My Client Is Having Their R&D Tax Relief Claim Investigated. Help!
HMRC can raise an enquiry around an R&D Tax Credits claim for a number of reasons - but help is at hand.
We’ll work with you and your client
Every R&D Tax Credits claimant wants their application to go as smoothly as possible. Claims themselves can easily run into tens of thousands and pounds, and that cash may be crucial to company survival.
But as the R&D Tax Credits scheme has become more popular, with ever growing numbers of businesses claiming, we’ve seen a parallel trend of HMRC putting stricter review policies in place alongside stringent anti-abuse measures. When individual claimants try to 'DIY' an R&D Tax Credits claim, or if accountancy firms don't partner with an experienced R&D funding consultancy like Myriad, the chances of coming to HMRC’s attention are increasing all the time.
Of course, prevention is always better than cure which is why we strongly recommend businesses and their accountants work with us on their claim right from the beginning. But we understand this doesn’t always happen, and there are many inexperienced or unscrupulous R&D tax consultancies out there that simply don’t cut it. Things can all too easily go wrong.
If your client has come to you because of an HMRC enquiry into their R&D Tax Credits claim, now is the time to act.
Immediately get in touch with the Myriad Associates team
The first port of call is us. We work solely in R&D tax reliefs and funding and have years of dedicated experience in collaborating with HMRC to find a resolution. Not only that, but we will offer guidance through any subsequent claims to make sure this doesn’t happen again.
We’ll start by putting both you and your client’s minds at rest, and unpick the claim with a fine tooth comb. We’ll want to understand exactly what HMRC are unhappy with, and what questions they’re raising. Then we’ll plan a successful way forward, working in conjunction with HMRC investigators to unearth the best way forward. And if your client is further down the road, and has already been found to have received payment incorrectly, we’ll work on their behalf to negotiate an outcome that suits everybody.
What tends to trigger an R&D tax relief investigation in the first place?
In our experience there are a number of things that can stand out to HMRC inspectors like a red flag to a bull. But it’s not unusual for HMRC to simply open an investigation at random, allowing it to check the relief is being administered properly.
An enquiry may also come about because the claim is particularly large (especially if the company isn’t) or if it has been made using the SME branch of the scheme instead of RDEC. Questions may also be raised about the scientific or technological challenges that were addressed, or to query a particular calculation. Perhaps there are holes in the technical report or officers believe evidence has not been adequately recorded. There may be a sudden or drastic change in the company’s circumstances or there could have been a recent change of director. Any of these issues and more could lead to HMRC launching an investigation.
It’s usually a case of HMRC needing more information - but this can still bring about delays
If your client has come to you in a panic because they’ve been contacted by HMRC the important thing is to encourage them not to panic. As long as they can provide the supporting documentation required and answer HMRC questions truthfully and accurately that will likely be the end of it. Even so, the claim could be slightly delayed which isn’t great.
If any supporting evidence is missing (one of the most common mistakes) or if HMRC disregards any of your client’s project costs, then a reduced amount will be awarded. It’s possible your client will also be charged a penalty for carelessness or negligence.
Be careful, as things can escalate
Although frightening the wits out of your client is not a positive way forward, we do need to highlight the fact that HMRC won’t hesitate to bring criminal charges if it’s deemed necessary. Again, this is where you need us on your side.
If severe R&D tax relief fraud is suspected, HMRC may begin a civil investigation into the company’s affairs under Code of Practice 9. If this happens, your client will be immediately informed of the steps being taken, and will also be issued with a copy of the code. This then gives them the opportunity to “own up” to any errors or omissions which must be done within 60 days.
Using the Code of Practice 9 legislation, HMRC can investigate a company’s tax affairs and activities as far back as 20 years, particularly if the alleged offence is serious. Individuals found guilty of tax evasion could receive a prison term of up to seven years alongside a substantial fine.
Don’t let your clients risk it - talk to us.
How the Tax Cloud portal helps prevent HMRC enquiries in the first place
The beauty of the Tax Cloud portal (designed by the Myriad team themselves) is that it offers an interactive, fully guided solution to creating an R&D Tax Credits claim that’s accepted by HMRC first time.
The portal is divided into two areas - one for businesses and one for accountants - so that claimants can either apply themselves, or their accountants can do it for them. Once signed up, each section is completed before being reviewed by our experts and the next ‘stage’ is only unlocked once everything is completed correctly. Figures are added in and a technical report formulated, which is again checked at every step for complete confidence. The portal is also less costly than the full Myriad service as the data inputting isn’t done by us - but we’re still on hand when needed. A great option indeed for smaller companies and those looking to apply for R&D Tax Credits without the hassle and worry. Maybe your own accountancy firm could even benefit from R&D Tax Credits too?
Sign up free to the Tax Cloud portal today and also see how the portal can help your clients - and of course, there’s an attractive partner package on offer.
Call us on 0207 360 4437 or send us a message.