Just before Christmas, Rishi Sunak announced that the Coronavirus Statutory Sick Pay Rebate Scheme (SSPRS) would be reintroduced from 21 December 2021 onwards.
Broadly, the SSPRS allows small and medium sized employers to claim back up to two weeks of Statutory Sick Pay for employees who are off sick due to Covid-19. Further details can be found on HMRC’s website here.
The SSPRS was a reintroduction of a scheme which had originally ended back in September 2021, so it may be that some employers have already made claims. However, a potentially unintended side effect may be the impact on SME R&D claims.
In order to claim R&D relief under the more generous SME scheme, projects cannot usually be funded via State Aid Grants. This is because the SME R&D scheme is a form of State Aid in its own right, and only one form of State Aid funding is allowed to be claimed on the same project.
Therefore, where projects are funded by State Aid Grants, a R&D claim must be made under the ‘less generous’ Research and Development Expenditure Credit (RDEC) regime, which is normally claimed by much larger companies.
The difference in benefit between a SME and RDEC claim can be as much as 23.63% of the expenditure incurred on a project, so it can certainly have a big impact.
So, how does the SSPRS come into all this? Well, there are two points to consider:
- HMRC make it clear that they “consider paying holiday and sick pay as a necessary cost of the employees undertaking R&D work and is, in effect, part of the cost of their working time” and
- The SSPRS is deemed to be a form of State Aid funding
Unfortunately, the SSPRS doesn’t fall within the ‘De minimis’ rules to be excluded. Therefore, where an employee’s time is included in an R&D claim where a claim has also been made under the SSPRS, this effectively means that part of the project has been funded by a form of State Aid funding and therefore a claim may be excluded from being made under the SME regime.
This has the potential for huge impact on an R&D, for what could be a relatively small sick pay claim.
If you undertake R&D claims, our advice may be to NOT claim the SSPRS for certain employees and if in doubt you should speak to your usual BHP contact or one of our R&D specialists.
