A pound symbol coloured to resemble an "L", referencing HMRC's "L Day 2022".

L-Day 2022: What do you need to know?

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Yesterday was what HMRC refer to as “L Day”, when the Government publishes draft legislation for the upcoming Finance Bill.

The changes are not new—in the sense that we’ve known about them all for a little while—but the draft legislation now shows that HMRC are committed to implementing them.

The majority of these changes are good news. For example, there’s an extension to qualifying expenditure to include data and cloud computing costs, and a raft of changes to deal with “unforeseen consequences” of some existing rules of the scheme. There will also be a new focus on only supporting UK-based subcontracted work, a measure to discourage off-shoring for R&D, which is an interesting measure that will certainly impact certain sectors more than others.

But the biggest changes are those designed to help tackle abuse of the scheme, all of which are long overdue:

  • Claims must be submitted digitally
  • All claims to include a technical report describing the work undertaken and a breakdown of eligible costs
  • The report should identify the agent who has prepared it
  • The report should be signed off by a senior representative of the claimant company
  • Claimant companies will be required to pre-notify HMRC no later than 6 months of the intention to file a claim for R&D for that period. This particular change will impact businesses’ ability to make retrospective R&D claims.

The finer details of these changes will become clear prior to April 2023, but in general we welcome the fact that rogue service providers will have their business models disrupted by these changes.

Our ethos has always been to help our users to deliver robust, HMRC compliant claims with a combination of great technology and expert support and to allow them to offer a high quality service to their clients.

With over £90m of tax benefits having now been delivered to clients of our users, our tech is proving that there is a ‘right way’ to do this work, by putting the best tools and support into the hands of the best people to deliver value to their clients.

Read the original proposal here: https://www.gov.uk/government/publications/research-and-development-tax-relief-changes/research-and-development-tax-relief-reform?fbclid=IwAR23zpgBwLv85QrEQv2ZGqQiJjc4ixPiuTPqccT4L1xfjwd7_BdlL5OMlLE#detailed-proposal

Brush up on the fundamentals of the R&D tax relief scheme

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