The CIOT has responded to the Treasury’s R&D tax reliefs report which sets out ‘further detail and next steps’ for the review of R&D tax reliefs announced at autumn Budget 2021. The CIOT:
welcomes confirmation that the government will expand qualifying expenditure for both R&D reliefs to include data and cloud computing costs;
agrees that the proposed measures to refocus R&D reliefs towards innovation in the UK will result in broader benefits for society, with more R&D activity taking place in the UK – although some kind of de minimis would be helpful, for example where overseas work represents a small proportion of R&D expenditure (the CIOT suggests 10%);
welcomes efforts to target error and fraud across both R&D tax relief schemes but notes that some of the measures proposed in relation to tackling abuse and ‘boundary pushing’ are not clear and potentially also not necessary or effective;
does not support the proposed measure that companies will need to inform HMRC in advance that they plan to make a claim for relief. Although this measure may prevent some dubious claims, it will also mean that many genuine claims fall out of time;
agrees that it is reasonable to require all claims to be made digitally; and
welcomes HMRC taking steps to clarify difficult areas of the law and would encourage the government to consider clarifying the rules around subsidised expenditure and contracted-out R&D during the next steps of the review of the R&D tax relief schemes.
The CIOT has responded to the Treasury’s R&D tax reliefs report which sets out ‘further detail and next steps’ for the review of R&D tax reliefs announced at autumn Budget 2021. The CIOT:
welcomes confirmation that the government will expand qualifying expenditure for both R&D reliefs to include data and cloud computing costs;
agrees that the proposed measures to refocus R&D reliefs towards innovation in the UK will result in broader benefits for society, with more R&D activity taking place in the UK – although some kind of de minimis would be helpful, for example where overseas work represents a small proportion of R&D expenditure (the CIOT suggests 10%);
welcomes efforts to target error and fraud across both R&D tax relief schemes but notes that some of the measures proposed in relation to tackling abuse and ‘boundary pushing’ are not clear and potentially also not necessary or effective;
does not support the proposed measure that companies will need to inform HMRC in advance that they plan to make a claim for relief. Although this measure may prevent some dubious claims, it will also mean that many genuine claims fall out of time;
agrees that it is reasonable to require all claims to be made digitally; and
welcomes HMRC taking steps to clarify difficult areas of the law and would encourage the government to consider clarifying the rules around subsidised expenditure and contracted-out R&D during the next steps of the review of the R&D tax relief schemes.
