Consultation on preventing abuse of the SME R&D tax relief payable credit
Consultation on preventing abuse of the SME R&D tax relief payable credit
Wed 03 Apr 2019
HMRC has issued a consultation on preventing abuse of SME R&D tax relief that seeks to limit the abuse of the payable credit available to loss making companies. The method of restriction will be to limit claims for the payable credit to three times the company’s PAYE and NIC liability for the year. The measure will be introduced with effect from April 2020.
Responses to the consultation are requested by 24 May 2019. Please get in touch with the Mazars R&D tax incentives team to discuss the implications of this consultation or any other aspect of R&D tax relief for your business..
Further details on the proposals
The abuse targeted is schemes seeking a tax repayment where there is in fact no entitlement, as well as schemes routing claims for R&D tax relief through the UK which would otherwise have taken place and where the R&D activity is done outside the UK.
There is no intention to target genuine businesses, which may have low PAYE and NIC liabilities due to their business model or their stage in the business life-cycle. Consideration is being given to a number of points, but feedback is requested in particular on this area. Some of the measures being considered are:
- Introducing a threshold below which the cap does not apply. If this threshold is introduced it may only be available to one claim per group (so that it would not be possible for a group to submit below threshold claims through different companies in any one year).
- PAYE and NIC liabilities might be taken into account where they are incurred by:
- Group or connected companies other than the claimant company.
- Those with whom the claimant company has made a connected party election for subcontractor or externally provided worker expenditure.
- It may be possible to utilise carried forward capped losses to make a payable credit claim under the SME relief scheme for a limited future period, if there are sufficient PAYE and NIC liabilities in those future years.
SME R&D tax relief payable credit – Consultation on preventing abuse
HMRC has issued a consultation on SME R&D tax relief that seeks to limit the abuse of the payable credit available to loss making companies. The method of restriction will be to limit claims for the payable credit to three times the company’s PAYE and NIC liability for the year. The measure will be introduced […]
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