Select committee: Finance Bill Sub-Committee
Conclusion 52
3rd Report - Research and development tax relief and expenditure credit
Published 31 Jan 2023
Paragraph 257
Finance Bill Sub-Committee Draft Finance Bill 2022-23 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Many of the suggestions for changes to the R&D schemes by witnesses would have been raised with the Government in responses to its March 2021 consultation on R&D relief. Although the Government has as yet to provide details of what the next stage of the review will cover, in our view it needs to include consideration of the issues raised with us around the definitions of R&D and qualifying expenditure, and linking R&D relief more closely to Government priorities. However, we acknowledge that changes to the definition of R&D for tax purposes or to categories of expenditure eligible for relief would be more likely to result in additional Exchequer cost. This will need to be balanced against the economic benefits that should follow from any such changes.
From: Finance Bill Sub-Committee, 3rd Report - Research and development tax relief and expenditure credit, paragraph 257, 31 January 2023
Government response
The government responded to the whole report on 13 April 2023 (deadline 31 March 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government thanks the Committee and "notes its conclusions and recommendations", accepting some recommendations in full, some partially, and not accepting others.
- It does not accept the recommendation to drop the six-month claim notification requirement, saying it responds to "high levels of error and fraud" and limits "bulk claims for multiple earlier years".
- It does not accept the recommendation that relief payments carry a warning about later recovery, saying existing guidance gives "sufficient warning" and a new customer contact point would add resource and IT costs.
- On overseas expenditure, it partially accepts the call for transitional relief. The restriction now starts on 1 April 2024, with narrow exemptions, and it does not think further exemptions are necessary.
- On a merged R&D scheme, the Government is "currently considering the responses and no decision has been made", and intends "to keep open the option" of a merged scheme from April 2024.