Select committee: Finance Bill Sub-Committee
Conclusion 55
3rd Report - Research and development tax relief and expenditure credit
Published 31 Jan 2023
Paragraph 260
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)
We accept that the two R&D schemes are now close in generosity but they differ in other respects, and it is clear that there are different views on whether the two R&D relief schemes should merge into a single RDEC-for-all scheme. In particular, SMEs value some aspects of the SME scheme which could be lost if this were the outcome. While we acknowledge that the Government has said that no final decision has yet been made on merging the two existing R&D tax relief schemes into a single RDEC for all scheme, we are disappointed that the consultation on a possible merger has been limited to design and implementation only. This is because it is imperative that the views of those who would be affected by such a change, particularly smaller businesses for which the existing relief provides essential support for their R&D activity, are fully taken into account in determining the “if” as well as the “how”.
From: Finance Bill Sub-Committee, 3rd Report - Research and development tax relief and expenditure credit, paragraph 260, 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.