Economic Affairs Committee
Research and development tax relief, HMRC data requirements, promoters of tax avoidance and sentencing for tax fraud
2nd Report of Session 2023-24 - published 1 February 2024 - HL Paper 52
Contents
Box 1: ‘Above and below the line’
Chapter 2: Government Review of Research and Development Tax Relief
The Research & Development Review
Initial reforms—Finance (No 2) Act 2023
Budget 2023—a new R&D intensive scheme
Autumn Statement 2023—the end of the review
General reaction to the R&D reforms
Chapter 3: The Research & Development Intensive Scheme for Small and Medium Enterprises
What is an R&D Intensive business?
Possibility of spurious claims
Chapter 4: A new merged Research & Development tax relief scheme
A simplification of R&D tax relief?
Awareness of the changes to R&D relief
Adjusting to the merged scheme
Chapter 5: Subcontracting Arrangements
Treatment of subcontracted R&D and subsidised expenditure under the existing R&D relief schemes
Different interpretations of subcontracted R&D and subsidised expenditure?
Who should claim relief for subcontracted R&D and subsidised expenditure?
Table 1: Subcontracting: who can claim under the existing schemes
Table 2: Subcontracting: who will be able to claim under the merged scheme
The Government’s preferred approach: defining subcontracted R&D
A need for transitional provisions?
Chapter 6: Changes to HMRC Data Collection
Data on dividends and dates of self-employment
Chapter 7: Dealing with Promoters of Tax Avoidance
New criminal offence for promoters
Effectiveness: offshore promoters
Figure 1: HMRC Stop notice process
Stop notices under appeal to the tax tribunal
Disqualification of directors—who should be targeted?
Disqualification in the Public Interest
Chapter 8: Doubling the Maximum Sentence for Tax Fraud
Doubling the maximum sentence for tax fraud
HMRC’s Approach to Prosecution
Chapter 9: Cross Cutting Issues
Introducing changes too quickly
Underestimating the cost of change
Concerns about increasing HMRC powers
Summary of conclusions and recommendations
Appendix 1: List of Members and declarations of interest
Evidence is published online at https://committees.parliament.uk/work/7923/draft-finance-bill-202324/publications/ and available for inspection at the Parliamentary Archives (020 7219 3074).
Q in footnotes refers to a question in oral evidence.