Consultation live for possible simplification of R&D regime

Consultation live for possible simplification of R&D regime

The UK’s Research & Development (R&D) tax relief system has been much debated in recent times, with high profile changes announced in last year’s Autumn Statement amid numerous crackdowns to tackle abuse. The changes announced by the Chancellor are set to come into force from 1 April 2023 and were met by strong criticism for effectively representing a more than 30% tax benefit decrease to businesses.

While action to tackle abuse of the system is very welcome, the subsequent processing delays for genuine claims could prove terminal as businesses grapple with the uncertain and changeable economic backdrop. 

In a possible acknowledgement by the Government of the issues surrounding the system, an 8-week consultation has been announced until 13 March 2023. The basis is for the implementation of a single scheme and how this could work. Victoria Atkins MP, Financial Secretary to the Treasury, commented: “Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.”

Currently, the scheme falls into two brackets - the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief. The proposal is for the unified relief to be based on the RDEC system, and the hope is that it would give SMEs clarity on how much relief they could be entitled to, as well as speed up claims. 

Any agreed reform would likely take effect from 1 April 2024. It’ll be interesting to see whether this is a manageable timeline, as it only gives 12 months for a new scheme to get successfully up and running.

Would you like to have your say?  

We will be participating in the consultation process and are determined to provide a platform for SMEs to have their say. If you have a view and would like to provide any comment, raise concerns or questions, please provide feedback directly here or route through your usual Azets advisor.
 
We will then collate a response for presenting to the Treasury and share any subsequent developments.