5 significant updates from the R&D Consultative Committee

Twice a year specialists in R&D from across the UK meet at the R&D Consultative Committee to discuss how the R&D Tax Relief Scheme is operating. The latest statistics show that £4.5bn was claimed by business last year – a statistic which is based on partial data and only expected to rise as more returns are received.

However, companies have also been hit by substantial delays in the processing of claims, hampering many who rely on the relief as a form of inward investment. Below is a quick summary of 5 key developments in the scheme, from the last meeting.

Upcoming policy updates

The 2018 Budget, announced that tax credits on loss making businesses would be capped, from April 2020 onwards. The cap would be three times the company’s PAYE and NICs liability for that year. In response to this announcement, a consultation was opened between March and May this year.

The overall result of the consultation was a call for modifications to this legislation, which are expected to be detailed in the next Budget. Earlier in the year, an RDEC Advance Clearance pilot program pilot ran across 12 companies from different industries, such as pharmaceuticals, manufacturing and financial services. The future of this program will become clear in May 2020, when a report and analysis will be published.

Processing changes

Changes in R&D processing were very much needed, as highlighted by the significant delays experienced by businesses earlier this year. Economists claimed that the backlog was ‘preventing innovation’ in the UK, and that it was leaving smaller firms ‘in a precarious position’.

As of September 30^th, the Business Tax & Customs (BTC) team, took over from Wealth Mid-Sized Business Compliance (WMBC) in the processing of claims. Because the BTC team is larger, it’s hoped that this change will bring 99% of claims up to date, and the standard 28-day processing period should be restored for SME and RDEC claims. Good news for claimants all around.

Problems with professional standards

With the rise in R&D claims, came worries about agents not abiding to professional standards. To try and resolve these worries, the CIOT and ATT are in the midst of developing guidelines for R&D Agents. The guidance will include information on where the Professional Conduct in Relation to Taxation sits within R&D.

Rise in RDEC expected

Last year RDEC claims amounted to 2,500, seeing £2.4bn being given out through the scheme. However, between April and September this year, only 490 claims have been made (£300m). Therefore, HMRC are understandably predicting a huge influx in claims between now and the end of the financial year.

Standard template debate

Concerns about standard templates being sent out to claimants were voiced at the meeting. The templates, which asked recipients to re-write information already included in their claim narrative, should only be used for further clarification. As standard procedure, R&D professionals should ask questions which have been tailored to each individual claim. Doing so allows the professional to understand the organisation’s claim in a more in-depth manner.

How can we help?

At Haines Watts, our specialist R&D team can take the time-consuming process of claiming R&D tax relief off your hands. Our R&D team are here to answer any queries you might have about claiming. Get in touch and see how we can help.