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One simple mistake that could be ruining your R&D tax relief claims

10th May 2023
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R&D tax relief training and support

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With scrutiny on the rise, many R&D advisors are looking for way to improve their claims and avoid costly enquiries. Here’s one key mistake you could be making – and how to fix it.

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I’m sure if you’re reading this, you’re no stranger to preparing a claim for R&D tax relief. But like many other accountants and advisors, you may be feeling a little uncertain about how your claims will be received by HMRC in the current environment.

They are opening more enquiries and denying more claims than ever before, so even the most experienced advisors are looking for ways to improve their processes and their claims, to reduce the risk of it happening to them.

Why would HMRC open an enquiry into your client’s claim?

HMRC don’t publish a specific list of reasons for opening an enquiry, but based on our work with our members, we’ve seen plenty of enquiry letters and the reasoning contained within.

The one problem that keeps coming up, over and over again? HMRC’s caseworkers can’t pick out the important details from the technical narrative, so they can’t see why the claim qualifies.

This is why it feels like enquiry letters ask you to repeat work you have already done – by asking questions you feel you already answered. They’re asking because they couldn’t find the answer themselves. 

Related: An Insider’s Guide to R&D Tax Relief Enquiries in 2023

How to present your R&D claim to HMRC

So how can you avoid making this mistake and landing your client in the same scenario?

Here are 3 key things you need to do to make sure HMRC’s caseworkers can process your claim.

1.    Pay close attention to the definitions in the guidance

HMRC’s definition of R&D for tax purposes sets out the criteria that must be met for a project to qualify for relief. Make sure you and your client have a clear understanding of these key terms and definitions, so you can give details of each element in your report.

2.    Use layman’s terms to describe your client's projects

Technical jargon and acronyms are the number one way to make sure HMRC will have no idea what you are talking about! While your client, and their technical experts, will know their area inside and out, the caseworker who reads the claim most likely won’t! So, unless they’re well explained, industry terms and abbreviations are not a useful shorthand – they’re a barrier to your claim.

Our latest blog post explains exactly how to explain complex ideas in layman’s terms in your R&D claim and provides some useful tools to help you improve your own reports. 

3.    Keep the report as short as you can, without skipping key information

While it might seem like more evidence is better, overly long reports can also be a barrier to the success of your claim. HMRC’s caseworkers are pretty pressed for time. We’ve heard through the grapevine that they only get about 30 minutes to review a claim before deciding whether or not to open an enquiry. Longer reports mean they have to read faster, or skip sections, which increases the chances that they won’t be able to get comfortable with the claim within the short time available.

From 1 August 2023, HMRC’s Additional Information form will give you a clear structure, and help you narrow down your technical narrative to key information. You’ll still have the option to submit other documentation alongside the claim, if you want to include any extra detail.

Other ways to improve your R&D claims and reduce your risk of enquiries

If you’re still concerned about the risk of enquiries, we have some other articles which may help.

Even if you’ve been preparing claims for years, taking advanced training in R&D tax relief can help you to keep your skills razor sharp, and improve standards within your team.

You can find out more about your training options in our free Guide to Support and Training for R&D Tax Relief Advisors. 
You can also explore our full course catalogue and find out about our training academy, if you’re looking for the best CPD resources.