New R&D Tax Relief regulations could leave thousands of businesses at risk of missing out

In a recent development, tens of thousands of businesses are facing the risk of missing out on crucial Research and Development (R&D) tax relief due to new pre-registration requirements.

Accounting and Business advisors Whitley Stimpson say the changes, implemented by HM Revenue & Customs (HMRC), aim to prevent abuse of the system and frivolous claims, but many businesses are unaware of the impact.

Businesses must now pre-register their intention to make a claim within six months of their financial year end. Failure to do so could result in losing access to generous tax relief, sometimes worth more than 20% of R&D spend.

As of 1st April last year, new regulations require businesses with a year-end of 31st March 2024, to register by the end of September. Failure to comply with the pre-registration requirement could result in businesses missing out on claiming for the financial year in question. Companies making their first claim or those who have not claimed in over three years are subject to these changes.

Ian Parker, Director at Whitley Stimpson explains: “While these measures are designed to promote responsible practices and deter unethical behaviour, it is crucial for businesses to seek proper guidance and stay informed about the evolving regulatory landscape.

“With thousands of companies potentially affected by the new pre-disclosure requirements, the need for timely action is paramount.”

The latest HMRC data reveals that around 19,000 new applicant companies join the UK R&D schemes annually, with a total of 90,000 companies claiming R&D Tax Relief last year.

Despite the direct impact on tens of thousands of businesses, the broader implications of these changes underscore the importance of widespread awareness and compliance.

In light of the estimated £7.6 billion claimed through the UK’s R&D schemes for the tax year 2021 to 2022, the impact of these changes could be significant for the thousands of businesses affected.

Ian goes onto say: “It is crucial for businesses to be aware of the new requirements and take the necessary steps to secure their tax relief claims. We have worked with a vast range of businesses on R&D tax claims and in the case of the start-up business with no income, these tax credits have kept the company alive.

“I would encourage anyone carrying out research and development to investigate making an R&D claim as it could make a real difference to their cashflow.”

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