HMRC have recently confirmed changes to R&D legislation, following on from consultation results released in December 2021 (

These will come into effect for accounting periods beginning on or after 1 April 2023.

The main focus of the changes is to tackle abuse of the R&D tax credits system and to refocus reliefs towards UK innovation.

To summarise the main changes from the announcement:

  1. Qualifying expenditure now includes the costs of datasets and cloud computing, the definitions are as below:
    • A data licence is a licence to access and use a collection of digital data
    • Cloud computing services include the provision of, access to, or maintenance of, remote data storage, operating systems, software platforms or hardware facilities.
  2.  Only subcontracted work and external workers provided by companies/businesses in the UK will be available to be included in an R&D claim.
    • There will be some limited exemptions based on factors such as geography, environment, population, or other conditions that are not present in the UK that are required for research.
    • There will also be exemptions where there are regulatory or other legal requirements for certain activities to take place in specific territories, for example clinical trials.
    • Cost or time will not be an exemption for not using UK subcontractors.
  3. Further details will be required alongside all submissions. At Richardsons we produce an R&D report which covers the information highlighted by HMRC, as well as being able to give advice to ensure that claims made meet the requirements set out by HMRC.
  4. New claimants will need to inform HMRC that they plan to make a claim in advance. This will be done using a digital service, and will need to be submitted within 6 months of the end of the period to which the claim relates to. If a company has not made a claim in any of the 3 periods beforehand, they will also have to pre-notify.

Further information from HMRC can be found at

If you have any queries on any of the points raised above, please get in touch with your usual contact at Richardsons or speak to a member of our R&D team.

John Holland, Laura Hankey and James Chapman.

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