk of error and have historically been the style of claim submitted fraudulently in the hopes they would be approved without scrutiny.
This may affect some industries more, such as software development, where overall expenditure can be relatively low, yet innovation still takes place.
For those with long memories, this proposal might bring to mind the Minimum Expenditure Threshold that was a part of the SME scheme for a while before eventually being removed.
The other main consideration is at what point in the R&D process the AAS should be filed and processed.
As the AAS will serve as a guarantee of a claim’s success, the timing has to be correct to prevent HMRC from accidentally approving ineligible claims ahead of time.
Similarly, if the AAS is required too close to submission, it risks being another piece of paperwork to file at the last moment and will be little more than a box-ticking exercise.
If you or your clients wish to respond to the consultation, you can do so using the online form.
Whatever the next steps in R&D tax relief are, we will be on hand to guide you and your clients every step of the way.
In the meantime, let us help you secure vital funding for your innovative clients so that they can continue to develop exciting new advances.
Contact us today to discuss the upcoming changes and how they might impact you and your clients.