Mike Shearan, Senior Manager, James Cowper Kreston and member of ITSIG highlights a proposal to cap R & D tax credits:
During the Autumn Budget, the Government made a proposal to reintroduce a cap on the amount of tax credits repayable to a company under the 'SME scheme'.
The Government has said that in order to prevent abuse, for accounting periods of companies beginning on or after 1 April 2020, the amount of credit that a loss-making claimant company can receive in any tax year will be restricted to three times the company's total PAYE and NIC liability for that year. Out of interest, the Budget note on this referred to £300M of fraudulent R&D claims that they were aware of.
There was previously such a cap, equal to just the amount of a company's PAYE and NIC payments, which was removed in 2012.
If this cap is introduced as announced, it will particularly affect earlier stage technology companies which may not have substantial direct employment costs but subcontract portions of their activities to third parties.
Clearly this will be of interest to many of our OBN Members, and we will continue to monitor this and feedback to the Government as appropriate.
If your organisation has experienced any difficulties as a result of these changes, we would welcome your feedback to strengthen our lobbying activities in this area (all examples will be anonymised). Please email: firstname.lastname@example.org with an overview of your experiences, we will contact you to discuss further if necessary and will certainly send a copy of any material used prior to issue.
Mike Shearan, Senior Manager