R&D tax credits have long been a vital tool for innovative businesses, but recent changes in HMRC’s approach have dramatically altered the playing field. Our team of expert R&D tax consultants are here to explain these changes and the industry’s role in shaping future reform. 

This is essential reading for other professionals working in this sector as well as businesses looking to benefit from this mechanism. Let’s get into it.

The current state of play for R&D tax credit claims

In recent years HMRC has significantly ramped up its scrutiny of R&D tax credit claims. Current statistics show that a staggering one in five claims are now subject to additional scrutiny. This is a far cry from the previous approach and has caught many businesses off guard.

While this increased scrutiny aims to combat fraud, it’s having the unintended consequences of genuine innovators getting caught in the crossfire. These businesses face lengthy enquiries and potential repayments. As a result, in some cases, they’re simply relocating to more innovation-friendly climates as the incentive to innovate in the UK diminishes. 

This trend, coupled with the post-Brexit exodus of FinTech companies (with nearly 40% opening offices outside the UK), creates a perfect storm that could significantly impact the UK’s position as a global innovation hub.

This is before even touching on the rising cost of tax credit compliance due to the extra time that R&D tax credit professionals need to bill clients for when claims are challenged.

What are the key challenges in the R&D tax credit claim process?

The issues that the current system is facing boil down into several key challenges as we see them:

Knowledge gaps: Many advisors and accountants lack the specialised knowledge needed to navigate the complexities of R&D claims. That’s why we strongly believe that when you choose an R&D tax credit advisor, it should be someone who has a strong history of processing successful claims.

Outdated frameworks: The guidelines used to assess R&D are nearly two decades old, struggling to keep pace with rapid technological advancements.

HMRC’s approach: The methods used to verify claims often lack a nuanced understanding of industry-specific innovations.

Proposed Industry-Led Solutions

It’s no secret that specialists in an industry can understand its nuances better than generalists. As the saying goes, you wouldn’t ask a carpenter to fix your car. That’s why we feel that the solutions should be industry-led. 

Key proposals we’re seeing from across R&D tax credit industry specialists include:

  • Accreditation for R&D tax advisors: Developing industry-led training and accreditation would ensure advisors have the necessary expertise.
  • Updating R&D guidelines: Creating modern, industry-specific guidelines that reflect current technological landscapes.
  • Standardised assessment framework: Developing a clear, standardised framework for assessing R&D claims across different sectors.
  • Collaboration with HMRC: Fostering closer cooperation between industry experts and HMRC would improve the claim verification process.

Hire sector experts for your R&D tax credit claims

In this rapidly evolving R&D tax environment, staying ahead of the curve is crucial. At Williamson & Croft, we’re not just observers – we’re active participants in shaping industry best practices. 

Our team of R&D tax specialists combines deep technical knowledge with a forward-thinking approach to ensure that your claims are compliant.

From emerging technologies to complex regulatory changes, we’ve got you covered. Don’t let uncertainty stifle your innovation. Reach out to us for a no-obligation chat about how we can future-proof your R&D tax strategy. 

Speak to our team of tax specialists today to discuss your specific situation. Get in touch to ensure your R&D claims are in safe hands.