R&D Tax Relief is Changing

From 1 April 2023, new rules for R&D Tax Relief claims will require businesses to submit a pre-notification of their claim to HMRC. This applies to new claimants or any business in the United Kingdom that has not claimed any R&D Tax Credits in the last 3 years.

If an R&D Tax Credits claim is anticipated a business must inform HMRC within 6 months of the end of the financial period that the claim relates to. Failure to notify will mean a business will miss out on 33% of the R&D costs it wishes to claim, even if it is eligible.

Eligible R&D projects improve existing products, processes, or services or create new ones and there must be demonstrable scientific or technical advancement, the outcome of which is uncertain at the outset.

If a business is unsure as to whether they will have a claim it will be best to pre-notify even if there is no subsequent claim as there is no penalty for changing your mind.

These changes to R&D Tax relief have been made as the Government feels that there has been an abuse of the R&D Tax Credit system. To date, £300m of fraudulent claims have been detected.

The e-commerce industry is constantly evolving, with innovation to be found around every corner. It isn’t just sellers that are innovating but also businesses that create functionality for e-commerce businesses (e.g. e-commerce agencies). If you develop your own bespoke system – or even modify off-the-shelf software (it must be “transformed substantially”) there’s a good chance your project will qualify for R&D tax credits. Examples of projects that may qualify include customer authentication, personalisation, stock control, integration with your back office and accounting systems, shopping baskets and payment enhancements, and improved cybersecurity.


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