HMRC has opened a consultation looking at ways to make it easier for small companies to access Research and Development (R&D) tax credits, following the announcement in the Autumn Statement of a package of measures to simplify the application process
The consultation will look at ways to improve awareness of the credits; design of the rules; understanding of the rules; and the claims process/ administration.
HMRC says feedback will be used to shape improvement of the guidance, and also the design of the new advance assurance service announced in the Autumn Statement. This is a formal process of advance assurance for small companies claiming R&D relief for the first time, with the aim of providing greater certainty in financial planning for businesses and reducing errors.
In future, companies will be able to supply brief information in a standard template, usually followed by a telephone (or in some cases, face-to-face) discussion. The document makes clear it is not proposed that advance assurances will be compulsory, or that any fee will be charged.
As part of the consultation, HMRC says it is considering broadening its communications on R&D tax credits to include providing information via social media, trade bodies or business networks, as well as its current approach of using R&D specialists, supported by guidance material on the HMRC and gov.uk websites.
It is also looking at whether small companies could be given an option of setting aside the current definition of what constitutes R&D activity, and instead using accounting rules to identify qualifying R&D.
Many practitioners and advisers say that the rules on what costs qualify for tax relief may be over complex given the amount of relief that can be claimed. The consultation will explore whether a more general framework or guidance which gives more certainty, specifying what R&D costs qualify for relief, would work better.
In addition, the department is considering whether to provide guidance in new forms, such as interactive flowcharts or applications, which could be organised either according to how the legislation for the credits is arranged, or by following events in a company’s lifecycle.
The consultation closes on 27 February 2015 and details are here: