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Report: Media businesses facing HMRC R&D tax relief challenges

Research suggests media businesses are struggling to make successful claims for research and development tax reliefs

Accounting company RSM UK has revealed more than three-quarters of UK media businesses are challenged by HMRC when submitting claims for research and development tax relief.

Publishing the results of a recent survey, the audit, tax and consulting firm highlighted the difficulties faced by media companies when trying to obtain R&D tax relief. The company said more than 40 per cent of respondents had made at least one claim under the scheme in the past year, with less than a quarter (24 per cent) being approved without challenge. Over the same period, 33 per cent had claims approved after being challenged by HMRC with another 33 per cent stating at least one claim had been declined.

Commenting on the findings, Constantine Costas, tax partner at RSM UK said “This research is concerning, as it suggests media businesses are struggling to make successful claims for research and development tax reliefs. These reliefs provide a vital lifeline to encourage businesses to develop new innovative technologies, which benefit their customers, their businesses, and the media industry as a whole.”

HMRC recently reported that it currently challenges around 20 per cent of R&D claims overall, indicating that media businesses in particular are struggling to access the right advice, according to RSM’s report. The findings also revealed 95 per cent of survey respondents had claimed some form of tax relief, with 46 per cent claiming creative sector reliefs and 35 per cent claiming Patent Box to offset R&D costs. Only 5 per cent of those surveyed did not claim any relief at all.

RSM UK also said the reduced 15 per cent credit rate offered under the new merged R&D tax incentive regime could reduce competitiveness, highlighting the 30 per cent R&D credit relief available in Ireland.

The company outlined ways to improve the chances of a successful claim, which included checking the credentials of advisors, ensuring rules are fully understood and avoiding the assumption that claims processed by HMRC are free from error or risk.