HMRC R&D reforms from 1 April 2023 – draft guidance published

HMRC published its draft guidance on 20 December in support of the 1 April 2023 R&D reform. A
link is below:

https://www.gov.uk/government/consultations/draft-guidance-research-and-development-rd-tax-reliefs

As a reminder, the key changes proposed are:

1. Restrictions to exclude overseas subcontractor / EPW costs from claims
2. Inclusion of data licenses and cloud computing services costs
3. Advance claim notification (for companies that have not filed an R&D claim in any of the previous 3 years)
4. The inclusion of mathematics within the definition of qualifying R&D
5. Additional information required before or at the same time the claim is made (to curb fraudulent claims). 

The additional information that will be required to be filed before or at the same time as an R&D claim has been set out within the guidance (section 5). Other than a few reference numbers (UTR, employer,

VAT, SIC code) which would be easy to include, most of this information should already be included within R&D report formats typically used. In addition, companies will need to identify a (technical) person from the business that is responsible for the claim (to prevent the scenario where a business later disclaims responsibility for an incorrect claim).

This will impact claims for accounting periods starting on or after 1 April 2023 (therefore periods ended 31 March 2024 onwards) so there is time to prepare.

Comments are invited prior to 28 February 2023. Get in touch if you have any questions or it would be helpful to discuss.