HMRC and R&D tax claims
We at R&D Tax Solutions in Manchester talk regularly about the lack of awareness many companies have in relation to the availability of R&D tax credits. That said, more and more businesses are becoming responsive to the fact they could be missing out; in 2017, there was a growth of 20% of organisations making a claim to reward their hard work in research and the development of innovative solutions.
As is so often the case when money is on the line, the growing awareness of HMRC R&D tax credits makes them a tantalising target for those looking to game the system. As such, it came as no surprise that in November’s budget, the UK government pledged additional funds to reduce tax avoidance. It begs the question, therefore, of whether HMRC is policing R&D claims?
HMRC enquiry process
When processing a claim for R&D tax credits, HMRC aims to work on a quick turnaround of receiving the application to completion – estimated to be 28 days. It is predominantly the case that the information provided is given a standard review and green-lit for the claim to be processed successfully. On occasion, however, it may be necessary for a more thorough investigation to be initiated.
As more and more R&D tax credit claims are submitted, it’s almost inevitable that the level of investigation will increase. At present, there are a number of common flags that trigger an investigation into claims:
- Inconsistencies in your claim – or even details that don’t seem credible – often cause HMRC to contact you for further information
- Unrelated issues discovered in your tax return may prompt investigations into your R&D claim
- Changes in circumstances for your business – such as significantly increased claims value from previous years
- HMRC routinely investigating particular industry sectors
These are just a few of the reasons why your claim may be subject to closer scrutiny. There are few causes of dread quite like being investigated by HMRC, so taking measures to ensure there is no reason for investigation – or simply being free of worry should one be initiated – is critical.
Working with R&D specialists
The easiest way to keep your claim accurate and free from excessive scrutiny is to employ R&D tax specialists in preparing your application. They will be able to determine precisely which projects and qualifying costs can form a successful claim, and will support you in preparing the necessary documentation to submit to HMRC. They will even be able to offer guidance in the unlikely event you are one of those subjected to investigation.
R&D Tax Solutions in Manchester has a team of experienced R&D experts that will be able to work alongside you to ensure you receive the rewards that your research and development endeavours deserve. Contact us today for more details.
