2 February 2023

From 1st April this year, HMRC are introducing changes to the R&D Tax Credits scheme. Most of these changes are process-based and include a new submission process.

This new digital submission process is a novel way of enabling HMRC to quickly filter R&D boutiques and claimants in sectors that wouldn’t normally be expected to carry out qualifying R&D in the digital submission process. This makes it easier for HMRC to identify fraudulent claims, so beware.

Additional changes for implementation from 1st April 2023 include:

  • providing HMRC with more detailed information about the nature of a claim;
  • naming any tax advisor involved in preparing claims;
  • requiring that claims should be endorsed by a senior officer of the company; and
  • pre-notification of an intention to make a claim.

The House of Lords published a report yesterday that, in my view, was the voice of reason. It highlighted some key points that were critical of HMRC but were also just common sense…

  • The committee expressed concern that the government’s proposal to refocus R&D relief on R&D activity in the UK may undermine the UK’s competitiveness by causing some UK-based R&D to relocate elsewhere. It calls for some sort of transitional relief for expenditure on specialised resources that aren’t currently available in the UK, especially for R&D being carried out under contracts already entered into.
  • The committee recommends that HMRC and BEIS improve both guidance and communications to increase understanding of the scheme. In particular, the report was critical of the lack of update to the BEIS guidelines, stating: “It is not appropriate that a document intended to explain innovation has not been revised since 2010.”
  • The need for certainty and clarity around HMRC’s ‘process now, check later’ approach. It advocates warning taxpayers that relief may subsequently be recovered if, as a result of later checks, it turns out not to be due.

All of the reforms aim to make the R&D scheme less open to fraudulent claims, which is good for the scheme and those who are claiming correctly.

However, I fear the move to a more strategic centred R&D scheme will strangle the innovation that happens on a day-to-day basis, where the baseline technology or science isn’t sufficient to overcome the problems which occur when competent professionals take on challenging work.


If you’d like more advice on what the changes mean for you and your business, or if you’d like to look into your R&D tax relief eligibility, speak to our team today on 01904 211637 or drop us an email.