Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
HMRC is responsible for administering Corporation Tax research and development (R&D) reliefs, which support companies...
Conclusion
HMRC is responsible for administering Corporation Tax research and development (R&D) reliefs, which support companies that work on innovative projects. There is a scheme for small and medium-sized enterprises, and a research and development expenditure credit scheme, mainly for larger companies. Both schemes are complex and open up opportunities for abuse.23
Government response summary AI-generated
HMRC is carrying out further analysis to understand the reasons for the growing cost of Research & Development (R&D) tax relief and is working with the Office for National Statistics (ONS) to better understand expenditure. A Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate of error and fraud.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Accepted
HM Government · verbatim extract
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2023 2.2 HMRC is carrying out further analysis to understand the reasons for the growing cost of Research & Development (R&D) tax relief, including sectoral analysis of the number and average value of claims. HMRC are working closely with the Office for National Statistics (ONS) to better understand why R&D expenditure derived from Corporation Tax returns and that produced by the ONS’s Business Enterprise Research and Development Survey are different, which may provide further insight into recent trends in R&D expenditure. 2.3 HMRC’s current estimate of the level of R&D error and fraud is 3.6% (£311 million) of the total expenditure cost. HMRC's R&D Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate and will further enhance its understanding of the cost drivers for the relief.
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