Companies can reduce their tax bill or claim payable cash credits as a proportion of their R&D expenditure.
As a result of lobbying from industry, the government launched a consultation in the 2012 Budget on changes to the Large Company R&D Tax Relief scheme.
The definitions of large and small company size are driven by the EU classifications (and adjusted for UK R&D Tax Credit purposes) including revenues, number of employees and balance sheet assets.
The Chancellor of the Exchequer announced in his 2014 Autumn Statement that the taxable credit available to companies claiming under the RDEC regime has been increased from 10% to 11% providing an after tax benefit of 8.8% of the qualifying R&D expenditure incurred after April 2015.
The government established a Working Group, to complement ongoing public consultation[7] on the R&D Tax Relief initiative and to discuss options and proposals in more detail.
Members of the Working Group include representatives from: HMRC and HM Treasury; industry; the financial services community including large accounting firms (PWC; Deloitte; KPMG; Ernst and Young) and independent consultants (Alma Consulting), (MMP Tax); and representatives from professional bodies.