The guidance note, issued following the Budget in April, was expected to widen the scope of businesses claiming tax credits by revealing businesses outside traditional ‘research’, such as laboratory work, qualified for the scheme.
One month on, accountants have been urging their clients to claim the credits but say the response has been limited. David Cobb, head of the R&D practice at Deloitte & Touche, said the tax return form was longer and more complex. ‘We are seeing a harsher response from the Revenue asking for more detail and underlying information,’ he said.
Ernst & Young R&D specialist Paul Harris said uptake, especially among large companies had been slow. He said: ‘We’re having to push with our own clients but we have been having difficulties with individual inspectors. The Revenue is being very strict on what it means by R&D.’
The response at KPMG was similar. Tax partner David O’Keeffe explained: ‘The compliance costs and complexity of claiming is putting a lot of companies off. It’s a lot of extra work for a relatively small benefit, especially for larger companies.’
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
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Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory