HMRC has now bolstered its operations, significantly increasing the number of inspectors reviewing R&D claims. It also frequently brings in its Fraud Investigation Team on R&D claims where it suspects tax fraud.
“Once they identify wrongdoing—whether from a client or advisor—they don’t stop there. This relentless pursuit has led to challenging times for some of the more adventurous R&D advisors and agencies, with some choosing to exit the industry altogether. However, this still leaves the end client at risk if they were aware or complicit in a fraudulent claim prepared on their behalf”, says Paul Woodward.
HMRC urges R&D over-claimers to come forward
HMRC has launched a special R&D Disclosure Service for companies with overclaimed research and development (R&D) tax relief. It is open to those who:
- Have claimed excessive R&D tax relief.
- Can no longer amend their tax returns due to expired time limits.
- Need to pay additional Corporation Tax or repay overclaimed tax credits.
The service operates separately from HMRC’s contractual disclosure facility and is open to directors, company secretaries, and tax advisers. As part of the service they must explain the mistake and confirm the amount owed.
Once submitted, HMRC will review the disclosure within 15 days and decide whether to accept it or request further information. If accepted, the company must pay the full amount within 12 months.
Unlike other HMRC disclosure schemes, this service does not waive penalties, and eligibility criteria are strict. HMRC warns businesses to be vigilant, as many rogue R&D claims firms have misled companies into making invalid claims.
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With the expertise of a specialist in-house R&D tax advisor and a sensible approach to calculating and verifying claims, we aim to thoroughly understand and quantify your research activities so that you claim the tax relief that you are entitled to.
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Companies that delay and wait for HMRC to investigate risk penalties and criminal prosecution. However, you can correct excessive claims and HMRC has stressed that this scheme is not the only way to do so.
If you are in doubt about the validity of your R&D tax claims and to discuss how to correct your past R&D claims, contact us for a free, no obligation consultation with our R&D expert.
With more than 20 years in tax, Paul provides tax compliance and advisory services to clients, and specialises in R&D and capital allowance claims.