R&D Tax credit farce

HMRC slow to react

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It is so obvious there have been so many spurious claims with R&D Tax credits

In the article the Optometrist may have had a genuine ground to claim but wish HMRC just concentrated on certain industries where claims maybe considered to be a bit outlandish like builders.


HMRC should have been proactive years ago on R&D claims and so many other areas where businesses with their advisers were exploting this loophole.  Its only last year HMRC decided to ask for more information on R&D claims and suddenly before 31st March 2003 there was an concerted effort by these R&D specialists to contact more businesses to claim R&D as they knew it would be more difficult in future to claim R&D tax credits

I wish HMRC would go after these tax avoidance promotors who exploited this loophole. 

I will take my tranquilisers now and calm down




Replies (3)

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By petercooperuk
11th Mar 2024 19:14

This will surely blow up at some point, if they decide to really focus on it. The criteria given by advisors versus the actual HMRC guidance was miles apart. The HMRC guidance is so strict that very few companies would ever qualify for it, since it requires scientific uncertainty, a competent professional in an industry to not consider the problem already solved, and for the project to push towards an industry-unique scientific or technical advancement, not merely one for the company doing the R&D. This is true of extremely few projects even in the realm of what would pragmatically be considered R&D.

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Replying to petercooperuk:
By FactChecker
11th Mar 2024 19:39

All true - although in my experience there are quite a lot more than "extremely few" projects that can be pragmatically (and truthfully/realistically) considered to meet the stringent R&D scheme criteria.

Nevertheless I'm all for those criteria being policed/enforced.
Without them there's not a lot of point to the scheme (whether you believe in the avowed objectives as an investment in the nation's future or merely the political dimension) ... it is 'our' money currently being gifted to those who take but don't contribute to our future.

Thanks (2)
By FactChecker
11th Mar 2024 19:52

The BBC link is interesting, but contains so many errors that are very important - e.g:

"R&D tax credits were introduced in 2000 and are designed to help start-up companies, by giving them tax relief when they invest in innovation"
That's pure 'lobby group' wording ... it may well help start-up companies, but that is NOT what it was designed to do. If anything, quite the opposite in most cases (such as a well established firm that wants to shake up its sector by creating a radically different mechanism/process/widget - that would indeed meet the scheme criteria).

And ... "One big problem relates to how you define "innovation", says Mr Conry. "It can be very subjective and the grey areas quite large.""
Not really. The word on its own might feel subjective, but the scheme rules are quite specific - so, although it might be hard work to understand & claim ('free money' does tend to be), it's quite easy to interpret against any potential claim.

What needs to change is that HMRC should check first then approve/reject - not the other way round!

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