R&D tax relief: small companies

The ATT is calling for a rethink of the UK government’s plan to require companies to notify HMRC in advance that they intend to claim R&D tax reliefs, noting that the proposal risks denying tax relief to those companies that need it most.

While the ATT strongly supports the UK government’s efforts to target abuse of the R&D relief schemes, it does not support the proposed requirement for companies to notify HMRC in advance that they plan to make a claim. This may affect the ability of companies undertaking genuine R&D to access the relief to which they are entitled.

In particular, the smallest and newest-formed companies, which are often most in need of the support offered by R&D relief, may not be able to plan their expenditure far enough ahead to make an advance notification.

A requirement for a detailed advance notification could also affect those companies whose R&D activities are carried out in an ‘agile’ fashion, being changed, or shaped by emerging issues – for example in response to the coronavirus pandemic.