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R&D Committee Update: Christmas past, present and future?

LinkStep has recently joined the HMRC consultative committee on R&D tax. The July 2017 meeting raised some interesting points of discussion, along with some revelations from HMRC. Here is a short summary below of key points. Please contact any member of the LinkStep team should you want to understand any of these points in greater detail, or to see if any points impact your company directly.

Christmas Past?
HMRC have made an unexpected change in the treatment of reimbursed expenses due to an oversight in earlier guidance given. While they were historically excluded based on previous guidance from HMRC, in a turnaround move by HMRC, these now qualify under certain circumstances. This is set to continue for the time being, but there is a big question as to how long this will continue for. For claims that are past their deadlines to be updated – a limited window until 31 January 2018 has now been opened by HMRC for these claims to be updated. However, please note that there are restrictions and procedures that have been set by HMRC – please do contact LinkStep for further details.

LinkStep will be reviewing all potentially affected clients with immediate effect.

Christmas Present
In the most recent R&D consultative committee, HMRC have confirmed research which finds the UK to be one of the most generous scheme in the world. However, this doesn’t mean that every claim report is being submitted without fault. They went on to highlight common pitfalls of technical reports being submitted, in particular, in relation to Software claims, including:

• Claiming a project in its entirety – when only some parts qualify
• Including indicative as opposed to diagnostic work
• Incorrectly assuming applications, appreciable improvements and integration are R&D
• Non-readily deducible methodologies are not being explained
• Showing a business rather than technical advance
• Trying to justify the project spend commercially
By utilising LinkStep you will not only have a technology specialist that has come from your industry working on your report, but you will also have a dedicated R&D tax team at your fingertips. R&D tax is all we do, we do not specialise in any other type of tax.

Our reports come with our reputation and our knowledge of your sector. For us, they are our ‘Unique Selling Point’, our differentiator from the wider field of competition. You will not see us pass to you pre-prepared templates to fill in, nor will you be required to write the report. We compile new reports for your claims on a yearly basis.

For peace of mind, our advice would always be to utilise an R&D tax professional (that has a technology background) to compile your claim report – not a pure accountant or one of your own technical team. This approach will reward you later by avoiding the potential of queries from HMRC at a later stage.

Christmas Future
In the future, HMRC are looking to transition to on-line claims submission, using I-Forms: with the first one being launched in 2 months. This will capture the details of “one-project” claims, and further roll-out of forms happening gradually over future years.

Shima Gallagher
LinkStep R&D Tax Services