Media businesses are struggling to access research and development (R&D) tax relief without challenge from HM Revenue and Customs (HMRC), a new survey has found.
According to audit, tax, and consulting firm RSM UK, some 40 per cent had made at least one claim for R&D tax relief in the past year, and just under a quarter of these were approved by HMRC without challenge.
A third had a claim that was challenged before it was approved by HMRC. According to a recent report from the House of Commons, HMRC currently challenges around 20 per cent of R&D claims overall—up from one per cent previously.
A further third had at least one R&D claim declined by HMRC in the past 12 months.
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.”
Only five per cent of the more than 300 audio, music, advertising, publishing, film and TV companies surveyed had not claimed any type of tax relief in the past year.
Costas added that the increasing volume of R&D enquiries that take too long to process is “holding the UK media industry back from competing internationally.
“To encourage innovation in the sector and improve the UK’s ability to compete, the Government needs to have a focused and efficient enquiry process and must work to raise awareness of the support available to businesses.”
It comes after Chancellor Jeremy Hunt’s new merged scheme that combines the previous R&D expenditure credit and SME schemes, was recently introduced despite calls from start-ups for it to be scrapped.
An HMRC spokesperson said: “We recognise the importance of R&D in driving innovation and economic growth, and we are determined to ensure that the claims process is straightforward for genuine claimants.
“We have to make sure that claimants are entitled to the reliefs they claim and will only seek to recover money where it hasn’t been claimed in accordance with the law.
“All claims go through a risk screening process and the majority are paid without an enquiry. Where risks are identified, we use a range of compliance approaches and powers to deal with them.”