If you are among the 2000 companies who received a letter from HMRC in January 2023 about your R&D claim, you should respond to it as soon as possible.
As part of the crackdown against R&D tax relief fraud, HMRC has been focussing on selected businesses warning them to ensure that previous R&D tax relief claims are robust and accurate. Where they are incomplete or inaccurate, companies are expected to amend their company tax return or face the prospect of penalties, tax investigations or rejected claims.
HMRC sent the letter in response to the rise in R&D tax relief fraud and especially where third parties have been targeting companies to make inaccurate R&D claims as an amendment to their company tax returns.
HMRC has estimated in its most recent annual report and accounts, that £469m was lost through fraud and error in its two R&D schemes in 2021-22, equivalent to 4.9% of corporate tax R&D reliefs. HMRC has been given additional resources and staff to check compliance.
The penalty for non-compliance and incorrect claims is likely to be higher for companies which have received this letter and not corrected their figures. If companies are in any doubt as to the validity of their R&D tax relief claim, they should review their claim and make a voluntary disclosure to HMRC, which carries a lower penalty than when HMRC make the first move.
Next steps
If you’re considering R&D tax relief, or would like a sanity-check of past, present or future claims, please do get in touch. UHY Ross Brooke employ experienced R&D tax claim specialists to ensure that only robust claims are submitted and where necessary will advise clients to amend or indeed withdraw claims where appropriate.
Get a FREE review of your R&D process and a copy of the UHY Research & Development Tax Relief Guide
Companies applying for R&D tax credits need to follow the rules carefully in order to maximise their tax relief. New changes to the R&D tax credit scheme come into force from 1st April 2023 aimed at reducing incorrect or fraudulent claims, improving compliance and encouraging UK innovation.
UHY Ross Brooke is delighted to offer a complimentary review of your research and development tax credit process with one of our R&D tax credit specialists. Please fill in the form below for your free review and Tax Relief Guide.
