Responding To A Changing R&D Tax Relief Landscape

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The issue of fraudulent claims during the government backed Covid19 loans (BBILS and CBILs) has been an ongoing story in politics and the media. Also, the increased focus on taxation, as a result of the government’s recent mini-budget, has added to an overall climate of HMRC vigilance particularly in relation to businesses.

This background is useful in understanding the drivers of the recent changes in the policing and legislation relating to R&D Tax Relief. The advent of specialist units and more resources dedicated to compliance checks means that fraudulent claims are more likely to be identified. It may of course be argued that there is a distinction between fraud and a simple error in an application, but it is unlikely that HMRC would differentiate between the two. This places even greater emphasis on an applicant getting things right first time.

Understanding the changes in legislation with the new caps, eligibility criteria and reforms places greater emphasis on getting the best advice and support, whether it be from a traditional accountant or a specialist tax relief provider. The key point is that it should not deter grant applications in the first place. Businesses just need to be aware of the new legislation when looking at the financial case for a grant application and understand that the level of detail and accuracy required may be more demanding than they anticipated. It remains to be seen whether this new environment reflects a forthcoming change in the availability of grant schemes given the increased need to support and encourage economic growth through the recession. We have not seen any changes in availability of funding amounts as yet. However, just in case things change, best to look for a grant and get your application in now!