Tax & Accounting News

Crackdown On R&D Credits

23/07/2009

HM Revenue and Customs (HMRC) has recently cracked down on firms claiming Research and Development (R&D) tax credits, leading to accusations that small and medium-sized businesses are being unfairly discriminated against.

The rules state that if a claim for an R&D tax credit is to succeed, the company must own all the intellectual property created as a result of the R&D expenditure, and retain the right to apply for and own the patent. HMRC say this is to prevent taxpayers’ money being given to support R&D which is then taken abroad.

These rules also mean that, even if all the intellectual property is retained within the UK, if it is not registered in the same name as the R&D company, tax relief will not be available. Many firms have previously separated ownership of intellectual property from R&D activities because of legal advice.

HMRC has stated that the rules have not been changed, merely enforced more stringently as part of a ‘consultation exercise’, which will run for another month or so. A decision will then be made about how to enforce these rules in the future.

For more information or advice please contact us.