The Research and Development Relief (Information Requirements etc.) Regulations 2024
Overview
The Research and Development Relief (Information Requirements etc.) Regulations 2024 aim to streamline and clarify the information requirements for businesses claiming R&D tax relief. These regulations are part of a broader effort by the UK government to encourage innovation and investment in research and development across various sectors. By simplifying the application process and providing clearer guidelines, the regulations aim to make it easier for businesses to benefit from available tax incentives.
Key requirements of these Regulations include:
- Eligibility Criteria: Businesses must demonstrate that they are undertaking qualifying R&D activities as defined by the regulations. The activities must seek to advance knowledge or capability in a field of science or technology, addressing scientific or technological uncertainties.
- Information Requirements: The regulations stipulate specific information that businesses must provide when claiming R&D relief, including:
- A detailed description of the R&D project.
- The objectives of the project and how they relate to scientific or technological advancements.
- An explanation of the uncertainties faced during the project and how they were addressed.
- Documentation of costs incurred, categorised into eligible expenditure types, such as staffing, materials, and utilities.
- Record-Keeping: Businesses are required to maintain comprehensive records of their R&D activities and related expenditures. This includes:
- Project timelines and milestones.
- Detailed financial records supporting the claims made.
- Documentation of any external collaboration, including contributions from subcontractors or research organisations.
- Submission Process: Claims for R&D relief must be submitted alongside the company’s Corporation Tax return. The regulations emphasise the importance of timely and accurate submissions to avoid penalties or delays in processing.
- Review and Compliance: HM Revenue & Customs (HMRC) will review claims for accuracy and compliance with the regulations. Businesses may be subject to audits to verify the legitimacy of their claims.
The Research and Development Relief (Information Requirements etc.) Regulations 2024 came into force on the 2nd of October 2024 and applies to the United Kingdom.
Do the Research and Development Relief (Information Requirements etc.) Regulations 2024 affect my business?
The Research and Development Relief (Information Requirements etc.) Regulations 2024 have wide-ranging implications for affected businesses:
- Encouragement of Innovation: By clarifying the requirements and streamlining the application process, these regulations are expected to encourage more businesses, particularly small and medium-sized enterprises (SMEs), to invest in R&D.
- Cost and Time Savings: With clearer guidelines and a more straightforward submission process, businesses can potentially save time and resources previously spent navigating complex regulations.
- Increased Compliance Risk: While the regulations aim to simplify the process, businesses must ensure they adhere strictly to the information requirements. Non-compliance could result in penalties or disqualification from relief, which emphasises the need for robust record-keeping.
The Research and Development Relief (Information Requirements etc.) Regulations 2024 represent a significant step toward making the UK a more attractive environment for research and innovation. By clarifying the information requirements and simplifying the submission process, these regulations aim to support businesses in accessing vital tax reliefs that can drive innovation and growth. As companies adapt to these changes, a focus on compliance and thorough documentation will be essential to maximise the benefits offered by the R&D tax relief scheme.
Do I need the Research and Development Relief (Information Requirements etc.) Regulations 2024 in my ISO Compliance Register?
These Regulations affect the following sectors:
- Small and Medium-Sized Enterprises (SMEs): SMEs form a significant portion of the businesses that will benefit from these regulations, as they often rely on R&D tax relief to support innovation and growth.
- Large Enterprises: Larger firms that engage in extensive R&D projects will also be affected, though they may have more resources to manage compliance with the requirements.
- Startups and Tech Companies: Startups, particularly in the tech sector, are likely to benefit from clearer guidelines, as they often depend heavily on R&D to develop new products and technologies.
- Research Institutions and Universities: These entities, when collaborating with businesses on R&D projects, must also be aware of the regulations as they may impact the way costs and contributions are documented and claimed.
If your business is categorised above then we strongly recommend including it in your ISO Compliance Register.
Legislation related to the Research and Development Relief (Information Requirements etc.) Regulations 2024
Legislation related to the Research and Development Relief (Information Requirements etc.) Regulations 2024 include:
- The Contracts for Difference (Sustainable Industry Rewards) Regulations 2024
- Finance Act 2019
- Income Tax Act 2007
- Tax Credits Act 2002
- Income and Corporation Taxes Act 1988
More information
Visit the Research and Development Relief (Information Requirements etc.) Regulations 2024 article on the legislation.gov.uk website.
Create an account in the ISO Compliance Register App and add this article to your Register.
