The NI Tax Committee’s response to the consultation on qualifying expenditure for R&D tax relief agrees that qualifying expenditure does require modernisation, but this should not mean relief is curtailed in other areas.

The Committee made four recommendations overall in its response:-

1. There should not be a reverse “quid pro quo” effect whereby if additional qualifying cost categories are added to the UK R&D tax relief regimes, relief is restricted or limited in other areas as a result;
2. Data analytics, cloud computing and related costs such as those incurred on artificial intelligence, emerging technologies, and cyber-security where the expenditure is directly and actively incurred on the qualifying R&D project should also be included as qualifying costs;
3. Rent should be included in the expanded categories of qualifying R&D expenditure as this would ensure companies obtain some form of tax relief for building costs irrespective of whether they rent or own the relevant property; and
4. The UK Government should undertake a review of the Patent Box regime to identify potential barriers to its uptake and consider mechanisms to reduce these barriers.

You can read the Committee’s response to this submission in full in the Source Material section of this issue.