Recently published information from the law firm Pinsent Masons shows that the corporation tax at stake as a result of R&D claims which HMRC are enquiring into has increased by 372% in the past year, from £90m to £425m.
Although these statistics relate solely to the largest businesses, we are aware through our membership of HMRCs R&D Consultative Committee that the number of enquiries has been increasing and is set to increase further.
The impact on your R&D tax credits claim?
What does this mean for companies such as yours, who have made or are considering making R&D claims? It certainly doesn’t mean that you should be put off from claiming! These are hugely valuable reliefs which provide support to a vast range of businesses across our region and if your company qualifies, we would strongly encourage you to claim. However, the increased level of enquiries means it’s more important than ever to ensure that any claim submitted is accurate, robust and compliant with the legislation and HMRC guidelines. By far the best way to deal with a potential enquiry is to ensure that a solid claim is submitted, supported by a strong report which clearly sets out what is being claimed and why this qualifies. Common areas for enquiry are whether the project itself qualifies for R&D relief, or whether the costs claimed are eligible. Our expert team works with clients to ensure the claims we submit address any likely queries from HMRC, with the aim of preventing an enquiry being raised in the first place. Shorts Innovation Taxes group has never made a claim which has been rejected by HMRC.
And if the worst happens and you find yourself in an enquiry situation? We are here to help, whether or not this is a claim we prepared, or one you submitted using a different adviser, or perhaps did yourself. Darryl Hoy has recently joined Shorts’ Innovation Taxes group direct from HMRC, where he has many years working on R&D enquiries from the other side of the table. Our team can confidently guide you through each stage of the process.
R&D Enquiries - how Shorts have helped
We were recently engaged to assist a company with an enquiry into an R&D claim submitted by a different adviser – there were numerous strands to the enquiry and when we first became involved, HMRC were challenging the claim on the basis all three of the projects making up the claim were ineligible for relief. On our review of the claim, we came to the conclusion that one of the projects did indeed fail the test to qualify as it did not seek an advance in science or technology. However, we were able to work with the client and HMRC to agree that the other two projects did indeed meet the requirements for a successful claim. Since that point the company has engaged Shorts to prepare their R&D claims and has not been subject to any further enquiries
Discuss your R&D tax credit claim
If you would like to discuss Research and Development enquiries in more detail, or discuss how to proceed with your claim, please do not hesitate to contact us and arrange your free consultation
