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R&D costs must be supported by evidence

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A company claimed R&D tax credits on losses of £398,325 but failed to provide supporting evidence for the expenditure. HMRC refused the claim and the FTT agreed.  

24th Jan 2020
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This is a cautionary tale of the need to keep and maintain accurate records of expenses and to record the technical details of R&D activities.

Teksolutions-Inc Ltd claimed R&D tax credits in respect of losses totalling £398,325 for two periods to 20 October 2015. After an investigation, HMRC issued a closure notice reducing the trading losses for each of the two periods to nil.

Teksolutions appealed (TC07456) and HMRC argued that if the appeal was dismissed, there would be no entitlement to claim an R&D tax credit, as there would be no qualifying expenditure for the purposes of CTA 2009, s 1044.

Teksolutions had provided lists of purported R&D expenses, but no documentary support. It wasn’t clear whether those expenses had been included in the tax returns that had been filed.

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Replies (2)

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By SteveHa
24th Jan 2020 16:00

I remember when I read this thinking that the company was on a hiding to nothing. The whole claim appears to have been a fabrication.

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By FayeBK
07th Feb 2020 10:57

Thanks, I need a laugh this morning!! Sound like from start to finish the claim was nonsense.

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