ACCA comments on HMRC R&D tax relief report

This afternoon, HMRC published its Approach to Research and Development tax reliefs.

Lloyd Powell, head of ACCA Cymru/Wales, said:

“Businesses and agents are bearing the brunt of HMRC inefficiencies. The R&D tax relief system is in a desperate state.

“ACCA is calling for a radical approach to fix the system, so that the UK can continue to be open for business and investment. Too often members are telling us that businesses are looking to move to other jurisdictions for R&D.

“Businesses are being put off claiming R&D relief and looking to move jurisdictions to escape the inefficiencies of the UK system.

“HMRC needs significant investment. In particular it needs to develop appropriately trained people to deal with R&D queries. ACCA and its members don’t see those skill sets at the moment.

“The R&D tax relief system is opaque. There is lack of transparency and process and a lack of contact with individual officers. This all needs to be rectified.

“Members are telling ACCA that HMRC is not reading the reports that are sent to them (supporting R&D claims). HMRC staff are struggling and need support. HMRC needs to invest in training on technical details to stop some turning to unsuitable tools like general internet searches to reach incorrect conclusions.

“The government says it want to keep investment in the UK – it wants the UK to be at the forefront of research, innovation and development. HMT know the sort of forest they want, but HMRC can’t see the wood for the trees and are chopping down everything for fear that something bad might grow.

“ACCA will continue to support HMRC but if HMRC cannot make significant improvements to its R&D capacity, then we would recommend a more radical change. HMRC should restrict R&D claims to only agents who are signed up to the PCRT (Professional Conduct in Taxation Group). PCRT has an established set of standards and requirements. Such a move would reduce HMRC workload on R&D and the businesses would be able to benefit from much needed investment.

“At the moment HMRC is using a sticking plaster on a gaping wound of a regime. This can’t go on.”