HMRC tightening on R&D tax credits claims

By Anne Rose, R&D Tax Consultant

The Spring Statement once again saw mention of the plans from government to crack down on the abuse of research and development tax credits – with rules expected to be tightened from April 2023.

In recent weeks, HMRC has already started to make moves to this end and has placed certain research and development claims on hold while it investigates irregularities which may constitute abuse of the relief.

Anne Rose
Anne Rose

While the majority of the R&D tax credit claims won’t be affected, there is likely to be some delay in the processing of claims while this investigation is carried out.  Indeed, HMRC has now stated that their timescale for processing claims is being extended from 28 days to 40.  It is hoped this is a temporary increase, but time will tell.

Fundamentally, the problem is that R&D tax claims can be carried out by anyone – and there isn’t any law or regulation in place to stop an individual or company claiming that they are experts in the area.

This has led to some claims being submitted for companies, projects and products that ultimately are completely unsuitable to access the tax relief available. In short, consultants have been charging fees to submit claims and taking that fee even if claims didn’t have a chance of success, bringing undue stress into the R&D tax claim process.

In response to this unethical practice, HMRC is expected to make it compulsory that SMEs include the name of their R&D advisor in any claim.  They are also considering an advanced notification process for companies wishing to make a claim.  This should give HMRC a way of tracking individuals and companies that continue to put in poorly thought through claims.

At Burgis & Bullock, we have a dedicated, trusted and experienced team of research and development tax credit experts. We’d urge any business considering entering a claim for R&D to contact a trusted accountancy firm or advisor to carry out the process for them, regardless of the promises being made by another individual.

A firm such as ours would never submit a claim if we didn’t think it was appropriate, and we can usually tell from an initial phone call whether there is a case for a claim. It would only damage our own reputation with HMRC if we were to submit unethical claims.

There is a clear need for new and improved standards across the research and development advisory sector and the changes being made ad those being proposed by HMRC should help towards achieving that.

The long-term intention would be to reduce the number of R&D enquiries that HMRC have to raise and that take up valuable HMRC time and capacity.   In the short term however, there will be an increased number of enquiries.

While I expect the changes HMRC will bring in will lead to an increased number of unsuccessful applications, it is likely to have positive benefits for businesses with genuine and worthwhile claims.

How we can help?                                                           

Our team is on hand to support you with any guidance around R&D tax credits. We are experts in this field and our vast experience will help to guide you through the process.

We offer an introductory phone call for no fee and would encourage any SMES or large businesses considering a claim to get in touch.

If you’re not sure, don’t worry, and if you do not have time to read all of the HMRC guidance, don’t worry – talk to an expert instead.

To find out how Burgis & Bullock’s specialist tax team can support with R&D tax relief claims, visit www.burgisbullock.com or call 01926 451 000.

Read our blogs on R&D tax credits:

In this blog, Anne Rose discusses what an R&D tax credit is, who can claim, what expenditure qualifies and how to calculate the tax credit your business is entitled to.

Anne Rose runs through who qualifies and what expenditure can be included in a claim for R&D tax credit in this blog.

In this blog, Anne Rose takes you through everything you need to know about how to claim R&D Tax Credits in 2022 as a start-up entrepreneur or business owner.

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