Guidance for merged R&D scheme published
Companies claiming tax relief for research and development (R&D) will need to use the new merged scheme for accounting periods starting on 1 April 2024. Guidance on the new scheme has now been published. What are the key changes?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
For accounting periods beginning before 1 April 2024, smaller companies could access a separate R&D scheme. Historically, this has been more generous than the relief available to large companies. Under the new scheme, SMEs will use the same framework as large companies to claim R&D expenditure credits (RDEC), unless they qualify for the narrowly drawn intensive scheme.
The main difference a small company will need to be aware of is the mechanics of the claim. The merged RDEC scheme involves adding a taxable credit to profits, then deducting it from the corporation tax liability. The SME scheme was a simple enhanced deduction. There are other changes too though. You will need to be aware of the rules regarding subcontracted expenses if you want to include these costs in your claim. There are also restrictions on the relief, e.g. relative to the company’s PAYE liability.
The new guidance is a handy overview and starting point. However, if your claim isn’t straightforward it is advisable to seek specialist advice.
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