Webinar: Navigating the 2024 R&D tax relief landscape

The past year has presented significant challenges for companies relying on government incentives to fund their innovation. With substantial changes to R&D tax reliefs in 2024, primarily through the introduction of the ‘merged’ scheme, alongside heightened HMRC scrutiny to combat fraud and abuse, it’s more crucial than ever for businesses to swiftly adapt to this evolving landscape.

Watch our recorded webinar, where we guide you through these turbulent times, covering key topics such as:

• The new merged scheme: gain insight into the implications for companies receiving grants, incurring overseas R&D expenditure or engaged in collaborative R&D projects.
• Enhanced R&D intensive support (ERID) for loss-making SMEs: learn how to maximise the benefits of additional support available for eligible SMEs.
• New notification requirements: understand the new obligations for companies claiming R&D relief for the first time or after a period of inactivity.
• HMRC’s compliance approach: discover best practices for navigating compliance checks and mitigating the risk of HMRC inquiries.
• Budget preview: get up-to-date insights ahead of 30 October budget and explore what it might mean for R&D tax reliefs.

To find out more, contact us.

FAQs on the 2024 R&D tax relief landscape

On average, how long are claims taking?

HMRC initially targeted repayments within 28 days of submission. However, in light of alleged fraud and the subsequent increased scrutiny and volume of compliance checks, that target has been increased to 40 working days. In practice, HMRC is generally meeting this, although we’re aware that 5% of payments are often withheld longer than this depending on HMRC’s initial risk profiling.

Please note that payment from HMRC doesn’t mean the claim is ‘agreed’. HMRC has defined windows (typically 12 months) within which to raise an enquiry, and can revisit earlier claims through the Discovery process going back up to six years.

Further, if HMRC does request further information via a compliance check, it could take much longer to resolve.  Please contact us directly if we can assist with this, perhaps through alternative dispute resolution channels or escalating the lack of progress with HMRC’s operational teams.

What new costs can we now claim under the new merged scheme?

Qualifying cost categories in the merged RDEC scheme are broadly consistent with the earlier schemes: staff costs, software and data licences, cloud-computing costs and materials consumed in the R&D process. The big changes relate to expenditure with third parties, whether providing resources augmenting your R&D team  (externally provided workers in R&D parlance), or contracted-out R&D activities (which were previously only available under the SME scheme)/contributions to independent R&D (in the old RDEC scheme). This, together with the restrictions on R&D conducted overseas, are quite nuanced so please contact us directly to discuss your specific circumstances.

Will there be a future revision of what is defined as R&D, e.g. social science R&D (post-Coronavirus)?

There have been several calls to revisit the definition of R&D for tax purposes/DSIT guidelines. After Brexit, HM Government has more freedom to widen the scope of eligible R&D activities. HMRC has begun to take initial soundings, but it is early days in any revision process. A significant expansion into such areas as social sciences is unlikely to happen soon.

HMRC continues to publish further guidelines for compliance to help interpret the meaning of R&D,  and recent First-tier Tribunal decisions continue to provide some clarity.

A client has had a call with HMRC and the caseworker seemed not to understand much about R&D. Is this getting better?

HMRC recruited nearly 200 staff to help address R&D fraud and errors. Many joined the individual and small business compliance (ISBC) unit conducting the ‘volume compliance’ programme. It is widely acknowledged, including by such professional bodies as CIOT and ICAEW, that these caseworkers have been poorly trained and lack awareness of the general UK R&D landscape an understanding of particular technology domains, industry sectors or geographies.

More recently, HMRC has begun a retraining programme and increased the level of review/oversight of correspondence to ensure better understanding. It is too early to tell if this has addressed many of the earlier failings, although there are some promising signs.