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Could HMRC benefit from better training in R&D tax relief?

19th Jan 2024
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R&D tax relief training and support

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HMRC's current approach to compliance in R&D tax relief leaves a lot to be desired. Could a more collaborative approach yield better results for all parties?

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Since last summer, CIOT and HMRC have been trading a fascinating series of letters about R&D tax relief. In carefully crafted letters, Ellen Milner (Director of Public Policy for CIOT) articulated many of the issues currently experienced by SMEs and R&D advisors at the sharp end of HMRC’s “volume” approach to compliance.

Some of the concerns raised in her latest letter of 11 December 23 were that:

  • “the volume compliance approach to R&D enquiries means that legitimate claims are still being rejected”
  • [ there is ] “a strong caseworker bias towards rejecting claims and disregarding the testimony of competent professionals” and
  • “the system continues to fail to deliver a fair enquiry process for a significant number of genuine claims”

Coming from such a highly respected source, these comments carry a lot of weight – and the CIOT’s observations have been echoed by our membership too.

While HMRC is likely to continue ploughing ahead with its current approach despite all protest, we saw an interesting opportunity to get involved in the debate. 

It struck us that a significant gap has opened up between how HMRC’s caseworkers define R&D, and the more pragmatic standard applied by the majority of reasonable R&D advisors. (This problem seems particularly acute within HMRC’s ISBC teams, which assess SME claims.)

The relationship between the two sides is currently pretty adversarial, with HMRC and advisors seemingly starting from a different set of core assumptions about what constitutes a reasonable R&D claim. 

But what if there were a collaborative solution to this? Or at least, a partial solution? What if we shared access to our range of R&D-specific video-based training courses with HMRC’s caseworkers? A more accurate shared understanding of the scheme might help bridge the divide and lack of trust between HMRC and advisors.

Now, we appreciate that HMRC provides internal training in this area already. But if the CIOT’s comments are anything to go by, that training isn’t quite hitting the mark. Perhaps our courses would augment their existing training and provide a different perspective that’s based on practical experience and an ethical outlook.

Anyway, we were keen to find out what HMRC thought about our ideas, so we wrote to them! You can read the full text of our letter here, and we'll report back on their feedback.

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