Changes to R&D tax relief cause confusion

Changes to R&D tax relief cause confusion

Nov 10, 2023

Poorly thought-out changes to R&D relief are causing confusion for accountants, tax software providers and companies, warns Blick Rothenberg

The government plans to merge the existing research and development (R&D) schemes into a single relief for all sizes of business in April 2024. There has been criticism about how the system will work, no clarity on the use of subcontractors and no guidance on the proposed intensive R&D scheme for SMEs.

Last month, representatives from the leading accountancy bodies called for a one-year delay to the rollout to give time for accountants to absorb the changes and allow businesses to review their current R&D activity in light of the revision of the tax relief scheme.

Dr Emma Rawson, technical officer at the Association of Taxation Technicians (ATT) told a House of Lords committee: ‘Businesses need a year until it is implemented, we need a lead-in time for businesses to factor this into their planning, for systems to get ready and for the software to be in place,’ Rawson stressed. ‘There are quite a lot of moving parts. There is a danger to rush it through given the importance of the changes.’

Ele Theochari, recently appointed partner at Blick Rothenberg and R&D specialist, said: ‘Regardless of whether one views these R&D changes as negative or positive, the implementation of some of these changes has been swift and largely without due care and consideration to the end-user, even with the consultations and continued dialogue between HMRC and the governing bodies.

‘Many of the implemented changes are in motion amidst the backdrop of a proposed merged scheme (with potentially another SME-intensive route running alongside) that is due to be rolled out in April 2024, which will further serve to confuse and deter genuine claimants.

‘This simply does not give enough time for stakeholders to adapt, and whilst tackling error and fraud is an important goal, it feels as though the current SME scheme is being deliberately eroded in order to eradicate it altogether, rather than tackling the true underlying issues.’

Joining Blick Rothenberg in 2023, Theochari is an R&D tax relief specialist with nearly 10 years of experience and has worked with start-ups all the way up to FTSE 100 companies. Her role at the firm is to help companies understand the increasingly complex R&D tax landscape and access R&D tax incentives.