One minute with Ele Theochari, Partner at Blick Rothenberg.
What’s keeping you busy at work?
Over the last four years, the R&D regime has faced challenges and changes that it hasn’t been subjected to in 20+ years. With every new change, requirement and FTT case, I need to assess the impact on my client base to make sure we don’t put a foot wrong!
What do you know now that you wish you’d known at the start of your career?
It’s a marathon, not a race. Every individual route and career path looks different – so focus on what you’re doing and what you want to achieve, rather than comparing yourself to others.
It may be a slight cliché but there is a great proverb: ‘let go or be dragged’. If your working environment isn’t serving you professionally, personally or intellectually, there’s never a ‘right’ amount of time to stick around.
If you could make one change to tax, what would it be?
I would give serious consideration to changing the £100k tax threshold. Since you lose £1 of your allowance for every £2 you earn over £100,000, by £125,140 it’s completely gone and leaves a marginal tax rate of (unofficially) 60%. On top of this, access to 30 hours of free childcare is lost which leaves a working family substantially worse off than two individuals earning £99k each. This threshold is outdated, and with the cost of childcare and general living expenses many are seriously weighing up whether to take a pay rise/promotion, or even come back into the workforce at all. This subdues aspiration and does not align with the Government’s growth plans for the economy.
What’s your view on R&D tax credits?
The key problem that I see is the administration overall. We have a ‘pay now, check later’ system that fundamentally does not work, and it has to be acknowledged that this has encouraged fraud.
Every change to the regime over the last few years has been a bolt-on to, rather than a simplification of, existing policies/statutory requirements – and that places a huge administration burden on both businesses and HMRC.
HMRC simply do not have the requisite staff (either in sector-specific capability or volume) to administer this relief in its current form. My advice to HMRC would be to stop adding on various statutory forms and side-projects (like beefing-up advanced assurance) and simply change the way the relief is administered to ‘check now, pay later’.
Businesses are crying out for certainty. They would be more than happy with a delay in payment if they knew that once they had received the money there would not be an enquiry. I do not believe there is any value in extending advanced assurance (in a mandatory or voluntary form, the latter of which will likely have limited take up due to the mistrust between businesses and HMRC) alongside the other measures currently in place.
Has a recent tax case caught your eye?
The most important R&D cases are the First-tier Tribunal decisions in the Collins Construction Ltd and Stage One Creative Services cases in which the FTT found in favour of these companies with regards to subcontracted R&D and subsidised expenditure issues. Although HMRC decided not to appeal in either case, they have since contacted many companies and closed their compliance checks with no changes as a result of those decisions.
And finally, you might not know this about me but…
I’ve been playing netball since primary school and have kept it up ever since. I’m a keen traveller and try to get away as often as possible, preferably somewhere boiling hot where I can enter a sloth-like state on the beach.
One minute with Ele Theochari, Partner at Blick Rothenberg.
What’s keeping you busy at work?
Over the last four years, the R&D regime has faced challenges and changes that it hasn’t been subjected to in 20+ years. With every new change, requirement and FTT case, I need to assess the impact on my client base to make sure we don’t put a foot wrong!
What do you know now that you wish you’d known at the start of your career?
It’s a marathon, not a race. Every individual route and career path looks different – so focus on what you’re doing and what you want to achieve, rather than comparing yourself to others.
It may be a slight cliché but there is a great proverb: ‘let go or be dragged’. If your working environment isn’t serving you professionally, personally or intellectually, there’s never a ‘right’ amount of time to stick around.
If you could make one change to tax, what would it be?
I would give serious consideration to changing the £100k tax threshold. Since you lose £1 of your allowance for every £2 you earn over £100,000, by £125,140 it’s completely gone and leaves a marginal tax rate of (unofficially) 60%. On top of this, access to 30 hours of free childcare is lost which leaves a working family substantially worse off than two individuals earning £99k each. This threshold is outdated, and with the cost of childcare and general living expenses many are seriously weighing up whether to take a pay rise/promotion, or even come back into the workforce at all. This subdues aspiration and does not align with the Government’s growth plans for the economy.
What’s your view on R&D tax credits?
The key problem that I see is the administration overall. We have a ‘pay now, check later’ system that fundamentally does not work, and it has to be acknowledged that this has encouraged fraud.
Every change to the regime over the last few years has been a bolt-on to, rather than a simplification of, existing policies/statutory requirements – and that places a huge administration burden on both businesses and HMRC.
HMRC simply do not have the requisite staff (either in sector-specific capability or volume) to administer this relief in its current form. My advice to HMRC would be to stop adding on various statutory forms and side-projects (like beefing-up advanced assurance) and simply change the way the relief is administered to ‘check now, pay later’.
Businesses are crying out for certainty. They would be more than happy with a delay in payment if they knew that once they had received the money there would not be an enquiry. I do not believe there is any value in extending advanced assurance (in a mandatory or voluntary form, the latter of which will likely have limited take up due to the mistrust between businesses and HMRC) alongside the other measures currently in place.
Has a recent tax case caught your eye?
The most important R&D cases are the First-tier Tribunal decisions in the Collins Construction Ltd and Stage One Creative Services cases in which the FTT found in favour of these companies with regards to subcontracted R&D and subsidised expenditure issues. Although HMRC decided not to appeal in either case, they have since contacted many companies and closed their compliance checks with no changes as a result of those decisions.
And finally, you might not know this about me but…
I’ve been playing netball since primary school and have kept it up ever since. I’m a keen traveller and try to get away as often as possible, preferably somewhere boiling hot where I can enter a sloth-like state on the beach.
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