Budget-2024

Spring Budget 2024: Anticipated Reforms and Economic Projections

As March edges closer, the forthcoming spring budget from the UK government stirs a palpable sense of anticipation, particularly regarding the R&D scheme. With a slew of long-awaited adjustments anticipated to be revealed this year, speculation is rife against the backdrop of a swiftly evolving economic terrain.

Set for announcement on March 6th, this budget holds significance as the final major fiscal overhaul before the looming general election, mandated to take place by December 17th, 2024. The public eye is keenly fixed on economic reform aimed at mitigating the ongoing recessionary challenges.

While much attention is understandably focused on the projected changes within the R&D scheme, it remains imperative to grasp the broader implications, given that alterations in tax policies have reverberations across diverse business sectors. For those harbouring questions or concerns about the potential impacts of the forthcoming March developments on their R&D Tax Claims, seeking guidance from experts is advised.

Current Insights

At the forefront of anticipated alterations within the R&D domain is the proposed consolidation of the SME and RDEC schemes, slated for implementation come April. This amalgamation aims to streamline the application process for businesses while affording HMRC greater oversight on claims submitted. Notably, HMRC has significantly bolstered its team in recent years to combat erroneous claims, and the impending scheme changes are expected to further fortify their involvement.

Nevertheless, this transition is not without contention, with calls for potential scheme adaptations to be deferred until 2025 to facilitate a smoother integration process. While no official word has surfaced regarding a delay, and further postponements are not anticipated, collaborating with advisors remains pivotal for staying abreast of the latest developments within one’s claim process.

Projected Tax Adjustments

Beyond the realm of R&D, the budget is poised to usher in tax adjustments. Earlier this year witnessed a reduction in National Insurance contributions for employees, translating into modest increases in household incomes nationwide. Expanding on this trajectory, speculation abounds regarding a reduction in income tax, although the Chancellor has downplayed these rumours.

With pre-election tax reform likely to concentrate on alleviating the personal tax burden, businesses are anticipated to experience comparatively lesser reforms, thereby mitigating potential disruptions for those navigating R&D claims.

Amidst impending changes, the most prudent approach to ensure preparedness for the March 6th unveiling is through close collaboration with expert advisors for your claims. Reach out today to guarantee meticulous handling of your claim amidst these pivotal moments.

You can contact us today on 0330 002 1362 or email us at enquiries@kirbyandhaslam.co.uk.

UK Tax Papers and Forms from HM Revenue Customs under a glass

3 Outcomes Following Fraud Investigation Services

Within the process of R&D compliance, there are a range of different ways HMRC investigates the tax claim submissions. Predominantly this is through enquiry letters, in which a compliance check is opened, however during this process there is a secondary check known as the Fraud Investigation Service (FIS). While an FIS is raised on a claim, everything is put on hold until this check is completed, which can delay a claim further or potentially result in the closure of a submission.

Some providers within the R&D world are noting a 400% rise in FIS checks, which while high, is not the first time we have seen HMRC increasing their investigation numbers. Hundreds of new employees have been brought in over the years for R&D compliance, and in previous years certain sectors had been brought into the spotlight through this process.

HMRC is doing its due diligence within the R&D world, to ensure the treasury is being allocated correctly, and as intimidating as this may sound at first, there is nothing to be afraid of as a company. Strong R&D claims will always have good supporting evidence behind them, and working with a trusted partner to help present this to HMRC will leave you in good stead within the investigation.

The most common results of these investigations are three potential outcomes;

  1. Your claim passes this check and continues to approval for the claim to be completed.
  2. Your claim is moved into a compliance review.
  3. Your claim gets rejected in its entirety.

Businesses need to ensure they are proactive in ensuring their claims are backed by solid and accessible evidence, which minimises the risk of any complication during the FIS check process.

Providing the best support your claim not only for compliance checks but also in the case of an FIS opening relied on the quality of your supporting evidence. Here at Kirby and Haslam, we are seasoned experts within R&D compliance, and working alongside us can help ensure your claim is robust and sustained by sufficient evidence.

If you have any further questions or concerns surrounding this process, or are currently facing an FIS check, contact us today on 0330 002 1362 or email us at enquiries@kirbyandhaslam.co.uk to discuss your claim.

kirby-haslam-new-form

A Closer Look at HMRC’s Additional Information Forms  

From the 8th of August 2023, claims submitted for the Research and Development (R&D) tax relief scheme have been required to send in advance an Additional Information Form (AIF). This change was originally announced in April of this year, and here at Kirby and Haslam, we have been working to streamline this transitional period for our clients as much as possible. Now, a month on from these regulation changes taking effect, it’s hugely important to understand how these procedures can potentially impact your claim.  

What is the AIF?   

The Additional Information Form supplements the previous submission system, providing a summary breakdown of the work undertaken over the course of the claim period, which is followed by full financial detailing and narrative on submission. Alongside the required financial and expenditure information, companies looking to claim on the R&D tax scheme will now also have to feature information on the projects undertaken in a formal, standardised system.   

Having been introduced by HMRC, this form is a requisite for claiming on the R&D tax relief scheme and intends to reduce the potential for erroneous or fraudulent submission. Any claims submitted without this information will be automatically rejected; HMRC have reported that as of September 2023 nearly half of all claims they have received since the 8th of August did not include the mandatory AIF. This is exactly why it is paramount to comply with these new guidelines and work with a reliable partner, as failure to submit an AIF in advance will result in your R&D relief being instantly rejected.  

Procedural Changes  

Responding to the procedural amendments, originally announced in April, Kirby and Haslam worked to introduce pre-submission reports that encapsulate the required information for R&D claims. These built upon the previous post-submission structure and were in operation within the company far ahead of August. This has allowed for a much steadier transition into the new AIF system, with clients already prepared for the further information required. Being proactive and adapting to these processes early equally allowed for internal changes within Kirby and Haslam, with structures being implemented to allow a more efficient workflow within these reports. As a result, all of our submissions made since August 8th have been supported in advance by the relevant AIF.  

Moving forward, the structure of these submission reports may be updated and improved upon in response to any potential feedback or regulation updates from HMRC.   

How This Affects You  

Submitted claims moving forward will require the AIF breakdown of eligible R&D costs, as well as information surrounding the R&D projects. Eligible costs can include expenditure such as staffing costs for employees involved within the project, subcontractor wages and material pricing used within the project. This will be required alongside a report of the work undertaken, detailing challenges faced over the course of the project, as well as how your project sought to innovate within its industry and the activities undertaken to achieve these goals.  

Claims submitted prior to the regulation changes will not require AIF amendments to the submissions. However, HMRC may still choose these cases for compliance checks during their R&D relief enquiries, which require their own post-submission reports.   

Looking ahead 

Further changes to the R&D regulations are expected to come in 2024, with amendments to qualifying expenditure being introduced within April of next year, and a proposed merger between the RDEC and SME schemes. As the landscape continues to evolve, we at Kirby and Haslam will endeavour to continue our proactive responses to these regulation advancements, ensuring our reports remain compliant within the changing guidelines.  

With this constantly adapting landscape, we strongly advise working alongside an R&D compliance specialist such as ourselves to stay ahead of these changes.  

Innovation Kirby & Haslam

Debunking R&D Tax Credit Myths

R&D tax credits are a fantastic opportunity that rewards UK businesses for their innovation, but with so much misinformation floating around online, this government-led scheme can seem confusing and therefore is often under-utilised. With over 20 years of experience, Kirby and Haslam have the expertise to separate facts from fiction. We have broken down the most common R&D Tax Credit myths to help you feel confident in your claim.

Myth 1: R&D Tax Credits are only for innovation within the scientific sector.

Whilst basic scientific research is a clear example of an eligible project, this government scheme is focused on encouraging applied science across all sectors. Applied science means addressing an issue within a business by using known scientific or technical principles. For your business, this could mean researching how you could streamline your business operations or developing and testing a new product.

Myth 2: You can only claim on completed projects.

This myth is entirely false. No matter the stage of completion, your R&D project may still be submitted for an R&D Tax Credit claim. Whether you’ve had to put your project on hold or completely abort it, your existing R&D efforts can still be rewarded.

Myth 3: You can only claim if your project is successful.

This government scheme was introduced with the sole purpose of encouraging innovation, whether it is successful or not. HMRC understands that there is always some risk in conducting innovative research, and they do not penalise businesses for this. So even if your project didn’t produce the results you were looking for, you can still claim R&D Tax Credits for your efforts.

Myth 4: You must create a completely new product or process to be eligible.

This is a common misconception that stems from outdated information. Previously, a business would have to discover or create a completely new product or process to be eligible for R&D Tax Credits. However, the government came to understand that this was an unreasonable expectation. HMRC now states, “Your project may research or develop a new process, product or service or improve on an existing one.” It is those last five words that really matter here. Improving upon a pre-existing process, product, or service is something many UK businesses are already doing and could be eligible to claim R&D Tax Credits for.

Myth 5: You can only claim for the current financial year.

When claiming R&D Tax Credits for the first time, you can claim for your last two financial periods. This means that if your current financial year is coming to an end soon, it’s best to claim before potentially losing out on a year’s worth of a claim. With this in mind, make sure to track all of the R&D expenses your business incurs and claim before the two-year deadline passes.

Kirby & Haslam HMRC Importance

The importance of HMRC Compliance for Modern Businesses: Insights from Steven Powley at Kirby & Haslam

As a respected specialist in the field of HMRC compliance and taxation, Steven Powley, Kirby & Haslam’s Commercial Manager, shares his keen understanding of the importance of maintaining HMRC compliances for modern businesses. With years of experience in helping businesses navigate complex tax regulations, he shares his insights into why HMRC compliance is crucial, and why working with experienced and trusted partners like Kirby & Haslam is essential.

This is more than just adhering to legal obligations; compliance can have a significant impact on your company’s financial well-being, reputation, and ability to attract top talent. Non-compliance can result in fines and penalties that can be costly and detrimental to your business’s finances. The failure to meet HMRC requirements can also result in audits, investigations, and legal action, which can consume valuable time and resources. Seeing recent high-profile cases in the media, shows us how it is more crucial than ever to ensure your business is compliant.

Moreover, a company that maintains HMRC compliance demonstrates its commitment to ethical and responsible business practices. This commitment helps build trust and credibility with customers, suppliers, and investors, resulting in more significant opportunities for growth and development.

Maintaining a reputation for integrity and compliance, as Kirby & Haslam do, can also help a company attract and retain top talent. People gravitate towards businesses that are committed to responsible practices, and maintaining compliance with HMRC regulations is a significant part of that.

On the flip side, non-compliance with HMRC regulations can damage a company’s reputation, especially in today’s social media-driven world. Negative publicity resulting from tax evasion, fraud, or other forms of non-compliance can lead to a loss of trust, customers, and revenues.

In summary, HMRC compliance is essential for a modern business. It helps companies meet their legal and ethical obligations, avoid penalties, build trust and credibility, enhance their reputation, and avoid reputational damage. It’s crucial to work with experienced trusted partners like Kirby & Haslam, who have a successful history of engagement with HMRC compliance. By maintaining compliance with HMRC regulations, you’re protecting your business’s financial well-being, reputation, and ability to attract top talent. If you would like to learn more about this level of protection, get in touch with us today!

Kirby & Haslam looking through documents

Staying Ahead of Compliance Changes

In today’s rapidly evolving business landscape, keeping up with the latest changes in compliance is crucial for companies seeking to maximise their Research and Development (R&D) tax credit claims. At Kirby & Haslam, we understand the challenges businesses face in navigating these complex regulations.

To ensure businesses stay compliant with R&D tax credit regulations, it is essential to stay informed about the latest updates. Here are the recent changes you need to know:

Rate Changes and Scope Enhancement 

R&D Tax Credits have undergone significant changes, combining rate adjustments and scope enhancements. Notably, the Research and Development Expenditure Credit (RDEC) rate has increased from 13% to 20%, effective from 1st April 2023. This means businesses can now benefit even more from their qualifying R&D activities.  

Digital Submission Requirements

To streamline the process and improve transparency, all R&D Claims must now be made digitally. This includes providing a breakdown of costs and a narrative describing the R&D. By embracing digital submissions, businesses can enhance efficiency and ensure accuracy in their claims.

Advanced Notification for New Claimants

New claimants are now required to notify HMRC within six months of the end of the relevant claim period. This proactive step helps facilitate smoother communication with HMRC and ensures compliance with regulations.

Expanded Inclusions

The latest changes also encompass the inclusion of Cloud Computing costs and pure mathematics from April 2023. This expansion widens the eligibility criteria, allowing businesses from various industries to claim R&D Tax Credits more comprehensively.

Future Merging of R&D and RDEC Schemes

Expect the R&D and RDEC schemes to merge in the future. This integration will simplify the process for businesses and create a more unified approach to R&D Tax Credits.

Staying ahead of compliance changes is crucial for businesses looking to maximise their claims. At Kirby & Haslam, we offer comprehensive compliance services, including report writing, compliance management and review services. Our subscription options provide additional benefits and tailored support to meet your specific requirements. Contact us today to ensure your business remains compliant and unlocks the full potential of R&D Tax Credits.

Kirby & Haslam R&D Tax Changes April 2023

Research & Development Tax Credit Changes from April 2023 

The UK’s Research & Development (R&D) Tax Credit Scheme is a government incentive, introduced in 2000, aimed to encourage businesses to invest in innovation projects. Providing tax relief for companies who undertake R&D, the scheme helps offset costs associated with research investment.  

The government continuously aim to improve the scheme, for example, in 2018 changes were made to the application process making it easier for small and medium-sized enterprises (SMEs) to claim for R&D Tax Credits. Such changes included reducing administration and providing more guidance on what qualifies as R&D. Another example of how the scheme continuously improves is 2020, in response to the Covid-19 pandemic, rates increased from 12% to 15% of eligible R&D expenditure, providing additional support for companies during challenging times.  

Further changes are to be introduced to the scheme as of 1st April 2023. Effecting SMEs and larger organisations, the changes to R&D Tax Credits reflect a shift in strategy from HRMC in UK innovation investment. In order to improve compliance and the smooth operation of the scheme, the rates are to be rebalanced and companies claiming under the R&D SME scheme will receive a lower rate of tax relief, whilst those claiming Research & Development Expenditure Credit (RDEC) will secure more generous rates.  

How Does this Effect SMEs? 

In real terms this means that, as of 1st April 2023, the additional deduction for SMEs will decrease from 130% to 86%, with the credit rate reducing from 14.5% to 10%. For example, if your R&D spend was £100, as of April, the Tax Credits available would decrease from £24.70 to £21.50. 

How Does this Effect my RDEC Claim? 

In a change of direction form how the scheme will reduce tax relief for SMEs, those claiming RDEC can expect to see an increase of Expenditure Credit, from 13% to 20%. So, once more, if your RDEC spend was £100, your Tax Credit would increase from £10.53, to £15.00. 

What Next? 

Although the reductions in R&D Tax Credits may make SMEs think twice about if a claim would be worthwhile, we would like to assure you it absolutely is! HMRC is still dedicated to improving Research & Development in SMEs, and even the reduced rate can provide vital support for your innovation projects. It is also worth bearing in mind that these changes will only affect monies spent for accounting periods on or after 1st April 2023, this means you can still take advantage of the more generous rates until then.  

For more information on how R&D Tax Credits, or RDEC, could benefit your business, contact us today so we can assess your innovation eligibility.  

Kirby & Haslam Research & Development

Research & Development in the United Kingdom

Research and development (R&D) plays a vital role in the United Kingdom’s economy, helping to drive innovation, increase productivity and competitiveness whilst also supporting growth. The UK has a long-standing tradition of scientific and technological excellence and is home to many world-leading universities and research institutions. 

Recognising the importance of R&D, the government launched the scheme in 2000 to encourage companies to invest in innovation. In recent years, the UK has established itself as a hub for tech start-ups, and the government’s initiatives have helped create a supportive ecosystem for such businesses, providing access to funding, mentorship and further resources to help growth within the UK economy. 

According to data from the Organisation for Economic Cooperation and Development (OECD), the UK ranks third in the world in terms of R&D investment as a percentage of GDP. These investments are helping to drive innovation and growth, attracting international talent and companies to the UK. 

Research & Development raises business productivity, creates high-value jobs and can solve national challenges. Innovation is not only key to rejuvenating existing industries, but also for building strong foundations for new ones. Whether in terms of new products or services, improved business processes, or new communication systems, these innovative projects can result in greater profits whilst also reducing expenditure.  

The Future of R&D in the UK 

The United Kingdom’s world-class universities and research establishments are key to our ecosystem, providing a pipeline of talent, knowledge and expertise, supporting the country’s innovative institutions and businesses, driving collaboration and the commercialisation of new technologies.  

The UK’s strong tradition of scientific and technological excellence, combined with supportive government policies and private sector investment, places us at the forefront of innovation projects, and Research & Development plays a crucial role in the economy, resulting in the country being well positioned to continue to drive R&D innovation in the future.  

Our team of specialist R&D experts are happy to answer any questions you may have about R&D Tax Credits or RDEC, contact us today for more information.  

The next step

Our team of specialist R&D experts are happy to answer any questions you may have about R&D Tax Credits or RDEC, contact us today for more information. 

Kirby & Haslam Diversity and Inclusion

The importance of diversity and inclusion in the workplace

What is diversity and inclusion?

Diversity is the progressive mindset that allows you to understand, accept, and value the differences between people of various ages, gender, race, sexual orientation, ethnicity, religion, disability, knowledge, experience, skillset, and personality.

Inclusion refers to how well a company represents and facilitates diversity.

But why is this so crucial in the workplace?

The primary reason for introducing diversity into the workplace is straightforward. It enables us to develop in a variety of ways and to establish a skilled team capable of running the firm efficiently. In turn, diversity promotes inclusivity, which assists in enhancing innovation as well as accepting and appreciating each employee’s unique background. It promotes a positive, helpful, and respectful work environment in which employees are encouraged to interact and contribute freely!

Diversity also fosters a hunger for new knowledge and perspectives, which leads to increased team decision-making and problem-solving abilities, culminating in unlimited discoveries and breakthroughs. Simply being exposed to diversity may impact and modify people’s brain processes.

What are the additional advantages of having a diverse team?

Having established that diverse teams foster innovation, below are a few examples to demonstrate why diverse and inclusive teams are the new engines of innovation:

  • Teams that are diverse and inclusive generate fantastic ideas. Great ideas are required for company success, and they will not appear out of thin air – only members of your team can come up with brilliant ideas that were not previously explored. This is why, as your teams become more varied in terms of culture, age, sexuality, ethnicity, educational background and skill, and so on, they will seek and take inspiration from seemingly unconnected places. When employees exchange their ideas with a wide set of people, they combine more unique ideas.
  • It’s beneficial to the company culture. Building a team that pushes each other to see the world in new ways leads to growth. Diversity allows people to make their own judgements and own the outcomes of their labour. It can contribute to the development of a culture that values freedom and kindness.
  • Embracing diversity and inclusion will ensure that everyone in your company feels heard and respected, leading to increased sales and leads and a more engaged team.

How to Improve Your Team’s Innovative Potential When You Have a Diverse Team:

  • Seek everyone’s opinions. Innovation in the workplace necessitates the generation of diverse ideas and the selection of the finest one from among them – just incorporating individuals with various points of view in your meetings may provide you with inspiration that you would not have thought of on your own.
  • Be careful of experts. Experts are not the only people who can give you the correct or best response in every case. In today’s environment, every individual on your team may spark your company’s next big idea. As a result, it is ideal if you remain open to such possibilities.
  • Bring out individuals’ real potential. Every individual has a plethora of experiences, interests, and passions that you may leverage to improve your organisation. During a conversation, valuing their perspectives and insights might lead to the creation of something genuinely unlikely and unexpected.

Almost all firms are experiencing or will experience changes as a result of an ever-changing global economy.

Furthermore, with the availability of cutting-edge technology and a rise in commercial competitiveness, innovation and creativity have become critical to success. A diverse and inclusive workplace enables you to release a flood of creative and inventive ideas within your organisation. However, keep in mind that merely assembling a diversified team is not always enough.

Creating a psychological safe haven for each individual in each group is important for bringing out their unique perspective!

See what positions we have available and become a part of our diverse and inclusive team, here at Kirby and Haslam: https://uk.indeed.com/cmp/Kirby-and-Haslam/jobs

Kirby & Haslam R&D renting and leasing

Renting & Leasing: R&D

The renting and leasing sector within the UK is growing across a multitude of subsectors. Due to an increase in goods and services that can be rented in the 21st century, the sector is rife with potential for research and development. There is a rising demand for goods and services that can be rented/leased, caused by several factors. Firstly, the rising costs of specific goods such as mobile phones has resulted in the inability to purchase outright, leading to a demand in the ability to lease the product instead. The renting and leasing of goods also allows greater flexibility for consumers, which can be evidenced within the housing market.

What is the Renting and Leasing sector?

In simple terms, the renting and leasing industry involves the goods and services that are available to rented and leased to consumers. A lease is a contract outlining the terms under which one party agrees to rent an asset—property, for example—owned by another party. Some of the most popular assets that are leased within the UK include:

  • Property
  • Cars
  • Electronics
  • Machinery

An example how large an individual area of the leasing sector is the UK’s car rental & leasing industry, which is projected to be £15.4 billion in 2022. The rise of the internet over the past 20 years has dramatically accelerated the ability for goods to be leased, which is one of significant factors of the industry’s growth.

What is R&D within Renting and Leasing?

The growth of the renting and leasing industry has seen a rising demand for advancement within the sector. With more goods and services available to be leased, there is a necessity for the industry to become more sophisticated and efficient, which can be achieved through innovative R&D projects. Other demands for R&D within leasing arose during the coronavirus pandemic. Common practices within certain markets became disrupted during the various lockdowns in the UK – providing a necessity for innovation to find solutions to these problems. Here are some examples of areas within renting and leasing that have seen innovation:

  • Novel means of digitising the management and maintenance of properties
  • Automation of tenant requests, through algorithms that bypass the need to contact estate agents and experience long wait times
  • Contactless collection of rental vehicles through mobile technology
  • AI technology that helps property owners become paired with prospective rental tenants by analysing tenants credit history
  • Virtualisation of practises such as house tours, increasing accessibility of properties for tenants who are not able to visit in person

How R&D tax credits can help your renting and leasing company

There are many benefits to be gained from the R&D tax credit scheme, however you may be curious about how your own company can be eligible. 

There are many stages throughout an R&D project, which each involve varied activities that may or may not be eligible towards your claim. Some expenditure within  projects that are eligible for tax relief include:

  • Building and testing of prototype models that contribute to the final product, such as test version of software systems
  • Salaries of staff who directly worked on the project, such as technical design staff
  • Any training costs for staff required to work on the project

Whether your company is big or small, the benefits can be significant. The tax credits can help make future R&D projects become more affordable, whilst providing a budget boost to be used in other areas, such as the hiring of staff that can help grow your future.

The next step

Our team at Kirby and Haslam are specialists when it comes to R&D tax relief. If you feel like your company could be eligible for R&D tax credits, then do not hesitate to enquire – our team of experts will help you along every stage in the process.