It’s no secret that HMRC is reviewing new R&D claims much more carefully than it has in the past and is taking a firm approach to any it suspects are fraudulent.
HMRC has a specialist team in its Fraud Investigation Service titled the Research and Development Anti Abuse Unit which is there to challenge and block such claims.
Further, since 8 August 2023, new tighter rules have been in place which include the need to:
- Identify any advisor who has assisted with the claim;
- Identify the responsible internal person within the company itself; and
- Provide a wealth of detailed supporting information.
Read in details about what changed on 8 August here.
HMRC targeting former clients of ‘boutique’ firms
HMRC estimates that around £0.5bn R&D tax relief is wrongly claimed every year through error or fraud.
In some cases, this has involved ‘boutique’ firms who professed to be R&D tax experts in spite of previously having little or no experience in the field.
It has been well publicised over the past 12 months or so that many of these companies have been submitting erroneous or exaggerated claims for R&D tax credits in return for a percentage of the “savings”.
HMRC are now targeting the current and former clients of these R&D ‘boutiques’.
How far back can HMRC look and what are the consequences?
HMRC have the power to recover historic tax repayments and savings from excess claims. Where businesses and/or their advisors are found to have acted carelessly or deliberately that can mean up to 6 years or 20 years respectively.
Any recoverable tax is also subject to late payment interest – as of 22 August this is 7.75%.
Further, depending on the behaviours involved and the degree of mitigation, civil penalties range between 0% and 100% of the additional tax or over claimed repayments.
In the most serious cases HMRC can also consider criminal prosecution.
Need our help?
Cowgills are experts in R&D tax claims, with over 15 years’ experience in reviewing, managing, and submitting successful claims.
Now more than ever it’s essential that when submitting a claim for R&D tax credits you have an advisor with integrity, expertise, and experience.
If you are concerned that past R&D claims made on the advice of other advisors may have been incorrect we can advise the best way for you to approach HMRC to mitigate your position.
Get in touch with our R&D tax specialists if you need support or help.
Disclaimer
The information was correct at time of publishing but may now be out of date.
