Research and Development (R&D) — reform for tax relief
This tax information and impact note relates to reform of Research and Development Tax Relief.
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Finance Bill (No.2) 2023 gives powers to HMRC to set out through regulations the form and detail of information to be provided by customers in support of their Research and Development Tax Relief claims.
These regulations deliver on the government’s commitment to tackle error and fraud within the Research and Development (R&D) tax reliefs by both:
- improving the standard of information that companies are required to provide upfront in support of their claims
- requiring the information in a form that can allow for improved risk assessment
At Budget 2021 the government announced a review of the R&D reliefs, supported by a consultation with stakeholders. This consultation explored potential revisions to the R&D schemes, including departure from the ordinary Corporation Tax Self-assessment system and increased information and assurance requirements for claimants.
Following the consultation, at Autumn Budget 2021, the government announced reforms to R&D tax reliefs and published a report in November 2021 setting out detail on a series of initial measures to reform the R&D tax relief system. These measures included a package of measures to target abuse and improve compliance.
The government published draft legislation for stakeholder input in July 2022. Final legislation was then included in the Finance Act (No.2) 2022 which gave HMRC the power to specify via regulations the additional information to be provided in support of R&D claims.