It has been my long standing view that many Research and Development (R&D) tax claims are at best debatable in their merits. My own action on this has been to only submit R&D claims for my clients if either an R&D expert has advised on the validity of the claim, or advance assurance is obtained from HMRC. This de-risks the process for both my clients and my firm.

 

The problem with claiming R&D tax credit when not having an expert opinion or clearance, is that HMRC will pay out without very much (any?) checking. Cash duly arrives from HMRC, in amounts often exceeding the company’s entire annual profits. HMRC may then check later, potentially disallowing the R&D and reclaiming the tax credits they have paid out.

 

In a recent case HMRC did just that. The First Tier Tribunal agreed with HMRC and reversed the R&D claim. R&D is not available where a company’s activities are merely a novel use of existing technology. The judge said they were not satisfied that the company had created a new technology or resolved technological or scientific uncertainty.

 

Be warned! When claiming R&D credits, let us help you get expert advice, or obtain advance clearance from HMRC…without these you could end up with a bill to repay your R&D tax relief claimed.

 

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.