Built environment companies using contractors need to hear this.
The government has completely overhauled the rules on claiming R&D Tax Relief for work contracted to another company.
These changes apply to financial years starting after 1 April 2024. If you’re currently conducting R&D, it's important to think about these changes now.
This post explains the key differences. If you want the full story, join our free webinar, specifically for built environment companies:
👉 https://lnkd.in/ewSWcGkw
Under the old rules, who’s eligible to claim R&D (customer vs contractor) hinged on:
✅ Who bore the technical and financial risk
✅ Which scheme the companies were applying to (SME or RDEC)
But things are changing…
Following the introduction of the merged scheme, it all depends on whether the R&D was ‘contracted out’.
How do you know if that’s the case?
R&D is contracted out if it meets three conditions…
📌 There was a contract between the customer and the contractor
📌 The contractor performed qualifying R&D
📌 It’s “reasonable to assume” that the customer “intended or contemplated” that R&D would be undertaken
The third point is especially important.
As the government says, "neither ‘intended’ nor ‘contemplated’ is defined in tax legislation".
However, HMRC is looking for something more substantial than ‘we thought about the fact we needed for R&D’.
You may need to supply evidence of your ‘contemplations’.
Evidence in the form of internal messages or, ideally, language in contracts.
It’s a good idea to start considering this evidence now.
If you’re using contractors or do contracted work for other companies, GrantTree can help you understand how these changes affect your company and navigate the new legislation.
Join our free Built Environment webinar next week, and we’ll give you a detailed explanation of the new rules.
#HMRC #contractors #randdtaxcredits #funding #construction #architecture
