The CIOT welcomes many of the proposed changes including modernised definitions, but it cautions that other steps need to be taken to mitigate against error and fraud in R&D claims.
The House of Lords Sub-committee’s call for evidence sought to illuminate the potential impact of the proposed Finance Bill changes on businesses R&D claims, with particular focus on SMEs. In its response, the CIOT raises a number of key points:
The requirement for companies to give advance notification of R&D claims may restrict access to relief for genuine claimants, while not necessarily leading to a significant reduction in abuse.
While bringing some definitions up to date (to include datasets and cloud computing) there is clear scope for a wider review of definitions in order to fully modernise R&D relief.
In relation to tackling error and fraud, HMRC should improve its risk-assessment mechanisms to deliver a more effective system of triage for R&D claims. A requirement for companies to include details of agents who provided R&D advice should help HMRC build a database of higher-risk agents and focus resources more effectively.
As a wider point, anyone providing tax advice should be subject to the same standards and disciplinary processes as those which apply to professional body members; advice on R&D is ‘clearly’ tax advice.
On digital claims, the CIOT sees no need for each R&D claim to be endorsed by a named senior officer of the company.
The CIOT welcomes many of the proposed changes including modernised definitions, but it cautions that other steps need to be taken to mitigate against error and fraud in R&D claims.
The House of Lords Sub-committee’s call for evidence sought to illuminate the potential impact of the proposed Finance Bill changes on businesses R&D claims, with particular focus on SMEs. In its response, the CIOT raises a number of key points:
The requirement for companies to give advance notification of R&D claims may restrict access to relief for genuine claimants, while not necessarily leading to a significant reduction in abuse.
While bringing some definitions up to date (to include datasets and cloud computing) there is clear scope for a wider review of definitions in order to fully modernise R&D relief.
In relation to tackling error and fraud, HMRC should improve its risk-assessment mechanisms to deliver a more effective system of triage for R&D claims. A requirement for companies to include details of agents who provided R&D advice should help HMRC build a database of higher-risk agents and focus resources more effectively.
As a wider point, anyone providing tax advice should be subject to the same standards and disciplinary processes as those which apply to professional body members; advice on R&D is ‘clearly’ tax advice.
On digital claims, the CIOT sees no need for each R&D claim to be endorsed by a named senior officer of the company.
