Month: March 2015

  • A “Thank You” from HMRC…..

    HMRC / HM Treasury have written to Maria Kitt today to thank us for our recent input into the 2015 R & D Consultation. It is good to see HMRC sweeping through a number of uplifts to R & D reliefs and general availability of the reliefs.

    In a ‘letter’ to Maria Kitt, HM Policy advisors thank us for our input and confirm:

    • Uplifted relief for SME’s to 230% from 01 04 2015
    • Improved access to R & D through the HMRC assurance programme
    • Work upon the definition of consumables to prevent inappropriate claims
    • Ongoing consultation on the UK relief programme

    This is what they said:

    The Government would like to thank you for providing views on recent consultations about improving access for smaller companies to the R&D tax credits and on the treatment of consumable items where a company sells the products of its R&D activity as part of its normal business.

    We have taken your views into account and are pleased to announce the following changes, alongside increasing the rate of the above the line credit from 10% to 11% and the rate of the small and medium enterprise (SME) scheme from 225% to 230% from 1 April 2015;

    • the government has announced in the Budget that it will introduce voluntary advance assurances lasting 3 years for smaller businesses making a first claim from autumn 2015 and reduce the time taken to process a claim from 2016. There will be new standalone guidance aimed specifically at smaller companies, backed by a 2 year publicity strategy to raise awareness of R&D tax credits. HMRC will publish a document in the summer setting out a roadmap for further improvements to the scheme over the next 2 years.
    • the legislation implementing the changes to the treatment of expenditure on consumable items has been revised to address concerns expressed in consultation. This will be by clarifying that the new restriction will not apply where the product of the R&D is transferred as waste, or where it is transferred but no consideration is received. We will continue to monitor how the legislation operates and will propose further changes if necessary.

    Thank you again for responding to the consultation and helping informing decisions announced in the Budget. I would be grateful if you could pass this email on to any colleagues who you think may be interested.

    David Harris
    Senior Policy Adviser
    HMRC Corporation Tax, International and Stamps
    100 Parliament Street, London SW1A 2BQ

  • UK R & D Tax Reliefs – Give me more!

    Consultation with HM Treasury – Update

    HMRC are tasked with improving access to the R & D relief and launched February’s Consultation.
    We were invited to feed our thoughts into HMRC’s R & D Consultation at a meeting with HM Treasury and HMRC’s Policy Unit, here in the Surrey Research Park. Here are some of the ideas we put forward for consideration.

    Accelerated Scientific, Research and Technology Allowances

    As HMRC hasten toward ‘’simplifying’’ R & D legislation (do they now make the legislation?), there is a real danger that the relief becomes an Innovation Allowance rather than an incentive aimed at Companies performing R & D.

    As we know, the rules currently offer as much incentive to the developer of a new ice cream as they do to Companies performing deep and complex development projects, or high level research activity. This is good news for some, but not all as the HMRC red tape then ensnares bona fide Companies in the same net.

    We recommended:

    • An accelerated allowance – to remove the layer of administration and recognise bona fide R & D performers perhaps by:
    • Identifying work upon Horizon 2020 projects
    • Recognising bona fide Companies such as those based on science and research parks or those in collaborative R & D projects.

    HM Treasury are considering this input with interest!

    Grant Funding Breaks

    This is an area of big concern in start-up tech. Many companies use grant funding not realising this compromises R & D tax reliefs down the line. The current law applies a ‘whole project’ blanket restriction. Refining this would recognise the reality of incubator Companies and larger R & D EC funded projects work where EC funding is key to the project budget.

    HMRC Assurance

    First time claimants will be able to confirm with HMRC their R & D project qualifies for relief.
    A useful first base but unlikely to ‘maximise’ the Company’s claim.
    Hopefully this lasts longer than the 2012 assurance which was withdrawn within 6 months as HMRC took on the role of tax advisor and became overwhelmed.

    Improved Publicity about R & D

    Further to the ‘Britain is Great’ HMRC Campaign (see our website), publicity will be focussed on social media campaigns and help lines.
    This is to be welcomed, although statistics show that more than 15,000 small claims were made in 2014, uptake is still ‘poor’ compared with our EEA neighbours.
    Economic trends show the UK R & D spend is historically inelastic to tax incentives. On the upside, ‘good’ R & D will continue unabated in the UK even where tax residence elsewhere appears advantageous!