HMRC Launches Updated Guidance for R&D Tax Relief Claims

October 31st, 2023:

HMRC unveiled its latest installment in the Guidance for Compliance series – Guidance for Compliance 3 (GfC3), aimed at assisting companies in determining the eligibility of their Research and Development (R&D) projects for tax purposes. This release marks a significant step in HMRC’s ongoing efforts to mitigate tax non-compliance risks and streamline the compliance process, an initiative that has been supported by many industry players.

GfC3 delves into four key areas essential for claimants to consider: HMRC’s expectations, the role of competent professionals, identification of qualifying R&D activities, and recommended record-keeping practices. While much of the guidance reinforces existing principles, it provides valuable clarity and examples, aligning with feedback gathered from HMRC’s recent enquiries.

The section outlining HMRC’s expectations emphasises a thorough thirteen-step assessment process for claimants and advisors, underscoring the importance of meticulous record-keeping to mitigate the risk of erroneous claims. Furthermore, there’s an increased emphasis on the significance of seeking the opinion of a competent professional during the claim preparation process, with detailed criteria and examples provided to guide claimants.

Regarding the identification of qualifying R&D activities, GfC3 aims to clarify HMRC’s criteria and provides insightful examples, particularly focusing on defining project boundaries – an area prone to errors. Perhaps the most notable departure from previous guidance lies in the section recommending a specific approach to claims and record-keeping. This section mandates detailed record-keeping practices specific to R&D projects, aiming to facilitate smoother enquiries and enhance compliance.

The release of GfC3 represents a welcomed clarification and guidance amid a backdrop of increased enquiries and evolving R&D tax relief landscape. R&D Claim Consultants recognises the importance of staying abreast of these developments so as to offer our clients expert guidance and support. Our integrated technology and advisory services ensure that clients not only navigate R&D tax relief claims effectively but also have direct access to our team for personalised assistance.