R&D Tax Relief: HMRC closes loophole.

7th September 2017

Companies that are developing innovative new products, services or systems have long understood the generosity of the R&D tax relief rules. These give a notional 130% uplift to eligible costs in the company’s corporation tax computation. Such eligible costs include ‘employee costs’, which hitherto has included all ‘reimbursed expenses’. This has always seemed overly generous and hence open to abuse. Unsurprisingly, therefore, HMRC have now issued new guidance restricting which reimbursed expenses can be included in such an R&D Claim:

 

 

The new definition of such eligible expenses is: “the expense is an expense the employee pays in order to fulfil the requirements of her employment”. So normal reimbursed costs, such as out of office travel to an R&D review meeting and the related subsistence, should still qualify, but expenses not normally settled through the employee, such as rent, accountancy fees, etc, will no longer qualify.

Blog entry by: Ian Piper.



 
Other items in Blogs
 
Jonathan Moore
28th September 2018 Top 5 tips for start-up businesses

Businesses are born in many ways but there are some common considerations for all start-ups. Legal form Consideration needs to be given as to the how you wish to set up and structure your business. If you are going it alone perhaps a sole trader could be the best route or, if there is more…

Read More »

Mark Deighton
14th September 2018 Sage 50 VAT T Codes

Sage 50 VAT T Codes. Sage 50 Accounts book keeping software populates its VAT return by using tax (T) codes to indicate which VAT rate to apply to each transaction. Whenever you post a transaction in Sage 50 Accounts you must enter the relevant T code:   T0 – Zero rated transactions (eg most food, books, new builds,…

Read More »

Richard Alecock
13th September 2018 Making Tax Digital …… Only 200 days to go!

It’s time to decide how you will digitalise your records in order to meet HMRC requirements ahead of April 2019 HMRC wants the UK to be one of the most digitally advanced tax administrations in the world, improving efficiency, effectiveness and ease of compliance. Their plans signal the end of paper accounting for millions across…

Read More »

Jeannette Hume
4th September 2018 EIS Test Case: Capital gains tax exit exemption not linked to income tax entry claim.

In a recent HMRC test case (Ames v CRC), the Upper Tribunal considered whether it was necessary for EIS income tax relief to have been claimed when an EIS investment was made, for the transaction to then potentially qualify for exemption from capital gains tax when the investment was sold. For the case in question,…

Read More »

Ian Piper
4th September 2018 Preserving your business income

It’s the holiday season, many will have recently been or soon be travelling abroad. As well as marvelling at the sights, we will also be struck by how these countries are run, and compare them to life back in home.   It is easy to be jealous of: State pension levels in Sweden Police numbers on…

Read More »

Amanda Newman
3rd September 2018 Making Tax digital is nearly here

As we head towards the end of summer and we start to prepare the children to go back to school, life starts to get back to normal. If you run your own business you may want to use this time to start planning ahead for the changes in the way you file your paperwork with…

Read More »