Know more about why HMRC suspending payments of R&D tax credit
HMRC had announced earlier in the news of 2022 that it would suspend payments of R&D tax credit credits while it investigates certain claims. HMRC has now revealed details about a new campaign to combat fraudulent claims.
The current scam for claiming tax relief for research and development
R&D tax benefits are a large collection of tax breaks for corporations that encourage innovation. R&D tax relief provides a basic deduction that can be used to reduce qualifying expenditures. Small and medium-sized enterprises may be eligible for even greater relief. If the claimant company is losing money, a portion of the loss (the surrenderable Loss) can be exchanged to receive a payable credit equal to 14.5%. Fraudsters have taken advantage of the credit’s generous terms. These ” R&D tax advisors”, who submit claims on behalf of companies, take a portion of the payable credit on a “no win, no fee” basis. HMRC will often make a payment to companies before asking any questions. If the claim is not merited, they can reclaim the amount with penalties. Many fraudsters will ask companies to allow HMRC to pay the money to them directly. This means that the company is often out of pocket when HMRC demands repayment.
You should be cautious if you are approached by someone who makes T&D tax relief claims that seem too good to be true. While it is possible that R&D costs are being incurred, it is unlikely that you would be unaware of them – even though you may be familiar with R&D tax credits. HMRC has sent an email to companies whose claim seems to be fraudulent, asking them to contact them with more information and reserving their right to open criminal investigations.
We access our tax advisors’ position and can assure you that our assessment process to identify R&D tax relief claims is very stricter. You can contact us at R&D Tax Credit for Small Business – Gatwick Accountant to book a free consultation.