1. News
  2. R&D tax credit consultation responses – ForrestBrown policy-level insight

R&D tax credit consultation responses – ForrestBrown policy-level insight

Director & Head of Policy
Read time:
London Westminster Bridge
At ForrestBrown, we believe in the power of R&D tax credits – we are passionate about the transformative impact the incentive can have for businesses and the wider economy. This is why we work proactively with government and industry bodies to strengthen and improve R&D tax credits for everyone: taxpayers, businesses and society at large. Consultation responses are a vital way for ForrestBrown to influence the government’s R&D tax credit policy with our expert, on-the-ground insight. Our consultation responses enable us to share with government and HMRC not only our own views, but the direct experience and opinions of our clients.

Jenny Tragner CA ATT (Fellow)

Director & Head of Policy

Jenny Tragner CA | Technical Director

Jenny is one of the UK’s leading R&D tax policy experts having specialised in the field since 2007. She helps deliver highquality advice to clients and is a respected and influential voice within the industry.

James Gore

Corporate Affairs Lead

James Gore | Corporate Affairs Lead 

James is focused on enhancing ForrestBrown’s position as the UK’s leading specialist R&D tax credit consultancy, lobbying for change in the industry and raising standards in the R&D tax advice market to benefit businesses.

James Gore - Corporate Affairs Lead

Katy Long CTA CA

Associate Director

Katy Long CTA CA | Associate Director

Katy supports clients across a broad range of sectors, providing expert consultancy but also has a focus on policy work, helping to shape the future of the innovation agenda and structure of the R&D incentive.

Katy Long - Tax consultant

This page includes responses to changes proposed in the Spring proposal 2022, our article on R&D tax relief changes in 2023 discusses the Spring Budget it 2023 and the Autumn Statement 2023.

We share these responses with you below because we believe in transparency and bringing the industry forward to inspire more businesses to unlock the full power of their innovation. We’ve included summaries along with links to the full consultation responses so you can read our insights and recommendations in more detail.

R&D tax reliefs review: consultation on a single scheme | March 2023

What is it?

In January 2023, the government published a consultation seeking views on the design of a single, simplified research and development (R&D) tax relief scheme, merging the existing research and development expenditure credit (RDEC) and the small and medium enterprise (SME) R&D relief.

What did we say?

ForrestBrown supports the proposal for a single R&D scheme to simplify access to and administration of the incentive, but not at the expense of reduced generosity for R&D-intensive SMEs. We provided several conclusions and recommendations in response to the consultation. The government have indicated their response to the consultation will be published in summer 2023.

R&D tax reliefs – draft guidance | January 2023

Following ‘L-day’ in July 2022, in January 2023 the government published graft guidance ahead of the implementation of reforms to R&D tax relief on 1 April 2023. The guidance was crafted to provide clarity on the practical implementation of the reforms, taking into account valuable input from stakeholders.

What did we say?

Potential reforms to the UK’s Capital Allowances Regime | July 2022

What is it?

The government’s Spring Statement 2022 saw the setting out of potential new options relating to the UK’s existing capital allowances regime. These included increasing the permanent level of the Annual Investment Allowance (AIA), increasing the rates of Writing Down Allowances (WDAs), introducing general First-Year Allowances (FYAs) for qualifying expenditure on plant and machinery, introducing an additional FYA and introducing permanent full expensing.

The government sought views from businesses of all size, tax advisers, trade associations and research-institutions on these options, with the aim of help foster a new culture of enterprise and growth in the UK.

What did we say?

After careful deliberation and consultation with our clients, ForrestBrown submitted a detailed response to the options laid out at Spring Statement 2022. We made recommendations around other proposed changes where more consideration was required.

‘L-day’ 2022 | July 2022

What is it?

In July 2022 the government published the supporting documents for Finance Bill 2022-23. The contents of which were set to be confirmed in Spring Budget 2023. The draft legislation included several proposed changes to R&D tax relief set to come into force from April 2023 which would affect the eligibility of certain costs for R&D tax relief – including changes to data and cloud costs, overseas R&D and measures aimed at improving compliance and tackling abuse of the relief.

What did we say?

What did we say?

The draft legislation proposed significant changes to both the R&D Expenditure Credit (RDEC) and SME R&D tax relief.

Whilst there was no formal consultation undertaken at the time, you can read our blogs which detail ForrestBrown’s response to the key adjustments below:

What is it?

R&D tax relief report | October 2021

What is it?

In his Autumn Budget 2021, Chancellor Rishi Sunak shared some proposed measures designed to reform the R&D incentive. These changes followed on from the R&D tax reliefs consultation. The accompanying R&D tax relief report outlined these proposed changes in more detail.

What did we say?

After careful consideration and consulting with our clients, ForrestBrown submitted a detailed response to the government’s report. We supported some measures, but made strong recommendations around other proposed changes where more consideration was required.

How the government responded

In his 2022 Spring Statement, the Chancellor took industry feedback on board. In particular, Rishi Sunak addressed a point of particular concern: Overseas R&D. In his speech, Sunak announced sensible exceptions to the restriction on including overseas R&D costs in an R&D tax relief claim.

The Chancellor followed suit in updating his previously announced plans for expanding R&D tax relief to include data and cloud costs. He confirmed that data storage costs will be eligible and also announced that advances in pure maths will attract relief in the future.

These changes are due to come into force in April 2023.

R&D tax relief | March 2021

What is it?

In his Budget 2021 address, Chancellor Rishi Sunak announced a broad consultation on the nature of private-sector R&D investment in the UK. This consultation will explore how that investment is supported or otherwise impacted by the R&D tax incentives, and where changes may be appropriate.

What did we say?

After consulting with our clients, ForrestBrown submitted a detailed response to the government’s consultation. We urged the UK government to use this consultation as a chance to create a coherent, long term platform for R&D tax relief, with greater flexibility to adapt as priorities change.

To do achieve this, we highlighted three clear priorities: An updated, more modern definition of ‘R&D’, better regulation of the incentive, and streamlining the rules.

How the government has responded

In November 2021, the government published a report on this consultation. The document provides further detail on changes to R&D tax relief which were announced by the Chancellor in his Autumn Statement:

  • Expanding qualifying expenditure to include data and cloud costs.
  • Refocusing the relief towards innovation in the UK.

It also sets out the next steps for the review of R&D tax relief and includes a summary of responses received to the original consultation.

The consultation response includes a number of proposed measures to target abuse of R&D reliefs and improve compliance:

  • All R&D tax relief claims to be filed digitally (with limited exception).
  • Businesses must provide more detail on what expenditure the claim covers, the nature of the advance sought and the uncertainties overcome.
  • Every claim must be endorsed by a named senior officer of the company.
  • Companies will need to inform HMRC, in advance, that they plan to make a claim.
  • All claims to include details of any agent who has advised the company on compiling the claim.

Raising Standards in the Tax Advice Market | March 2020

What is it?

A government consultation on whether and how to regulate the tax advice market. This is obviously much broader than R&D tax relief, but the R&D tax market is mentioned in the consultation document as an area where poor advice adversely affects claimants and taxpayers.

What did we say?

We recommend that the existing tax and accounting professional bodies play a more prominent role in monitoring and regulating their members. HMRC should help by endorsing the actions of the professional bodies, to raise awareness among taxpayers of the protections afforded them by working with a regulated adviser.

Improving data collection, analysis and reporting at HMRC will also be vital to understanding the impact of poor advice on taxpayers and R&D tax incentives, and enabling HMRC to focus compliance efforts.

Long term, we support a move to require professional body membership for any firm offering paid-for tax advice and services.

How the government has responded

In November 2020, the government published its first response to this consultation, in which it proposed compulsory professional indemnity insurance for tax advisers and accountants.

The summary of responses set out the government’s plan to:
• Raise awareness of HMRC’s Standard for Agents and review HMRC powers to enforce the Standard.
• Consult on introducing a mandatory requirement for tax advisers to hold professional indemnity insurance.
• Work collaboratively with the existing professional bodies to understand their role.
• Take steps to tackle the high cost to consumers of claiming R&D tax refunds.

In November 2021, following strong opposition to this proposal, the government confirmed that it would not be pursuing compulsory PII.

The push for better regulation of tax advice has gained substantial momentum in recent times and we await further consultation on the matter


Enquiry support and tax advisory

Work with the best

Do you want to work with an R&D tax adviser that is proactively helping shape the industry?