HMRC Election to be treated as Connected
April 21, 2016 7:16 AM   Subscribe

I am self employed and one of my clients has asked me to sign a letter to HMRC asking to be considered jointly connected so that they can claim R&D tax relief on what they pay me. I know you are not my tax advisor etc but can anyone tell me what the ramifications might me for me if I sign this.

I can't seem to find any information on what impact this will have on me/my "company".

The letter says:
"The company and the Subcontractor hereby jointly elect that they should be treated as connected for the purposes of all transactions made in relation to the development carried out by the subctractor on behalf of the company

As a a result of this election, the Company have claimed 100% of the expenditure incurred by the Subcontractor in its R&D claim for the year ending December 2015"

The main reason I'm concerned is, if there were no potential negative consequences to me for being "connected" to them, why would they need my permission? As far as I'm concerned, their tax situation is none of my business and vice versa.

Has anyone else been through something like this? I can't find anything online about the potential consequences of being officially connected to another company
posted by missmagenta to Work & Money (3 answers total)
 
To me, it reads more like an intellectual property question (as in your work would become solely their property), rather than tax relief. And even if it is tax relief, what's in it for you? Are they the only ones to benefit, in which case why should you sign --- i.e. 'what's in it for me?'

I think you need a lawyer for this.
posted by easily confused at 7:23 AM on April 21, 2016


What's in it for me is my client is happy and keeps hiring me ;)

It is a tax credits scheme, nothing to do with IP.
posted by missmagenta at 7:26 AM on April 21, 2016


It says here that ‘The company and the subcontractor may jointly elect to be treated as if they are connected even though they are not connected.’ which suggests that both parties have to agree to the nominal connection in order for them claim tax relief on 100% of what they paid you rather than on the 65% of what they paid you that they could claim if you were to remain unconnected.

As to any potential adverse consequences for you: I don’t know.
posted by misteraitch at 8:06 AM on April 21, 2016


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