In recent weeks, HMRC have issued a number of informational letters to companies that have previously claimed R&D tax relief.
These letters advise companies to check that their previous R&D claims meet the Business, Energy and Industrial Strategy (BEIS) guidelines, and to amend any claims made in error.
The letter states that during compliance checks carried out by HMRC there have been particular issues with software claims, because the software claimed for does not create an advance in the field of software development. In addition there have been issues with claims that do not seek to make scientific or technological advances for the field as a whole. These claims do not meet the BEIS guidelines and therefore should not have been made. Consequently, when discovered, these erroneous claims have been subject to penalties.
HMRC’s decision to send out these letters now may be linked to the fact that the March 2021 budget included the launch of a wide-ranging consultation on R&D tax relief. Whatever the outcome of this consultation, we anticipate that any companies who have received a letter from HMRC regarding R&D claims, may be subject to higher penalties should they later make an incorrect claim.
E R Grove clients can rest assured that we undertake the required due diligence on potential R&D tax relief claims, ensuring that all claims are robust and meet the qualifying criteria. Our reputation in the sector is one of technical competence and honesty – both of which will stand us in good stead for the anticipated increase in HMRC enquiries.
If you are a new client, or not yet a client, and are concerned that you may previously have made an incorrect R&D claim, speak to one of our advisors today.
