The 2024 Spring Budget was announced last week and as we reported in earlier emails, the R&D tax credit programme has undergone a significant number of changes in the past 2 years. These changes were precipitated by HMRC’s view that nearly 50% of all R&D tax credit claims were in error.

The estimates are that HMRC is now reviewing up to 20% of all R&D tax credit claims submitted. These reviews or compliance checks have caused much concern among companies claiming R&D tax credits. Many companies, who have received refunds from previously filed R&D tax credit claims, are surprised to learn HMRC is now challenging their claim(s) on current compliance checks. 

To address these concerns Treasury has said HMRC will establish an expert advisory panel to support the administration of the R&D tax relief. The panel will provide insights into the cutting-edge R&D occurring across key sectors such as tech and life sciences. Plus review relevant guidance, ensuring it remains up to date and provides clarity to claimants.

So, what does this mean?

If the panel is advising HMRC on cutting-edge R&D, does this mean HMRC will narrow its definition to permit only cutting-edge R&D as eligible? Or is this just a guideline for HMRC to better understand the current state of technology?

A fundamental issue with the R&D tax credit programme is that HMRC inspectors are making decisions on what does and does not qualify as R&D. In just about every other country that has an R&D tax credit programme, eligibility is determined by qualified technical staff. (i.e. software specialists, engineers, life science professionals, etc.) hired or contracted by the government.

How can RDP help?

It is for this very reason that RDP has qualified, technical staff. In every field of science and technology with the academic background, industry experience and R&D tax credit experience to assist our clients. We understand both the technology and/or science being developed, as well as the eligibility requirements under the tax law.

If you or your clients are concerned about the 2024 Spring Budget. Or would like a free consultation on our services and fees, including R&D tax credit claim preparation, assistance with an HMRC compliance check or setting up a system to identify and track eligible R&D projects. Then please contact our team at RDP today at 0208 214 1341 or email Jenni at [email protected].