To ask the Chancellor of the Exchequer, pursuant to the Answer of 22 October 2018 to Question 182193 on Research and Development Expenditure Credit, how the performance of the Research and Development Allowance is assessed; why the data on the amount of relief claimed cannot be identified; and if there are any plans to improve the technical specification of the system for capturing data on that allowance.
Research and Development Allowances (RDAs) often become indistinguishable in businesses’ tax returns when claims are made that include different types of tax relief. For example, when using the Annual Investment Allowance rather than the more specific RDA, unless claiming for buildings-related costs. This makes it very difficult to disaggregate claims by relief type, particularly where businesses claim non-RDAs for research and development costs. The government keeps all taxes under review, including by continued engagement with stakeholders.
As with other matters, HMRC examines tax returns on a risk-led basis in order to understand the basis on which claims are made. Further to this, HMRC encourages the use of more detailed online reporting and toolkits for tax advisers. These help save both businesses and HMRC time and money, as well as providing richer datasets for future policy evaluation and its future development.