Other news in brief

Following the reforms to the UK’s Research and Development (R&D) tax incentives regime confirmed in March’s Spring Budget, HMRC have now published their final guidance in respect of these. A draft of this guidance was published by HMRC in December 2022 – there are a number of changes in the final guidance that claimant companies will want to be aware of. As expected, all claimants will need to be aware of and adhere to the Additional Information requirements, including the separate digital form which must be submitted to HMRC prior to the claim submission via the relevant tax computation. The guidance confirms that HMRC will continue to accept extra information, such as supporting reports, although this must not be used as a substitute for the form (e.g. submitting the form using language such as “See R&D report for more detail”). Groups may be disappointed to note that there will be no ‘group exemption’ – the requirement to provide the form applies at a company (rather than group) level and, therefore, multiple claimant entities in the same group will each need to submit a form. Many companies that fall within HMRC’s Large Business customers will have noted the draft guidance’s suggestion that claimants should contact their CCM to agree the level of information required in the form. The final guidance provides some clarification of this – whilst CCMs may have some discretion as to the length and detail of the project descriptions, HMRC have been clear that CCMs will not have any discretion to disregard the requirement to submit the form, nor to the number of projects that information must be provided for. Finally, HMRC have also provided further examples of how the Claim Notification requirements will operate in practice, including a further separate digital form, which will need to be adhered to in order for a submitted R&D claim to be valid, and have also confirmed that the previously announced restrictions on some overseas R&D expenditure have been postponed, and will now come into effect from 1 April 2024. More detailed guidance is expected as to how HMRC expect Large Business claimants to agree the level of information required with their CCM. Further commentary on this will be provided in a future edition of Tax Matters Digest.

MPs scrutinised and voted on proposed amendments made to selected clauses of the Finance Bill over the course of two days in the Committee of the whole House on 18 and 19 April 2023. The topics debated included multinational and domestic top-up tax (Pillar 2), pensions changes, capital allowances and R&D reliefs. As is usually the case, only amendments tabled by the Government were accepted and these were relatively minor amendments centred around Pillar 2 and R&D relief. The remainder of the Bill will now be committed to the Public Bill Committee which will meet on 16, 18 and 23 May. The Bill will progress to the Report stage thereafter but no date has yet been published for that.

Further to an earlier error on the HMRC website mentioned in a previous edition of Tax Matters Digest, the Government has now confirmed that the UK/Kyrgyzstan tax treaty came into force on 17 March 2023. 

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