Accounting Update

R&D Tax Relief changes for SMEs

If your turnover is under £2m and you employ fewer than 50 people, you will now be able to seek ‘advance assurance’ on Research & Development tax relief. Essentially this will give you ‘assurance that HMRC will allow your first three years of R&D tax relief claims without further enquiry’. This could be very valuable – R&D relief allows you to reduce profits liable to corporation tax by 230% of your qualified spend on research and development. To learn more about this scheme, please talk to your account manager.

Tax Investigations taking years to solve

A quarter of tax probes are taking over a year to conclude, with about 3,800 out of a total of 115,000 taking over three years to resolve. Regardless of the outcome, each business or person selected has to shoulder the burden of being investigated, covering the extra costs, time and red tape involved. To make sure you’re not hit by the expense of an unwelcome tax investigation, talk to your account manager about our Professional Fee Protection scheme or visit (the special section on our website). This inexpensive protection covers your accountancy fees in the event of an investigation and allows us to complete the work without you worrying about the cost – no matter how long the investigation takes.

Micro-Businesses struggling with expenses

A poll of UK accountants who work with micro-businesses has found that 53% of respondents cited expenses to be the area in which mistakes by their clients was most common. Around 29% of accountants found micro businesses tried to claim expenses against tax that they weren’t entitled to, while 24% said firms failed to claim expenses that were allowable for tax purposes. Other common areas for mistakes were reconciling bank balances and failing to accurately record monies in and out.

Gift Aid: Have you paid enough?

After recent changes, HMRC’s Gift Aid declarations now require you to confirm that if you pay less Income Tax or Capital Gains Tax in the current tax year than the amount of Gift Aid claimed on your donations, you will pay any difference. While we encourage you to give to charity, we don’t want you to be out of pocket as a result – let us know if you have any worries about this change.

Tax Gap narrows

The UK’s tax gap – the difference between tax owed and tax collected – has fallen to 6.4%. Despite this, the missing money amounts to a huge £34bn.

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