Managing Director, ForrestBrown
Research and development (R&D) tax incentives play an important role in funding innovation, but policy changes and a new approach from HMRC have added complexity and risk for companies claiming relief.
At ForrestBrown, we’ve been helping the UK’s most innovative businesses secure funding for R&D for over a decade. We’ve submitted more than 13,500 claims, won awards from our peers for the quality of advice we provide and remain the only R&D adviser to win a First Tier Tax Tribunal on behalf of a client.
Innovative businesses securing funding
For most of this time, R&D tax policy remained relatively unchanged, and this stability helped businesses plan their long-term investment with confidence. We see the positive results of R&D tax relief in the revolutionary innovations of our clients — from fridge-free vaccines to jet suits for first responders.
Businesses need to undertake proper
due diligence when appointing an adviser.
Reforms and compliance focus
However, recent reforms — combined with HMRC’s heightened focus on compliance — present new challenges. Driven by an understandable desire to crack down on error and fraud, R&D tax relief claims now carry an increased risk of enquiry for all, leaving legitimate innovators exposed if they haven’t engaged expert advice at the right time.
A case in point is the additional information form, which became mandatory earlier this year. Many businesses are failing to meet the new requirements, which also include providing a set number of detailed project descriptions.
Others are caught in time-consuming enquiries, sometimes forced to sacrifice the tax relief to which they are entitled because their adviser has little experience in negotiating with HMRC.
Fresh insights to avoid pitfalls
To avoid these pitfalls, businesses need to undertake proper due diligence when appointing an adviser. Membership of a professional body like the Chartered Institute of Taxation is an essential starting point.
At ForrestBrown, we’re committed to shaping a positive future for the incentive, so we actively engage in government consultations on R&D, enabling us to bring these insights to our fresh approach and advice to clients.
The good news is that R&D tax relief remains a vital lever for government to encourage private sector investment. Innovative businesses can therefore remain confident in the incentive but must equip themselves with the right advice from the outset to ensure they’re fulfilling the new requirements.