Is it time to slow down the changes to R&D claims rules?

The Association of Tax Technicians ‘ATT’ recently published their comments on the draft provisions for the Finance Bill 2023-24 research and development relief published on 18 July 2023.

In their letter the ATT suggested the additional support for ‘R&D intensive’ small and medium-sized enterprises (SMEs) should be included within the new single scheme rather than operating as a separate scheme, as the goal of the merged scheme is to simplify the R&D tax relief. As currently drafted SMEs could end up moving in and out of the two regimes which would arguably make things more complex.

In terms of ‘R&D intensive’ eligibility, ATT proposed that businesses should only be excluded from the R&D intensive scheme where they fall below the 40% threshold for two consecutive years to provide certainty for claimants and simplify its operation. ATT also thought an alternative approach to structuring the R&D intensive relief would be to focus on the nature of the R&D rather than the expenditure profile of the company.

Timewise, ATT suggested that the commencement date of April 2024 for the new single scheme is too soon. ATT believe more time is required for consultation to ensure the successful implementation of the scheme.

We support ATT’s proposals, particularly the need to slow the rate of change down for businesses. HMRC have recently shared that half of all R&D claims they received in the last month were submitted without the new additional information form (mandatory for all claims from 8th August) and means these R&D claims are invalid. This is a shockingly high proportion of claims given the changes were heavily promoted and suggests a real need to slow the pace of change down to give businesses the best chance of getting to grips with what will be some fundamental changes to how R&D relief works.

If you are struggling to work out what the changes mean for you, or need help completing the additional information form Wilson Partners can help. Please get in touch for more information.