The key takeaways from HMRC’s R&D Tax Reliefs Review

Most businesses need to develop products/services and technologies before they go to market but the danger is that they then sit on their laurels and do little further innovation or R&D to keep them ahead of the game. This scheme encouraged them to continually innovate.


That question should stimulate innovation.

This valuable incentive to innovation has created a new form of business advisors that help organisations, most with no knowledge of how to present an R&D claim, to prepare and present these claims on a no win no fee basis i.e. if the claim is successful they take a percentage of the claim. And many of them were good at it, knew the basis behind the incentive and were able to produce credible claims (within the government guidelines) which encouraged their clients to keep innovating.
However, it appears the few may have once again spoilt it for the many.

HMRC, whom I heard this week has 25000+ unopened letters awaiting action, has woken up to the fact that they have been approving spurious and dishonest claims produced by unscrupulous intermediaries – after finding that the scheme had been abused to the tune of £1billion due to fraud and error.

As a result, HMRC has apparently now written to over 80 R&D claims advisors insisting that they desist from producing “inaccurate and misleading adverts”.

Allegedly,  HMRC is now going to reduce the impact of the scheme whilst doubling of the number of HMRC staff working in compliance. Which includes reviewing claims over the past year that have been already paid out.

So the advice to those companies who have been in receipt of R&D tax money is to ensure historic claims are credible and to choose your partners carefully when preparing R&D tax credit claims. Detailed information is in the ‘HMRC R&D Tax Reliefs Review Consultation on a single scheme’ which is available online.

On a more positive note, the report does suggest that the introduction of a single scheme to cover both SMEs and larger businesses may result in an increase in the relief available to SMEs, in line with that provided to larger businesses.

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