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‘New rulebook’ for R&D tax creating uncertainty for accountants and their clients

Kelly Oakley
Associate Director
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At ForrestBrown, we wanted to better understand how accountants and their clients feel about the latest R&D tax credit changes. These reforms included a new rate for R&D intensive SMEs introduced in the Spring Budget, an extension to the scope of qualifying expenditure to include data licences, cloud computing, and pure mathematics, as well as restrictions on overseas expenditure.

At a series of accountant events ForrestBrown held across nine UK cities throughout May and June, we polled accountants on their attitudes to the changes. The data revealed some emerging challenges and concerns.

Added complexity and risk for accountants and their clients

It is clear that the recent changes to R&D tax incentives have added complexity for accountants and their clients.

The responses revealed that more than half of accountants’ clients are concerned that increased complexity surrounding R&D tax relief will affect their cashflow.  Our polling showed that accountants shared similar concerns around increased complexity. Nearly two-thirds (61%) reporting that the reforms to the R&D tax incentives were raising the level of their practice’s business risk.

Overall there is a sense that confidence in claiming R&D tax relief has been eroded, particularly in highly technical sectors such as software. Research also revealed that just under a third (28%) of accountants no longer want to work on R&D tax claims.

Some of the recent government reforms to R&D tax relief are welcome, but concerns remain around the pace of change and the challenge of adapting to a new ‘rulebook’. Accountants felt the risk associated with R&D tax relief claims has been heightened by HMRC’s increased focus on compliance, and the resulting uptick in R&D tax enquiries. Half (50%) of accountants say they’ve disagreed with HMRC over technical interpretations in claims submitted on behalf of their clients. 

With HMRC’s increased focus on tackling error and fraud, there is potential for legitimate claims to come under scrutiny as a result. It’s no surprise that many accountants are reviewing their approach to R&D tax relief.

Reduced profitability and team appetite

The polling also revealed that a third of accountants (33%) found that the changes are affecting their profitability and fees. And almost a third (28%) reported that their team no longer wanted to work on R&D tax claims at all.

Our R&D tax credit partner programme for accountants

ForrestBrown offers a seamless partner programme for R&D tax credit accountants, ensuring effortless provision of R&D tax credits to your clients. By directing clients to our services, they gain access to our renowned, PCRT-compliant expertise, allowing you to save valuable time.

Contact ForrestBrown today

If you’ve got concerns around the R&D changes and want specialist technical support, ForrestBrown are here for accountants. With a decade’s experience working with some of the UK’s most innovative companies, we will help you and your clients navigate the evolving R&D tax relief landscape. Get in touch today to benefit from our award-winning (named ‘best independent consultancy firm’ at The Taxation Awards 2023) 130-strong multi-disciplinary team made up of qualified chartered tax advisers, accountants, lawyers, industry sector specialists and former HMRC inspectors. Our unmatched technical expertise is available on a consultancy basis – you can also find out more about accountant partnerships with ForrestBrown