HMRC crack down on ‘irregular’ R&D Tax claims

HMRC have announced delays in processing some research and development (R&D) tax credit claims due to ongoing investigations into “irregular claims”. The likelihood is that potentially fraudulent or abusive R&D claims have triggered the revenue to delve deeper in order to gain comfort over the validity of the claims it is receiving.

With R&D tax credits offering such generous financial relief, protecting the system from abuse is clearly a high priority for HMRC. The correspondence describes a number of ‘irregular’ claims. While the majority of applications will not be affected, HMRC have stopped payment on certain claims and their continuing investigations may have a knock-on effect on processing times in general. As R&D tax credit consultants, Momentum welcome this higher level of scrutinty.

Why are ‘irregular’ R&D tax credit claims being submitted to HMRC?

There are several reasons why a company may submit an incorrect Research & Development tax relief claim to HMRC.

• A deliberate attempt to defraud the system;
• A lack of understanding of tax legislation, leading to a mistaken belief that their activities are R&D qualifying;
• Submitting inflated or innacurate R&D costs without a supporting technical report;
• Acting on the advice of unscrupulous R&D agents who do not have the requisite experience, or they don’t comply with the Professional Conduct in relation to Taxation (PCRT).

The majority of irregular R&D tax credit claims are usually based on innocent and genuine mistakes rather than nefarious reasons. However, the penalties in both scenarios can be equally serious, which is why it is a situation that every business owner or director should strive to prevent.

How can I avoid submitting an incorrect claim for R&D tax relief?

Put simply, get expert advice from a specialist R&D tax credit consultant such as Momentum with a well proven track record. As R&D tax credit experts, you might well expect us to say this, but in our experience, it is always better to seek specialist help if you want to avoid costly mistakes.

Claiming research and development tax credits is a complex and nuanced process that requires an in-depth knowledge of the R&D tax system and the expertise to identify projects that meet the BEIS guidelines, whilst supporting your claim with an appropriately detailed and complex technical report that HMRC requires.

All R&D tax advisors in GB & NI must comply with the Professional Conduct in Relation to Taxation (PCRT) which sets standards and principles for all agents providing R&D tax credit advice. This means that your tax agents have a professional framework within which to act, comprising:

1. Integrity,

2. Objectivity,

3. Professional competence and due care,

4. Confidentiality and professional behaviour.

Here at Momentum Group, we adhere to all these principles. In addition, all R&D tax advisors in the UK are legally required to be registered with HMRC for the purposes of Anti-Money-Laundering.

Not only can an expert help ensure you’ve correctly provided all information required by HMRC, but their input is also invaluable in making the entire process as simple, streamlined and as effieicnet as possible. This provides you the peace of mind that you are doing things by the book, and you are gaining the optimum tax benefits from your R&D Tax Credit claim.

Expert R&D tax credit advice

At Momentum, we welcome all steps HMRC are taking to combat fraudulent or abusive claims. As specialist R&D tax credit consultants, we take great pride and care to ensure that every claim we deal with is completed to the highest standard and that our work makes life easier both our clients and HMRC.

If you’re new to R&D tax credits, or are unsure about any aspect of your R&D claim we’re here to help. For specialist tax advice, please get in touch to book a free initial consultation.