Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to help increase the UK’s global competitiveness in green finance.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The Government has taken world-leading action to green the financial system, and we remain fully committed to that work. The action we have taken is part of the reason that London has been consistently ranked as the world’s top financial centre in the Global Green Finance Index.
We were the first major country to publish a Green Finance Strategy in 2019 and in March 2023 we published an updated Green Finance Strategy. It set out our ambitious work on green finance, providing further clarity on key policy areas such as our ambition to become a Net Zero Aligned Financial Centre, and next steps under our Sustainability Disclosure Requirements framework, including transition plan disclosures, and next steps on the UK Green Taxonomy. In addition, as part of the 2024 Spring Budget, the Government has announced that it will proceed with developing a regulatory regime for ESG ratings providers, aiming to improve transparency and promote good conduct.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has made an assessment of the adequacy of the advisory market to support businesses claiming R&D tax relief.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
HMRC recognises that agents play a vital role in the Research and Development (R&D) tax reliefs regime and around 90% of R&D claims involve an agent.
Agents offer valuable support for their clients to access the relief they are entitled to.
The Government expects all tax agents, including R&D advisers, to adhere to the HMRC Standard for Agents, which sets out HMRC’s expectations for all individuals and businesses involved in professionally representing or advising taxpayers. In addition, the government is continuing to explore options to raise standards in the tax advice market.
HMRC’s dedicated R&D Anti-Abuse Unit, focuses on the most complex and high-risk cases including tackling agents actively promoting the R&D schemes to businesses unlikely to be eligible. This includes working with the Advertising Standards Agency to remove false advertising by agents.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what progress he has made in reducing R&D tax credit fraud.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
In July 2023 HMRC published their compliance approach to R&D reliefs (HMRC's approach to Research and Development tax reliefs) setting out the scale of non-compliance in the R&D schemes, action taken by the government to date and how HMRC are tackling R&D non-compliance.
HMRC will set out steps it is taking to tackle error and fraud in its Compliance Action Plan, to be published in due course.
HMRC will also provide updates on the level of error and fraud for R&D tax credits in their Annual Report and Accounts 2023-2024 to be published in July 2024.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to introduce a new help-to-buy ISA.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The Help to Buy: ISA (launched in 2015) allows prospective first-time buyers to obtain a government bonus of up to £3,000 towards their first home. This scheme closed to new accounts on 30 November 2019, but existing Help to Buy: ISA holders can continue saving into their account until 30 November 2029 and can claim the government bonus until November 2030.
Since April 2017, adults under 40 have been able to open a Lifetime ISA (LISA) and save up to £4,000 each year until they reach 50. The Government provides a 25 per cent bonus on all LISA contributions within these limits. Savings invested in a LISA can be withdrawn from the age of 60 but funds can be withdrawn at an earlier stage if used as a deposit for the account holder’s first home on a property worth up to £450,000. Help to Buy: ISA account holders will be able to transfer their funds to a LISA within the LISA’s £4,000 annual limit.
The Chancellor keeps all tax policy under review.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's policy paper entitled Merger of current small or medium enterprise (SME) and Research and Development Expenditure Credit (RDEC) schemes, updated on 23 November 2023, whether his Department has assessed the potential impact of the proposed merger on individual sectors.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
R&D tax relief will continue to be available to all sectors following the merger of the small or medium enterprise (SME) and Research and Development Expenditure Credit (RDEC) schemes.
The government will monitor the impact on claimants of R&D relief policy changes, including on sectors, through information collected from claims and claim notifications.
HMRC publish annual statistics on the sectoral distribution of R&D tax credit claims https://www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has issued recent guidance to tax accountants on (a) how and (b) whether activity can be classed as research and development for the purposes of claiming research and development tax reliefs.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
HMRC keeps all guidance under review and is committed to making improvements to its guidance working with a wide cross-section of businesses, industry groups, agents and accountancy professional bodies.
In October 2023 HMRC published Guidelines for Compliance on R&D. This helps customers avoid common errors when claiming the R&D reliefs. They set out practical steps for customers to follow and examples provided help to identify projects where some or all of the activities may qualify for R&D tax reliefs. This publication was well-received by stakeholders.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department is taking steps to ensure consistency in the processing of claims for (a) Research and Development Expenditure Credit and (b) research and development tax relief for small and medium-sized enterprise; and what training is received by HMRC staff working on such claims.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
All R&D claims go through a risk screening process before the payment process. Where risks are identified, HMRC opens enquires into those claims following the HMRC Enquiry manual, a detailed guidance framework on conducting compliance checks.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to ensure that HM Revenue and Customs' definition of a competent professional is applied consistently when assessing research and development tax relief claims.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
A competent professional is someone suitably qualified or experienced in the field. Having worked in a field or having an intelligent interest alone, does not make a person a competent professional. They must have enough knowledge and experience relevant to the qualifying project.
The opinion of a competent professional should set out:
HMRC will give due weight to an opinion offered by the company’s competent professional but further enquiry may still be needed, especially where the opinion omits the required information, as set out above.
HMRC are committed to adhering to the values set out in the HMRC Charter and have a quality assurance programme to ensure consistency when applying guidance.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what proportion of (a) Research and Development Expenditure Credit and (b) Research and Development tax relief for small and medium-sized enterprises claims were disallowed in each of the last five years for which figures are available; and what the most common reason was for a claim being disallowed in each of those years.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
HMRC do not publish the proportion of R&D claims disallowed and the reasons for disallowing them.
HMRC publish the estimated amount of R&D tax relief claimed and the estimated number of claims. The latest figures for 2021-2022 are published here: Research and Development Tax Credit Statistics September 2023.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions his Department has had with insurance companies on recent trends in the level of the availability of insurance premiums that insure against (a) Research and Development Expenditure Credit and (b) Research and Development tax relief for small and medium-sized enterprises claims being disallowed.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors on an ongoing basis.
Insurers make commercial decisions about the terms of cover they offer, including for tax liabilities, based on their assessment on the likelihood of a claim being made. The Government does not intervene in these commercial decisions by insurers as this could damage competition in the market.
The Government is committed to making Research & Development (R&D) claims as straightforward as possible. His Majesty’s Revenue & Customs (HMRC), are responsible for delivering the checks and compliance activity for R&D claims, in line with their professional standards for compliance.