In summary:
- not ruling out ‘above the line’ R&D relief/credit but the Government still needs to be convinced
- large company subcontractor costs to qualify for the subcontractor only where the subcontractor is aware that it is qualifying R&D and has evidence to this effect
- no plans to extend qualifying expenditure to cover (eg) rent of premises used for R&D
- draft legislation in the Autumn to allow a wider range of externally provided workers to qualify
- no plans to restrict internally created software from being qualifying costs
- improved guidance on whether prototypes will be qualifying R&D – whether the ‘uncertainty’ principle applies
- plans for a pilot scheme will be brought in during the Autumn so that small companies and start-ups can get advance assurances that can be relied on in making R&D claims for several years
The Government is looking for specific responses (by 2 September 2011) on:
- qualifying indirect activities: should the relief be retained? (QIA are hard to define and harder to get relief for)
- should there be some form of certification or election process to provide certainty for subcontractors as to whether the work they are doing is R&D?
- does the removal of the PAYE/NICs limit on the repayable credit require any safeguards?
- does the ‘going concern’ definition need to be reformed, to make it closer to that for other tax reliefs?
