CPDStore

In this course Simon Briton covers the following five key points;

• Overview of Changes: Understand the new R&D tax relief scheme coming into effect in April 2024, with its shift towards a more streamlined process.

• Impact on Clients: Explore how these changes affect the ability of companies to claim R&D tax benefits, particularly focusing on supply chain dynamics.   This is of particular importance to software developers, construction businesses, manufacturing and engineering clients and industrial designers. 

• Strategic Planning: The importance of early planning and commercial considerations to reduce the extent to which some clients lose out under the new rules.

• Documentation and Compliance: HMRC expects companies to have proper records and evidence to support claims. We will share tips on how to help clients document R&D activities to make sure claims are robust, and we’ll look at how to treat RDEC in the accounts so as not to inadvertently trigger a double tax charge.

• Practical Implications and Case Studies: Real-world scenarios and advice on navigating contracted R&D, overseas expenditure, and the R&D intensive regime for loss-making SMEs.

New Rules for R&D Tax Relief Starting April 2024

From April 1, 2024, HMRC is rolling out major updates to R&D tax relief. These changes will affect nearly all businesses looking to claim innovation incentives through the tax system. Here's what you need to know:

What's changing? 

This is a major overhaul of the way R&D tax relief works. From 1 April 2024 the current rules will only be available to R&D intensive loss-making SMEs who have to spend a large proportion of their costs on R&D to fall within that scheme. Most companies will now claim R&D tax relief through new RDEC rules which favour those that are directly involved in planning and paying for R&D activities.  The new subcontractor rules open up possibilities to make claims where it is currently not possible to do so. 

Why this matters

Without taking appropriate steps in advance, some people in supply chains will lost the ability to make R&D tax claims where they have been able to do so until now. This will be an unwelcome surprise to businesses that have come to rely on this funding and so those clients will appreciate an early warning and an opportunity to change things to reduce the harm.  Other clients may well be able to make claims where they have not been able to do so in the past.  It’s all about who initiates, plans and pays for the R&D activities. 

Planning ahead

The government wants companies that claim R&D tax relief to include planning in their project management from the start. This means if clients take the time to properly document their R&D activities and costs, they will have far greater certainty that their claim is robust.   The role of a good adviser is to help shape those processes. 

Shift in emphasis on role of accountants.

As accountants, understanding these changes is crucial for advising companies on navigating the new landscape. By focusing on early planning, proper documentation, and strategic management of R&D activities, businesses can maximise their tax benefits and minimise compliance headaches. This transition represents a significant shift in how R&D tax relief is approached in the UK, emphasising the importance of adaptability and foresight in the accounting profession.