Proposed changes to R&D tax relief will make the tax system more complicated for businesses, the Association of Taxation Technicians (ATT) has warned.
Draft clauses for what is expected to become Finance Bill 2023/24 propose merging the two separate reliefs that make up the current R&D system into a single scheme.
However, the proposals also include a new enhanced relief for “R&D intensive” SMEs, which will operate as a standalone scheme.
According to the ATT, these changes will work against the Government’s ambitions to simplify the tax system, instead creating more complexity and confusion for businesses.
It also warned that the new single scheme’s commencement date of April 2024 would be “too soon” and that the Government should take more time to consult and ensure the scheme can be delivered successfully.
Senga Prior, chair of the ATT technical steering group, said:
“The proposed April 2024 timetable for introducing the new combined scheme is overly ambitious. Such a timescale does not allow for proper consultation or for the required systems and processes to be put in place by businesses, agents, software providers and HMRC.
“We note that the draft legislation indicates the Government has not yet taken a final decision on whether to introduce the new single scheme but intends to keep open the option of doing so from April 2024.”
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