MPA Group Blog Inaccurate R&D Tax Relief claims could lead to expensive fines

The R&D tax relief scheme is a well-established vehicle for rewarding companies that invest in innovation. It's a generous scheme and HMRC is rightly concerned to make sure that it is targeted in the right areas. Given that the scheme has been in place since 2000, HMRC has a large amount of data around which it can benchmark the claims it receives. If they think you have claimed too much, they will check; if they think you have claimed too little, well, let's just say that they are less likely to check! Historically, if you were found to have made a claim that you could not substantiate, HMRC would simply correct the claim value and collect any extra tax that was owed. However, as tax collection has become more of a political issue, HMRC is beginning to place more emphasis on levying penalties. While honest mistakes will occur from time to time, companies claiming R&D tax relief need to make sure that they minimise the risk of a penalty. Remember, the penalty could be as high as 100% of the claim value, and with average claim values being over £40,000, that could be a significant dent to the bottom line. So, before you lodge your next claim, make sure that you only claim for activity that is eligible, that you have proper records to support the costs you are claiming and that you have clearly identified the scientific or technological advances you were seeking to achieve. But, make sure that you also claim your maximum entitlement; don't reduce the size of your claim unnecessarily, just to try and stay under HMRC's radar. Mike. If you would like help in checking that your claims are compliant with all aspects of the legislation then contact us on 01234 912000 or email info@thempagroup.co.uk .