Source · Select Committees · Public Accounts Committee
Recommendation 10
10
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
Not Addressed
HM Government
Not Addressed
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.