R&D tax relief for SMEs goes live

UK small and medium-sized businesses with a turnover of less than £2 million and which employ fewer than 50 people can now apply to HM Revenue & Customs (HMRC) for advanced approval on their R&D tax relief claim.

A new publication called “Making R&D Easier: HMRC’s plan for small business R&D tax relief” sets out the details of the measure that is being introduced following a period of consultation.

Effective financial planning

Small and medium-sized businesses will gain certainty and will be able to plan their finances more effectively, HMRC says.

The new advanced approval will be open to all companies whether or not they employ a tax adviser.

Applicants will have "assurance that HMRC will allow their first three years of R&D tax relief claims without further enquiry," according to the Treasury.

HMRC take the lead

ForrestBrown director Jennifer Tragner said: “It’s great to see HMRC take the lead and work towards raising awareness, ‘enabling work’ as they call it, and accepting that there are a large number of companies in the UK that aren’t claiming but should be."

She explained: “They’re taking control of raising awareness of R&D relief and making it easier to claim.”

The intention of setting up a process of letting companies apply for government approval was first announced at the Autumn Statement 2014 and then mentioned in the following Budget. 

Although the focus will be on HMRC dealing with claimants directly, the overall success of R&D tax relief claims is still expected to hold a significant role for the accountancy sector.