R&D Tax Credits: HMRC demands for greater detail and expertise

HMRC haven’t been shy in their declared attempt to stamp out fraudulent Research and Development (R&D) Tax Credits, with the standard for evidence and accountability within claim submissions reaching new heights.


Compliance is under the microscope, more than ever before. In this blog, we’ll outline one new measure which is going unnoticed by countless applicants.


HMRC’s recent R&D Tax report (November 2021) stated that R&D Tax Credit claims ‘will in future require more detail – for example, on what expenditure the claim covers, the nature of the advance sought, the field of science or technology, the uncertainties overcome’.


This was the first documentation that outlined HMRC’s insistence on extensive, detailed submissions to justify R&D claims.


Why are they doing this?


Well, demanding greater expertise helps HMRC combat the increasing number of rogue R&D advisors within the accountancy and consultancy space.


At present, accountants often enter essential figures on the CT600 without any supporting evidence backing up that spending action - which isn't sufficient in the eyes of HMRC.


Professional and legitimate R&D Tax consultancies, such as Claim Capital, don’t operate like this. We differentiate ourselves by producing comprehensive financial and technical reports that feature a detailed background to every R & D claim.


What’s more, our reports also map out how the qualifying R&D expenditure adheres to changing legislation.



🔎 Successful R&D Tax Credits: It’s all in the details


Simply put, HMRC wants greater detail for all claims from April 2023.


The demand for more detailed justification aims to rid r&d tax credit claims of reported costs that don’t actually qualify.


This crackdown won’t cause problems for experienced R&D specialists, like us at Claim Capital. But for Accountants that lump R&D claims in with general bookkeeping – it presents a problem.


Naturally, more in-depth financial and technical reports take longer, and accountants that are already spread thin may not have the time to produce the necessary detail.


Even for accountants that aren’t time-poor, a general proficiency in financials isn’t going to cut it. An understanding of complex legislation, as well as expert knowledge of research and development expenditure, will be fundamental for satisfying HMRC and avoiding an enquiry when filing your r&d tax credit claim.


That’s why R&D Tax Advisors that specialise in the field are so important.


Our team of R&D Tax experts have over 20 years of combined technical experience in delivering successful and maximised R&D claims. And as an authorised HMRC agent, changing legislation is always at the forefront of our attention.



🏆 Remember, tighter rules shouldn’t mean higher fees


Don’t be fooled into thinking this new HMRC guideline automatically means that your annual r & d claim process has to be dragged out to span months. Again, the key is choosing an advisor that dedicates their time solely to R&D tax relief.


Illegitimate service providers within this space will likely use new rules as a crutch for demanding higher fees and taking longer to complete and submit your r & d tax credit claim.


This doesn’t have to be the case. Because in reality, operators should have been working to this standard all along.


We always have been - and we aim to complete and submit R&D Tax Credits within 3-5 days of receiving sufficient information.


 

HMRC estimates that more than £300 million was incorrectly claimed in 2018-19. In response, HMRC is in the process of recruiting 100 investigators to monitor r & d claims meticulously and flag any wrongdoing.


Yes, sometimes fraudulent R&D tax credit claims are orchestrated by criminal masterminds. But the truth of the matter is that most cases of rejection, enquiry, and penalty, happen unintentionally due to misunderstanding the rules surrounding R&D Tax Credits.


Now more than ever, it’s vital that a trustworthy, experienced specialist handles your R&D Tax Credit claim.


If you want to maximise your R&D tax relief, and have the confidence that your claim meets the new standard, get in touch with our team.


💡 Click here to arrange a free consultation with our R&D Tax Specialists. 💡