Subcontractors and subcontracting.
While HMRC has been keen to stress the draft legislation is changeable and they’re open to different viewpoints, it seems certain that expenditure on subcontractors will remain a claimable expense.
Controversially, it also showed the claim to relief will generally lie with the company paying for the work (i.e. the customer) rather than the subcontractor fulfilling the contract.
However, it does seem there will be concessions for companies acting as subcontractors to the government, or companies outside the UK, effectively allowing some subcontractors to claim relief when their customers are unable to do so.
Additionally, for companies seeking to claim relief on payments to their subcontractors, they will need to consider the location of the subcontractor. Generally, only expenditure on UK based subcontractors and Externally Provided Workers (EPWs) will be allowed, but there will be cases where expenditure is claimable on ‘qualifying overseas expenditure’.
You’d be forgiven for thinking this sounds complicated because…it is! That’s why we’ll be building at least one brand new course on Subcontracting – and possibly two, if there’s too much material to pack into just one!
Qualifying Costs, apportionments and reliefs.
The costs in the new unified scheme aren’t changing drastically but there will be some subtle changes around some of the cost categories, particularly for EPWs and subcontractors.
The mechanism by which SMEs get R&D tax relief will also be changing to mirror the current RDEC model. Our updated course on Qualifying Costs will include examples of how the relief and credit is calculated for companies in different financial positions.
Grants and subsidies.
While HMRC’s plans are still tentative, the draft legislation suggests relief will not be available on expenditure that’s been subsidised e.g. by grants or certain prepayments from customers. While that seems straightforward enough, there’s likely to be some fine details and complexities around Brexit, European funding, legacy Notified State Aid and the Subsidy Control Act. Our bet is there’s going to be enough complexity in this to merit a course, so we’re already pencilling one in!
Marketing and ethics.
Of course, it’s not just the draft legislation guiding our plans for a certification in R&D tax relief. Another factor is HMRC has started to reach out to certain R&D advisors to caution them on how they’re marketing their services. Certain messages used in the past are now considered misleading, with HMRC threatening to report advisors to the Advertising Standards Agency.
While this threat may sound like it lacks teeth, the more worrying implication for advisors is that HMRC will focus its compliance efforts on advisors who are demonstrably and persistently using poor marketing practice. In other words, it’s now going to pay to be one of the good guys. It’s why a course on Marketing and Ethics will be part of our R&D certification.
We have additional courses in the pipeline that will make up part of our R&D certification.
There are some new and revised R&D courses in our plans relating to some unchanging facets of the scheme or how R&D advisors find and process work. They are the foundational blocks of our upcoming certification too.
These will be the core courses:
- An Introduction to R&D Tax Relief (updated)
Giving new members of your team the basic knowledge they need from day one. - Screening Clients (new!)
Help on identifying good prospects (and how to say no to poor ones). - Establishing Eligibility
How to talk to clients about qualifying projects and gathering the information you need. - How to Complete HMRC’s Additional Information Forms (AIF)
How you complete the AIF will determine whether your claim is processed quickly, or subject to a Compliance Check. - Software (Part 1 & Part 2)
Still one of the least understood areas of R&D tax relief, but with so many companies in this sector, it’s vital to understand what software eligibility looks like. - Accounting Aspects of R&D Claims (new)
A course on the mechanics by which relief is given.
What will our certification programme look like?
We plan to offer two levels of R&D certification; one for people in sales and marketing roles, and a longer and more comprehensive certification for R&D practitioners who prepare claims.
The sales and marketing curriculum will be composed of:
- An Introduction to R&D tax relief
- Marketing and ethics
- Screening clients
- Establishing eligibility
- Qualifying costs, apportionments and reliefs
The R&D Practitioner curriculum will be composed of:
- Marketing and ethics
- Screening clients
- Establishing eligibility
- Qualifying costs, apportionments and reliefs
- How to complete HMRC’s Additional Information Forms
- Subcontractors and subcontracting
- Grants and subsidies
- Accounting aspects of R&D claims
- Software (2 courses)
Now of course, certification isn’t as simple as just completing a bunch of courses – it’s going to be deeper and more rigorous than that. Achieving our certification will involve completing a mix of digital modular courses and assessments, interviews, coaching, and reviews of work you complete for clients.
It won’t be easy – we intend our certification to be a mark of the highest standards and something to be proud of. However, we’ll be on-hand to support you with our years of expertise, clear and comprehensive resources, and an unflinching commitment to high standards.
Our programme will improve the standard of R&D consulting and start to rebuild trust in the industry.
In an increasingly cynical market, in which HMRC and companies alike can look at advisors with mistrust, we believe it’s vital to rebuild the trust that’s been lost over the past decade.
Training, testing and certifying advisors is our way of helping to restore that integrity and usher in a more positive era in R&D tax relief.
Our certifications will be available to members of The R&D Community who wish to take their team’s level of knowledge to the next level.
If you want to help shape our community, our training and our upcoming certification, download our prospectus to learn more about membership. We’d love to welcome you soon.
