Sam Palmer

Last week, HMRC published their draft rules and restrictions on contracted-out R&D and overseas workers. Overseas expenditure draft guidance has remained relatively similar to its original however there has been some significant and promising changes to contracted-out R&D compared to previous communications from HMRC.

The optimal time to sell a business can be influenced by the potential tax implications. UK Corporate sellers can claim the “substantial shareholding exemption” (“SSE”) to exempt a gain on a sale from corporation tax.

HMRC is currently scrutinising claims for R&D tax relief, following increased media attention and parliament focus. The government has recently made its first steps towards reforming the R&D tax relief scheme, but the biggest changes are due to come into force on 8 August 2023.

For UK start-ups and small enterprises, the Chancellor significantly reduced R&D Tax Credits in his Autumn Statement.

Research and development tax reliefs can provide substantial help to businesses investing in innovation – but HMRC is increasingly cracking down on unjustified claims, says Sam Palmer of Lovewell Blake.

HMRC announced yesterday that some R&D Tax Credit payments will be suspended whilst it investigates fraud and abuse of the incentive programme.

The Research and Development (R&D) tax relief schemes can provide valuable reliefs and tax credits to innovative companies. The two schemes are the Research and Development Expenditure Credit (RDEC) scheme, and the Small and Medium Enterprise (SME) scheme, with differing levels and methods of reliefs. It is important to know which of these schemes your company falls into when making a claim but making that determination can often be complex.

R&D tax credits can provide vital support to innovative businesses. The scheme available to small and medium sized enterprises (SMEs) can provide an enhanced deduction (up to 230% of qualifying expenditure) against taxable profits and/or a cash repayment.