At the end of November 2023, we held our second roundtable discussion. Following the success of our first event in April 2023, it is important to bring leaders together again to discuss the many recent changes that have impacted our industry in a short space of time.
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The Autumn Statement, a pivotal moment on the UK’s fiscal calendar, promises a glimpse into the government’s economic roadmap and policy priorities. With this year’s Autumn Budget fast approaching, the government’s plans for R&D tax policy are hotly anticipated, and here is all you need to know ahead of next week’s announcement.

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Yesterday HMRC released the latest statistics for the usage of the R&D tax relief and Patent Box schemes. Here’s an initial view of this year’s numbers.

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As part of HMRC’s focus on the R&D tax relief scheme, an additional information form was introduced and is now a statutory requirement to complete for all R&D claims. The additional information form must be submitted before filing your company’s Corporation Tax return.
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You may have seen that the R&D tax relief schemes have been in the news again, based on new activity and information from HMRC. For any accountants who have clients claiming R&D tax relief, or who offer this service in-house, this is what you need to know.

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You may have seen that the R&D tax relief schemes have been hitting the headlines again this week. There has also been a flurry of activity and information from HMRC that you may not be aware of. So, I thought I’d take this opportunity to run you through it, explain what it means for the future of the schemes and what our, GovGrant , opinion is.

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You will have heard that soon, in some circumstances, HMRC will need advanced notice of your intention to claim R&D tax relief. We’ve been receiving a lot of queries from our clients and our partner accountants asking for clarification of this requirement, not least because the guidance provided is not particularly clear and appears to contradict the draft legislation. We asked HMRC to clarify and hope that we can explain further here.> Read more

A headline in The Times, Saturday 20 May 2023 stated “Brace yourself for more HMRC chaos” and warned that new tax rules would mean more work for a tax office that is already struggling to cope with queries. This was raised in the context of personal tax affairs, rather than anything specifically around corporation tax or R&D tax relief issues, but it speaks to a system under strain. > Read more

From the conversations that I’ve had recently, many accountants have noticed a change in stance from HMRC whose approach has become more forceful and their tone more combative in enquiry matters relating to R&D.
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Unsurprisingly, HMRC are turning up the heat on R&D tax relief claims, and what was once deemed a quick win by business owners, accountants, and agents are now becoming a much more considered approach to tax. There has always been a requirement to evidence and justify compliant activity but from April 2023, the requirement is to produce a technical report.
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As we move into a New Year there seems to be rumblings of concern from several accountants about the changes within the R&D tax relief regime, and the direction of travel from HMRC regarding the schemes.
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The latest statistics showing the value of R&D tax relief and Patent Box were published by HMRC today. What does an initial look at this year’s numbers tell us?
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Yesterday (Wednesday 20 July) was what HMRC refer to as Legislation Day, on which they publish the draft legislation changes that have now been submitted to parliament to receive Royal Assent and be passed into law. This is expected to take place over the Autumn which will then come into effect for full accounting periods starting on or after 1 April 2023.
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Your R&D tax relief claim can’t be an afterthought

For too long, and for too many, R&D tax relief has been a tick box exercise of tax planning. However, HMRC has drawn a line in the sand when it comes to abuse of the R&D tax relief scheme. This change of tack is well overdue and should protect the integrity of the schemes.

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There were a number of proposed changes relating to the R&D scheme in the Autumn budget 2021. In the Autumn HMRC published their proposals and launched the consultation process to seek feedback on the proposed changes.
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What was announced in the Autumn Budget 2021 concerning R&D tax credits?

Following on from that consultation reforms that were announced in the Autumn Budget 2021, the government:

• support modern research methods by expanding qualifying expenditure to include data and cloud costs
• more effectively capture the spillover benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK
• target abuse and improve compliance

Today we got more of the detail of these reforms and understood more of the next steps.
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The latest statistics showing the value of R&D tax relief were published by HMRC in October 2021. And as we noted at the time the total value of R&D tax relief for 2019-2020 is now projected to be nearly £7.5bn – a big number.
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The latest statistics showing the value of R&D tax relief and Patent Box were published by HMRC yesterday. What does an initial look at this year’s numbers tell us?
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Further to our blog outlining the impacts of the Finance Bill 2021 we have received an update to the guidance on the new SME cap from HMRC.
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For the first time ever, HMRC have independently reviewed the Patent Box scheme to understand if it is an effective tool in the government R&D agenda or if it needs to scraped.
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HMRC have recently announced changes to the rules for R&D tax credits for SMEs. The new rules have been designed to target perceived fraudulent claims using structures set up in the UK to claim a repayable credit even though no R&D work was actually carried out in the UK.
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HMRC recently reported on the outcome of a first-tier tax tribunal case investigation into an R&D tax claim, in the case of Hadee Engineering Co Ltd (Hadee). Hadee made R&D claims for the periods ending 30 April 2009 and 30 April 2010. HMRC challenged the claims asking if the expenditure was incurred in the relevant periods, whether the projects qualified as R&D under the BIS guidelines and whether the expenditure was incurred as part of a contract and whether the expenditure had been subsidised.
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Now that I have had some time to digest the recent update from HMRC in respect of the R&D tax credits and Patent Box statistics, there are three things that have stood out for me:
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The latest Research and Development Tax Credits and Patent Box statistics have been released today by HMRC. It’s encouraging to see a year-on-year increase in claims for R&D tax relief but once again, the growth in Patent Box is woefully behind. More businesses are using the R&D scheme, which is great. However, overall business investment in innovation has only seen a marginal increase.
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As businesses look to recover from this year’s crisis, investment in R&D is a vital step for a sustainable UK economic recovery. In their latest Inside Accountancy podcast, Accountancy Age’s Leanna Reeves speaks to GovGrant’s Luke Hamm to assess how tax incentives should be further targeted to encourage investment from organisations into R&D projects.
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There has been much talk about the regulation surrounding R&D tax advisors and it is a welcome conversation. I would love to work with like-minded advisors to keep evolving the conversation. To find the right framework for this industry today, and just as importantly, where it goes next.
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In the recent HMRC consultation regarding the R&D tax credit cap for SMEs, they talked about a need to identify and rely on ‘Hallmarks’ of R&D to ensure that claims that are being made are bona fide and not an attempt to play the system.
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GovGrant sits on the Research & Development Consultative Committee (RDCC) to represent UK’s business when it comes to the operational delivery of the R&D tax relief schemes. This is an HMRC-sponsored forum, and as members we receive regular updates as HMRC advice evolves and develops. We are currently in an unprecedented period of change, with the introduction of new and vital measures to support business British business.> Read more

HMRC recently reported on the outcome of a first tier tax tribunal case investigation into an R&D tax claim.

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Increased risk of material uncertainties

In these unprecedented times, the audit of going concern assessments and reporting on material uncertainty related to going concerns are key for auditors. The Audit and Assurance Faculty has produced two guides on the topic.
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Innovation tax specialist GovGrant comments on the annual HMRC tax credits statistics and says Government needs to demonstrate that it really is pro-business. Commenting before the publication today (10 October) of the latest HMRC statistics measuring the amount of tax credits claimed by the UK’s most innovative businesses during the previous 12 months, Luke Hamm, CEO of GovGrant, said:

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Commenting on HMRC’s analysis of UK R&D tax credits in its report, published today Luke Hamm, CEO of innovation tax specialist GovGrant, which has helped businesses claim back over £200m for their R&D, said: “The good news is that the number of claims by UK SME businesses accessing the tax credits system has increased by 22% between 2015-16 and the end of 2017. 77% of all claims are from SMEs, and there’s been a welcome 15% increase in the number of first time SME applications.”

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GovGrant CEO Luke Hamm has welcomed HMRC’s (HM Revenue & Customs) decision to crack down on abuse of the R&D tax relief system. GovGrant, which is a member of the HMRC Research and Development Consultative Committee, helps businesses claim millions each year for their innovation, including patents and inventions. Luke said he hoped ministers would move quickly to protect the reputation of the tax system and force out unscrupulous agents in time for new rules on tax credit coming in April next year.

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As is usual, politics took centre stage following the 2018 Budget. Labour was under scrutiny after the Shadow Chancellor, John McDonnell, indicated that, unlike his boss, he would not oppose the government’s personal tax changes. In the Times, leading economist David Smith noted that while the budget ‘must be judged as a political success,’ the level of public debt continues to be a cause for concern.

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The Chancellor has announced that Budget day 2018, one of the busiest news days in the financial calendar, will be earlier than expected, on 29 October.

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The government is giving more of a boost than ever before to the UK’s most innovative companies, according to the latest full-year statistics from HMRC.

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