Tax Chat

Research and Development Tax Relief

R&D tax relief provides a valuable reduction in your taxable profits – however many companies are put off by the lengthy definitions of qualifying expenditure and struggle to decide if the work they do is sufficiently innovative to qualify for the relief.

We have long advised our clients not to dismiss the possibility of making a claim for R&D tax relief.  It is worth the time and effort needed to put together a claim.  We have extensive experience of R&D claims and can guide them successfully through the process.

Through a consultation process, the Government has also recognised the value of R&D tax relief to many smaller businesses, including start ups, and that they can find the prospect of a claim off putting.

To assist with this they are offering an advance assurance process, to companies with less than 50 employees, who are looking to make their first R&D claim.  The aim is to agree a basis for the first claim and the claims for the two subsequent accounting periods.  Provide that you use the agreed basis your R&D claims for these periods will normally be accepted as being accurate without query from HMRC, unless a significant issue arises.

We think this is a very useful scheme from HMRC and once which if run correctly will be very useful to give smaller businesses some certainty.  In our experience, the R&D specialists at HMRC are very helpful and offer constructive advice to businesses regarding their R&D activities.

However to date they have been very resource constrained and have not been able to offer help and advice to taxpayers as widely as they would have liked to.  It will be interesting to see if resources have been increased at HMRC to enable this new offering to be given a fair pilot.

Please email tax@revellward.co.uk for a copy of our questions and answers on R&D tax relief or for further information on this pilot scheme.