Making Tax Digital (MTD) will introduce extensive changes to how taxpayers have to record and report information to HMRC. Under MTD businesses will be required to maintain their records digitally using either accounting software or apps. They will have to report summary information to HMRC quarterly and an end of year statement through their digital tax accounts.

Unincorporated businesses were going to be the first to have to report under MTD but the government has announced a delay in its introduction. From April 2019 businesses with a turnover above the VAT threshold of £85,000 will have to keep digital records and only for VAT purposes. Businesses will not have to report under MTD for other taxes until at least April 2020.

These changes mean that businesses and landlords with turnovers under the VAT threshold will not have to move to the new digital system.

These changes are to be welcomed but businesses with turnover the VAT threshold need to be checking whether their accounts software will be able to cope with the new reporting requirements.

The General Data Protection Regulation (GDPR) will come into force on 28th May 2018. This replaces the existing data protection legislation and preserves existing rights but will provide new rights and enhanced protection for individuals. Failure to comply with the provisions of the GDPR may lead to greatly increased fines so any company processing personal data needs to be aware of the changes.

New data subject rights include the right to erasure, requiring a company to delete the personal data it holds. This data could include personnel records, computer data, CCTV, electronic access records, etc.

Individuals will also have the right to rectification of any inaccurate personal data.

Under the current regulations an individual can make a subject access request to find out what information a company holds them to verify whether it is lawful and correct. Under the GDPR the right to charge a fee for this information is abolished and the time to provide the information reduced to one month.

The GDPR allows companies to refuse to respond a such a request where it is manifestly unfounded or excessive, however they should seek legal advice before making such a decision.

It is estimated that only 10% of eligible companies claim the R&D tax relief to which they are entitled, so small business owners need to consider whether they are eligible.

A company can claim the tax relief if it “seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability”. This is not the most clear definition but in addition to what can be considered pure R&D (such as pharmaceutical research) it would include such things as software development or research to create or improve processes, products or services.

The key to a successful claim is to prove to HMRC that the R&D project meets the requirements fully and that the constituent activities and costs qualify. To be able to do this it is necessary to keep accurate records of times and costs throughout the project from planning to completion.

In order to increase the likelihood of a claim being processed smoothly applicants may choose to use a R&D tax specialist to assist in the preparation of the claim by providing the information that HMRC would expect to see. This would include a company background, a description of the R&D project and why it meets the official definition and a breakdown of qualifying costs.

Using a third party tax specialist may increase the likelihood of a successful claim but it comes at a cost. R&D tax specialists charge a fee based upon a proportion of the tax saved so it is in their interests to maximise the claim.

If you think that you are able to claim for R&D costs then please contact us.