R&D Tax Enquiries - What triggers an R&D investigation?

Tax enquiries can be extremely stressful for companies.  Claims for R&D tax credits submitted without supporting information will be viewed as risky by HMRC, which is why our Radius team always submit a detailed R&D report to HMRC with a full breakdown of the costs included in the claim.

Any large first-time R&D claim is likely to be reviewed at HMRC and has the potential to be enquired into. This could also lead to larger full tax enquiries into the company if they are not satisfied with the information that has been supplied.

Main areas HMRC see as risky for R&D tax relief claims

• A proportionally large R&D claim is submitted with no R&D Report or a cost breakdown.
  
  
• If the advance or appreciable improvement in science or technology is not adequately explained in the report, HMRC will consider opening an enquiry to test if the company has qualifying R&D projects – our reports always include a comprehensive explanation.
  
  
• Directors using their own “connected” company to perform sub-contracted R&D is another significant risk to HMRC, even though it might be a bona-fide business relationship.
  
  
• Claiming all or most your staff are doing R&D is a risk, particularly if the company has revenue streams – explaining why is the key to minimise the risk and we detail the methodology used in our reports.
  
  
• Poor or inadequate methodology in calculating the qualifying R&D costs in the project – we make sure the methodology used is robust and would stand up to any enquiry.
  
  

How a qualified R&D specialist can help

The R&D tax relief scheme can be complex and using a R&D Specialist will help cut through the legislation and red tape that can make claiming, a daunting experience.  Shorts have an experienced and dedicated team of R&D tax credit specialists who can guide you through the process and prepare a detailed R&D Report to submit to HMRC. We also prepare and submit Patent Box claims.

Our team has already submitted hundreds of successful claims to HMRC and have a 100% success rate in claims submitted. We employ an ex-HMRC R&D Tax Inspector who provides even greater assurance that the claim we submit for you is correct.

Click below to arrange your free consultation to discuss your R&D claim.

 Other related links;

• Research and Development tax credit - Qualifying costs
• R&D Tax Credits explained
• R&D Tax Credit Eligibility Checklist
• R&D reliefs on software development