BIA submission to HMRC on R&D tax reliefs draft legislation

The BIA has responded to draft legislation on R&D tax reliefs and a potential merged scheme published by the Government in July. As detailed in our blog, the legislation confirmed that an enhanced rate will continue to be available to qualifying SMEs, and builds on the support for R&D-intensive SMEs secured by the BIA at Spring Budget 2023. The BIA welcomes the measures set out in the legislation, and the continuing engagement of HMT and HMRC with the sector. 

Our submission makes specific recommendations including:

• Detailed guidance and clear boundaries for the implementation of Qualifying Overseas Expenditure rules;
• Clarification of the position for R&D service providers established in the UK, including proposals for the operation of an effective framework employing a qualifying R&D trading test; and,
• Clarification of the intended qualification requirements for the R&D Intensive Scheme, and the adoption of an 'exceptional circumstances' concept to mitigate the risk of extraordinary expenditure in a given year affecting qualification for R&D intensive SMEs.