Research and development (R&D) tax experts Jumpstart have warned that the government’s new Advanced Assurance process, which encourages small businesses to claim for research and development tax relief, is certain to disappoint.
In a statement, Jumpstart director Richard Edwards questioned whether the scheme would actually make applying for R&D grants any easier for the UK’s SMEs. “While we welcome any attempts to make the R&D tax credit application process easier, the details required from SMEs under Advanced Assurance remain potentially complex and time-costly.”
The new process, outlined by the chancellor George Osborne in the 2015 Autumn Statement, requires businesses applying for grants to submit long and detailed applications, including the proposed R&D activity the firm plans to take and the specific scientific or technological advance intended.
Furthermore, applicants must submit details of any scientific or technological uncertainty about their proposed research, details about how they would go about dealing with that uncertainty, a complete break down of the costs involved in the R&D and reasons why the knowledge being sought isn’t already available to the applicant.
“It is certainly not the light-touch route that many in the sector expected,” Edwards said. “These are not unreasonable questions, but companies often need help understanding them, applying them to their business and drafting a comprehensive response.”
“Although SMEs may be clear on what they consider to be R&D, they typically are not familiar with HMRC’s definition, or the 500 pages of guidance HMRC has produced. A few help buttons on an online form is no substitute for detailed guidance.”
The Treasury guidance accompanying the process promises SMEs access to a specialist that will help applicants make sure compliance is met, yet Edwards is skeptical about where such governmental resources will come from. “What SMEs really need is expert help from advisors who have an in-depth understanding of the minutiae of the guidelines and process,” he said.
“It would have been more helpful to move this assistance even closer to SME’s by allowing them to call in to discuss what the highly generic guidance means in practice,” he added. “As it stands, the load is still on SME’s to read, understand and apply HMRC’s guidance before the department will really engage.”
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