We’ve had a number of clients query if claiming government grants in relation to Coronavirus will impact on their ability to claim R&D tax credits, so we’re pleased to be able to clarify the position.
Firstly, businesses should be aware that companies in receipt of notifiable state aid for a project are not allowed to claim any further state aid on that project. As R&D relief for SME’s is considered state aid, this has had many questioning if the CJRS will impact on their ability to claim R&D tax credits. It should be noted that any business receiving state aid would instead have to claim under the Research Development Expenditure Credit (RDEC), which is not as favourable. This position is explained at CIRD81670.
Thankfully, HMRC have confirmed that the CJRS grant is not state aid because it is available to all businesses. As a result, receiving this grant should not affect a company’s ability to claim R&D tax relief.
This is confirmed at paragraph 11 of the BEIS guidelines (State aid: Guidance on the Covid-19 Temporary Framework for UK Public Authorities), which states:
- The UK government has prepared a package of both aided measures such as the Coronavirus Business Interruption Loan Scheme (CBILS) 10 to support SMEs, and general measures like the job retention scheme that do not constitute State aid as they are measures available to all businesses
The guidance regarding subsidised expenditure still applies, as stated at CIRD81650. Therefore, staffing costs, while normally considered qualifying expenditure for R&D, cannot be claimed to the extent that they were subsidised by the CJRS.
Furthermore, the rules for receipt of de minimis state aid, such as the NIC employment allowance, are also given at CIRD81670. The NIC element of staffing costs covered by the employment allowance will also be disqualified from being claimed as part of the R&D enhanced credit.
For any further guidance, please contact a member of our team, who will be happy to help.