The Spring Budget announced that the government was intending to make administrative changes to research and development (R&D) tax credits, following a review of the tax environment for R&D. It is intended that this will increase the certainty and simplicity around claims, and will take action to improve awareness of R&D tax credits among SMEs. It is not yet clear how this consultation (if any) will occur and when the changes will be effective.
But we welcome anything that encourages eligible companies to claim R&D tax credits and have more certainty over them. In particular, we would hope that the changes will include some or all of the following:
- Clarification as to what is meant by “consumables” – we know that there are many differing views, and it shouldn’t be hard to give a clear list of what is included and what is not
- Guidance as to how to apportion time spent on R&D and how much “blue sky thinking” time of those not directly involved with hands-on R&D can be included
- Removal of the need to describe the exact R&D performed during the accounting period where projects span more than one period of account
- Clarity on grants and State Aid – when is a grant not a grant? In our experience, many SMEs are so desperate for cash that they do not consider the impact on R&D claims until too late
- Further public awareness of the widespread applicability of the relief, so that those companies which do not obviously perform R&D know that it’s something worth considering
It is clear that this relief – which has been around for some 15 years now – is fully supported and encouraged by the government. So, let’s make a relief be actually that – a relief, not another hurdle to overcome.
And in the meantime, talk to us to see how we can help you maximise your R&D claim.