Rewind only a couple of years and R&D tax relief was welcome for companies undertaking technically challenging projects. Unfortunately, as it was a seemingly easy win, there has been a rise in fraudulent claims. Over the last twelve months there has been increased scrutiny and activity around R&D claims.
Levels of non-compliance in the reliefs
Last Monday we saw HMRC published its Annual Report and Accounts for 2022-23 and this includes new estimates for the level of non-compliance in the reliefs. Originally, the estimate for the tax year ended 2021 was £336m (3.6%) however the updated level is £1.13bn (16.7%) a considerable increase.
HMRC also published their compliance approach to the R&D reliefs which details the scale and shape of non-compliant claims, action taken so far and the department’s compliance approach to R&D.
HMRC have adopted a volume approach to try and stamp out these fraudulent and incorrect claims, and while the industry welcomes measures to tackle these claims, the way in which HMRC are handling these is potentially damaging.
Draft legislation published last week revealed:
proposed merger of the SME and RDEC scheme and overseas R&D spend
rate changes for both schemes from the 1 April 2023
additional qualifying costs which can be claimed
the introduction of an advanced notification of intent to claim
an additional information form which needs to be submitted before the tax return for any claims submitted after the 1 August
With all of these changes and concerns the R&D landscape is increasingly difficult to navigate, therefore it is increasingly important to seek advice from a regulated advisor to ensure that you are not unwittingly at risk of submitting a claim which might be deemed careless or fraudulent.
Need assistance?
Please contact us using the enquiry form or call 0845 555 8844 if you would like to discuss any of the issues in this article or if you a seeking assurance that your claims are completed correctly.
