Following the successful launch of Incentives Insider, take a look at our festive edition of Cooper Parry’s R&D newsletter! Treats include an overview of recent R&D tax cases, how the Budget announcements will affect you, the ability to use R&D losses to generate more generous tax refunds and an update on our ever-growing team!
BUT FIRST AN UPDATE ON THE 2021 ACCOUNTING EXCELLENCE AWARDS
We were thrilled to be shortlisted as Specialist Team of the Year in 2021. A group of our longest serving team members attended the event in London. We may not have lifted the trophy this year, but we celebrated in style all the same…!
TECHNICAL UPDATES
HMRC’S TIGHTENING STANCE ON SME R&D RELIEF
There have been several recent tax cases involving R&D incentives claims, meaning that R&D relief is increasingly under the spotlight. Read more HERE.
TAX UPDATES
MODERNISING THE REGIME POST-BUDGET
The Chancellor was very keen to encourage UK businesses to continue innovating with a commitment to increasing support through various measures including the R&D incentive tax relief scheme. Rishi Sunak announced that the scheme would be modernised to include data and cloud computing costs. This is excellent news for many businesses and reflects the need to allow today’s costs to be incorporated in claims. In addition, concern was raised by Rishi that there is a gap between the level of R&D included in taxpayers’ claims and the amount of R&D actually carried out in the UK, with the suggestion that some of this gap is due to the reliefs benefiting overseas operations. As such, plans are in place to refocus R&D support on UK only operations as well as targeting potential abuse. These changes will take effect from April 2023 with further details to be set out in due course.
TAX REFUNDS GENERATED BY MORE GENEROUS USE OF LOSSES POST-COVID
As a result of the Covid 19 measures, companies generating losses in periods ending between 1 April 2020 and 31 March 2022 have access to extended loss carry back relief. This means that losses can be carried back 36 months (to potentially generate refunds of tax paid in these earlier periods) rather than the normal 12 months. This allows taxpayers to see immediate cash benefits during loss making periods as well as potentially relieve losses generated by R&D at rates of 19% rather than rates of 14.5% (available to SMEs for loss surrenders in the current period). Please talk to your friendly R&D adviser to make sure you are maximising the use of any losses.
NI INCREASES APRIL 22 – HOW WILL THIS AFFECT YOUR CLAIM?
The 1.25% increase in national insurance rates from April 2022 will increase the tax burden for UK businesses and employees. Whilst this undoubtedly causes further cashflow pressures, it will mean that the amounts included in R&D tax incentives claims are expected to rise, providing additional relief at 24.7% for SME claimants.
HOT SECTOR FOR R&D: MEDICAL DEVICES
With R&D taking place across most sectors, we wanted to highlight this area in particular as we have seen increased R&D activity recently.
PEOPLE
We are thrilled to announce the addition of Caroline Hawkins to our team. Caroline is an experienced Senior Manager and Chartered Tax Adviser with over 24 years’ experience in providing tax advice, which includes 15 years at KPMG. Caroline says: ‘I thoroughly enjoy helping innovative companies of all sizes access R&D tax relief and seeing how this funds their future growth. I use my tax knowledge and experience to help clients understand how the R&D rules apply in practice, ensuring that qualifying companies access the benefit to which they are entitled in the most tax efficient way possible.’
Welcome to the team Caroline!
