In response to HMRC’s consultation on a potential single R&D tax relief scheme the CIOT notes that, although a single scheme based on RDEC would be a simplification, it would ‘not necessarily be simple or fair for all smaller companies’ – and would be further complicated by the re-introduction of the small profits rate (and marginal relief) from 6 April 2023. Within a single scheme, consideration should still be given to having a higher rate of R&D relief for smaller companies, given the typically higher barriers they face to undertaking R&D, says the CIOT.
The institute also comments that ‘piecemeal’ changes to the R&D relief schemes present difficulties for business and discourage marginal investment (meaning that relief could go to investment that would be happening anyway, rather than incentivising new investment).
In its response, the ATT concludes that a single, merged scheme would ‘not take into account the very real differences between the activities and needs of smaller and larger companies’.
Alongside the various Spring Budget 2023 R&D proposals, the Treasury confirmed that no decision had yet been taken on whether to take forward a single, merged tax relief scheme and that it would publish a summary of responses to the consultation on Legislation Day in July 2023 ‘in order to keep open the option of a merged scheme’.
In response to HMRC’s consultation on a potential single R&D tax relief scheme the CIOT notes that, although a single scheme based on RDEC would be a simplification, it would ‘not necessarily be simple or fair for all smaller companies’ – and would be further complicated by the re-introduction of the small profits rate (and marginal relief) from 6 April 2023. Within a single scheme, consideration should still be given to having a higher rate of R&D relief for smaller companies, given the typically higher barriers they face to undertaking R&D, says the CIOT.
The institute also comments that ‘piecemeal’ changes to the R&D relief schemes present difficulties for business and discourage marginal investment (meaning that relief could go to investment that would be happening anyway, rather than incentivising new investment).
In its response, the ATT concludes that a single, merged scheme would ‘not take into account the very real differences between the activities and needs of smaller and larger companies’.
Alongside the various Spring Budget 2023 R&D proposals, the Treasury confirmed that no decision had yet been taken on whether to take forward a single, merged tax relief scheme and that it would publish a summary of responses to the consultation on Legislation Day in July 2023 ‘in order to keep open the option of a merged scheme’.
