Legislative changes to R&D will not work in isolation, say Lords

Legislation changes in the Finance Bill to counter the abuse of research and development relief will not be effective in isolation according to a report from the House of Lords Finance Bill Sub-Committee.

The measures include the requirement to provide HMRC with more detailed information about the nature of a claim naming any tax adviser involved in preparing claims and requiring that claims should be endorsed by a senior officer of the company. It also introduces a requirement to give pre-notification of an intention to make a claim. The report said this last proposal was ‘uniquely onerous without any direct precedent within the tax system’ and that it risked ‘companies being unable to make legitimate claims’.

The lords believe that improvements to HMRC’s compliance capability are also required. These would include a more focused and targeted approach to identifying suspect claims greater expertise and...