Auditox Accountancy Say Accountants Should Prepare for Changes To R&D Tax Credits Focused on UK Innovation In 2022

Darlington, Feb. 02, 2022 (GLOBE NEWSWIRE) — Accountants will be well aware of the research and development (R&D) tax credit incentives that were brought in from March to June 2021 in the UK. Launched by the government, the initiative aimed to get the country closer to its target of a 2.4% investment in research and development, boosting the UK’s gross domestic product.

Following announcements in the Autumn Budget 2021, R&D tax credit is likely to continue to see reform and restructure. For accountants, understanding the reforms in totality and predicting next moves based on solid information is key. In doing so, they can be best placed to navigate the new stringent measures, make use of new tax credit categories, and ensure their clients have clear net profit growth plans that aren’t hindered by complexities.

Auditox Accountancy, an accountancy group in the UK at the forefront of advice and thought leadership in the industry, say accountants should be prepared for further changes and understand the current R&D landscape to benefit their clients.

Below, we outline the advice from Auditox Accountancy on the current landscape of R&D credits and their future predictions:

The current landscape of R&D tax credits – a focus on innovation in the UK

The covid-19 pandemic had a substantial impact on the economy. As restrictions begin to ease and the country returns to a small state of normality, now more than ever, it’s clear that the UK is striving to rebuild a strong, green economy. Auditox say research and development forms a critical part of this rebuild, as outlined in the Autumn Budget.

To ensure the UK benefits directly from increased research and development activity, with focus on innovation in the country, the government have said:

• Third party labour and subcontractor costs only qualify for tax credits if the research and development is conducted in the UK.

• Companies who use externally provided workers (EPWs) may be limited to only claiming expenditure for EPWs within UK PAYE/NIC. Confirmation on exceptions and legislation are set to be announced in the Autumn.

• Modern research methods around data and the cloud look like set to qualify for expenditure in 2023. As many modern methods include vast data processing and analysis, and make generous use of cloud technology, start-ups and tech companies will benefit. Accountants should plan ahead to ensure clients can make use of R&D tax credits where applicable.

• There will be an increase in inspections from HMRC to reduce the potential abuse of R&D tax credits, with the HMRC now employing 100 new inspectors who are largely focused on R&D activity and enquiries.

The future of R&D tax credits, and why accountants need to be prepared

As the reforms take place and continue to be modernised, there’s no doubt that there are great opportunities for clients to play their role in reaching the 2.4% investment in research and development in the UK. For the client, this can lead to growth and internal business innovation, improving their bottom line whilst boosting the UK’s forward-thinking economy.

According to Auditox Accountancy however, it is clear that the government want to ensure R&D tax credits are used appropriately and that the UK reaps the benefits. It’s likely that clients will receive far more scrutiny around compliance, and if poor guidance is provided by R&D tax credit advisors, the financial consequences could be substantial.

Accountants should play a vital role in helping clients seek out financial gains and opportunities by providing expert advice on R&D tax relief schemes as they continue to be modernised and reformed around innovation in the UK.

More Information

Auditox Accountancy is an accountancy group which provides online Accountancy solutions for businesses. They are a team of qualified professionals with over 20 years’ experience in the accounting industry, providing services to individuals and companies alike. Auditox accountancy provide Contractor Accountants, Chartered Accountants and Tax Advisors who will work hard to ensure that your business is compliant with all relevant legislation. Learn more via the website: https://www.auditox-accountancy.uk/

https://thenewsfront.com/auditox-accountancy-say-accountants-should-prepare-for-changes-to-rd-tax-credits-focused-on-uk-innovation-in-2022/