Thomas Chacko and Quinlan Windle discuss the options for tax breaks in relation to spending on R&D:

• outline of scheme and changes made in 2024
• what R&D means
• can you claim when R&D is contracted out
• practical points about how to deal with enquiries bearing in mind recent case law

1:25 outline of the scheme pre the Finance Act 2024 - basic deduction and 2 further possible schemes (relief for small and medium enterprises + R&D credit).

2:54 effect of Finance Act 2024

3:23 what is R&D? A common question as well as major issue in many of the cases.

8:03 the effect of HMRC now taking very robust stance on R&D tax credit claims and requiring cases to pass a very high threshold. Issues with highly technical areas eg software. Tax payers must be able to explain highly technical projects to HMRC/tribunal in a way that enables them to understand why the work merits the tax credit.

18:40 restrictions on qualifying expenditure in recent case law and following the Finance Act 2024.

37:09 practical problems in enquiries and litigation. Also the use of ADR.

Citations

Legislation and guidelines

Corporation Tax Act 2009

Finance Act 2024

BEIS Guidelines - latest update March 2023 (originally the DTI Guidelines)

HMRC Guidance - CIRD84250

HMRC CIRD161000

Case law

Hadee Engineering Co Ltd v Revenue & Customs [2020] UKFTT 497 (TC)

BE Studios v Smith & Williamson Ltd [2005] EWHC 1506

Flame Tree Publishing v HMRC [2024] UKFTT 349 (TC)

Get Onbord v HMRC [2024] UKFTT 617 (TCC)

Quinn (London) Ltd v HMRC [2021] UKFTT 437 (TC)

Collins Construction Ltd (TC09332) - 21 October 2024

Stage One Creative Services [2024] UKFTT 1059 (TC)