Weekly tax brief | 25 August 2020

R&D tax relief reforms risk stifling innovation in small firms 
Sheetal Sanghvi 
HMRC recently published a second consultation document with proposals for preventing abuse of the research and development (R&D) tax relief for SMEs, but will these proposals discourage small businesses from undertaking genuine R&D activity? We suggest improvements. 

Who pays the tax bill anyway? Well-intended tax schemes often penalise consumers 
George Bull 
Directly or indirectly, most taxes are ultimately paid by individuals. We’ve been looking at what this means in practice, particularly as some countries make increasing use of their tax systems to tackle avoidance by multinational corporations, to slow global warming and, in the UK’s case, to prepare for the end of the Brexit transition period. 

Free money! Children’s Trust Funds begin to mature 
Sarah Saunders
Children’s Trust Funds, (CTFs) start maturing on 1 September 2020 as the first recipients turn 18. HMRC has a tool to allow children to track down their funds if they are not contacted. Funds will contain a minimum of £250. 

HMRC is back and focusing on people with offshore investments
Justin Stevenson
HMRC has launched its latest campaign of nudge letters aimed at taxpayers who hold overseas investments. Given the potential for extremely harsh penalties for any errors discovered by HMRC relating to offshore matters, taxpayers with such investments need to carefully review their position.