R&D tax relief – points to note

Date posted: 24th May 2022

If you are waiting for a tax refund as a result of an R&D claim, then you should be aware that HMRC have stopped the payments of some R&D tax credits whilst it investigates some irregular claims. (https://www.icaew.com/insights/tax-news/2022/May-2022/HMRC-suspends-payment-of-some-RD-tax-credit )

HMRC believe that it is necessary to suspend payments to make sure that the relief is not being abused. HMRC have not clarified what is regarded as an “irregularity” but we would anticipate that such claims will be claims that do not have enough technical detail to ascertain whether R&D has been undertaken and possibly those that included an incorrect calculation of the relief available.

However, you should not let the delay in any refunds deter you from making a genuine claim. We find that many innovative businesses believe that the R&D relief is either too good to be true or does not apply to their business, due to their sector. As you can see from the recently released HMRC statistics, claims are made from a variety of different sectors  https://www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit/research-and-development-tax-credits-statistics-september-2021

From April 2023, we are also expecting confirmation of some changes to the R&D scheme including:

  • Restrictions on businesses carrying out R&D overseas.
  • Extension of the relief to cloud computing, data costs and pure mathematics.


Finally, it would not be beyond the realms to imagine that the 130% uplift on SME R&D expenditure will decrease, given the upcoming rise in corporation tax rates ( https://www.cliveowen.com/2022/04/corporation-tax-increases-april-2023/ )  as the R&D tax relief given would then be much greater than it is at present. Conversely, for those larger companies falling within the RDEC scheme, given that the RDEC tax credit is subject to corporation tax, it will mean a lower amount received, therefore we would anticipate that the RDEC % may increase. We anticipate that any such announcements will be made in the Autumn 2022 Budget.

If you have any queries regarding R&D tax credits, please give us a call.


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