As communicated by Azets in February, a Government consultation has recently been underway for the UK’s research & development (R&D) tax relief system. The consultation, which focused on contracting out rules and overseas restrictions, ran until 1 March 2024 and the firm participated in the process on behalf of its clients.

What’s the latest?

With the consultation being complete, the Government has now released updated draft guidance, which is accessible here. While there are continuing and much-publicised challenges with the Government’s processing of R&D claims, Azets has noted that some of their recommendations and clarifications have been included in the draft, including:

  • Calling HMRC to include references to existing guidelines in relation to record keeping of R&D activity
  • More guidance related to IP ownership when looking at the conditions that may apply on claiming overseas expenditure

What happens next?

The draft guidance relates to claims beginning on or after 1 April 2024. However, with regards to the subcontracting aspect, HMRC may look to infer that this has always been the case and that the guidance has simply provided clarification rather than a change in process.

Any business looking to submit an R&D claim now or in the future needs to be aware of this guidance to ensure no complications to the submission process.

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