Research from ForrestBrown, the UK’s leading research and development (R&D) tax specialist, has revealed that more than half of accountants’ clients are concerned that increased complexity surrounding R&D tax relief will affect their cashflow.
The findings from ForrestBrown’s recent polling of accountants show that this sentiment is echoed by accountants themselves. Nearly two-thirds (61%) of those polled also reported that the changes to the R&D tax relief scheme were raising the level of their practice’s business risk.
While some recent reforms to R&D tax relief are welcome, the pace of change and the challenge of adapting to a new ‘rulebook’ have added complexity for accountants. HMRC’s increased focus on compliance, and the resulting uptick in enquiries, is also a factor in the perceived risk associated with R&D tax relief claims.
The findings also revealed that a third of accountants (33%) found that the changes are affecting their profitability and fees, while almost a third (28%) reported that their team no longer want to work on R&D tax claims at all.
Highlighting the challenges accountants are facing, half (50%) of accountants say they’ve disagreed with HMRC over technical interpretations in claims submitting on behalf of their clients.
The data was taken from polls taken at series of events held by ForrestBrown for accountants throughout May and June, where advice and expertise on the extensive changes to the R&D tax relief regime were shared with accountants in nine UK cities.
Recent changes include a new rate for R&D intensive SMEs introduced in the Spring Budget, an extension to the scope of qualifying expenditure to include data licences and cloud computing, a widening of the definition of R&D for tax purposes to include pure mathematics, and restrictions on overseas expenditure.
Kelly Oakley, Associate Director at ForrestBrown said, “The raft of recent changes to R&D tax incentives have added complexity for accountants and their clients, in many cases eroding confidence in claiming R&D tax relief, particularly in highly technical sectors such as software.
“Combined with HMRC’s increased focus on tackling error and fraud, with the potential for legitimate claims to come under greater scrutiny as a result, it’s no surprise that many accountants are reviewing their approach to R&D tax relief.
“With a decade’s experience working with some of the UK’s most innovative companies, ForrestBrown is well placed to help accountants and their clients navigate the evolving R&D tax relief landscape.”