HMRC have recently published a detailed review of the R & D Tax tax relief regime, titled “Evaluation of the Research and Development Tax Relief for Small and Medium Sized Enterprises“. Richard Coombs, Tax Partner at Bates Weston comments:

“Running to some 117 pages, the review might be classified as “rainy day reading”, but there are some useful take-away points from it.  What is encouraging is that the report concludes that the tax relief does promote additional spending on R&D by UK companies and therefore accelerates advances in science and technology, which is precisely what the relief is designed to do.  In turn, this drives increased profitability and employment which generates more revenue for HMRC.  That is good to know as it means that the Government are less likely to water down the relief, especially given the current pressure on public finances.

The other theme which comes out of the report, and in truth comes out in pretty much all analysis of the R&D relief, is that there are still literally thousands of companies who are not claiming the relief when they may well be entitled to. Of the sample companies interviewed as part of the research, 51% had never even heard of the relief and a further 22% had only a sketchy understanding of it.  The amount of unclaimed tax relief that this represents is mind-boggling and in the current economic environment, where cashflow is extremely tight for some companies, an R&D cash credit could be extremely welcome.  We have said it many times before and we will say it again, please speak to us about the relief.  Even if you feel that you haven’t done any R&D, if you don’t ask then you will never know and you may be missing out on a significant cash boost.”

If you would like to speak to us about your R & D, without obligation, please do get in touch with Richard Coombs.

Disclaimer: The information contained in this article is generic in nature. You should take no action based upon it without consulting ourselves or an alternative professional advisor. All information correct at time of publication: 19 November 2020