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image of scaffolding | accountingweb | Scaffolding company's R&D claim failed but not due to carelessness
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HMRC forced to climb down on R&D claim case

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A scaffolding company whose research and development claim was rejected won its appeal as the tribunal found it had not acted carelessly.

19th Mar 2024
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H&H Contract Scaffolding’s appeal in a research and development (R&D) claim case gives other companies a strong argument to appeal a penalty, as long as they have not acted carelessly.

This first tier tribunal (FTT) case was decided without a tribunal hearing. HMRC issued a penalty assessment of £6,632.01 for careless inaccuracy under schedule 24 Finance Act 2007 for the corporation tax return covering the tax period 1 July 2018 to 30 June 2019. The company appealed this penalty notice. The company director, Andrew Thomas said: “I used what I understood was a reputable company, Legal Rooms, to make an R&D claim on my behalf.”

Careless inaccuracy

Simply put, HMRC said that because the company could not show that it qualified for the tax relief, an inaccuracy had occurred that meant the company had been careless and should pay a penalty. The tribunal, however, quite rightly pointed out that the “existence of the inaccuracy does not answer whether the inaccuracy itself is careless”. 

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Replies (8)

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Replying to Justin Bryant:
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By FactChecker
19th Mar 2024 15:16

Indeed, with some reasonable contributions.

But the headlines here are very misleading:
"HMRC forced to climb down on R&D claim case.
A scaffolding company whose research and development claim was rejected won its appeal as the tribunal found it had not acted carelessly."

That all sounds as though the R&D claim rejected by HMRC had been 'reinstated' ... whereas the minor aspect of the *Penalty* being based on 'carelessness' is all that was overturned.
And even that was primarily due to HMRC's poor (actually almost non-existent) presentation of their argument.

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Replying to FactChecker:
By Ruddles
19th Mar 2024 16:36

Agreed - very misleading headlines

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Replying to Ruddles:
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By Justin Bryant
19th Mar 2024 17:24

But then again you should never let the facts get in the way of a good pun or play on words etc.

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By listerramjet
21st Mar 2024 09:32

It does seem to be difficult to challenge HMRC “guidance” with regard to interpreting tax law. A lay person might reasonably conclude that taking expert advice from tax advisors would be a sensible approach, particularly given just how complex the tax code can be. Does that responsibility really extend to expecting a lay person to test the veracity of expert advice? And if so then how?

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Replying to listerramjet:
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By Richardnss
21st Mar 2024 19:33

Perhaps the taxpayer should call an HMRC helpline!

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By anthony charles taylor
21st Mar 2024 09:44

Oh...its no wonder the Revenue treat most of these claims with contempt.....writing fiction obviously forms a large part of the claim...and then the third party yskes a third of any "saving".
I approached a couole of coompanies advertising claiming capital allownces on holiday homes....having worked oit myself what would possibly be included at no more than 30k of assets....6k oof tax I was told at a value of 550k my claim would be for 150k and theyd want 20k to put in the claim!!!!!

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By moneymanager
21st Mar 2024 12:01

I know someone in a 'big 4' who's department is specfically an R&D claims marketing op. we pay another department to write the rules which they makecsovardzne but they know all the back doors, itls a con.

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