Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if his Department will conduct a review of the (a) eligibility criteria and (b) claims process for R&D tax relief, in response to ONS evidence, published 29 September, showing a high incidence of fraud and error.

The recent ONS Business Expenditure on Research and Development (BERD) publication did not provide new evidence on R&D tax relief error and fraud, but it did show that ONS estimates of UK R&D and, the amounts of expenditure for which R&D tax credits are claimed, are closer than previous estimates thought. The current estimate of error and fraud in the SME R&D scheme is higher than the 2020-21 estimate, reflecting improvements in HMRC’s risk identification process. As part of an ongoing series of reforms to tackle abuse and better target the relief, in November 2021 HMRC announced a series of new compliance measures that will be implemented from April 2023. These include improvements to the claims process, which will require additional information from claimants, and the establishment of an anti-abuse unit.