Iain Rankin looks at changes in HMRC’s new simplified claims procedure for research and development, and how small firms may benefit.
Prior to February 2019, making research and development (R&D) claims was something of a minefield for small firms. Some claims were submitted with no more than a single figure included in the tax computation, representing the total qualifying R&D expenditure, while others contained extremely detailed information about the individual projects undertaken and the costs to justify the claim.
Simply, there existed no clear definition of what constitutes R&D in tax legislation, nor guidance on the precise nature of information that should be disclosed when making an R&D claim.
Consequently, take up for R&D claims was surprisingly low. It is estimated that less than 5% of potentially qualifying firms were taking advantage of