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R&D Tax credit efficiency

With greater scrutiny of the claims being made for research and development tax credits, James Dudbridge explores ways of making sure you avoid the pain of inspection with scrupulously accurate records.

ProductivityAround 50,000 claims were made for research and development (R&D) tax credits in the 2017-18 tax year alone – a 31% increase on the prior year. This success has prompted greater scrutiny of the submissions being made in the form of enquiries. While HMRC doesn’t release data about the volume of enquiries it undertakes, estimates suggest it’s about 5-10% of all claims submitted. These can be prompted by any number of factors from simple, honest mistakes spotted by an HMRC inspector to questions about a firm’s wider tax position.

 With more enquiries being launched than ever before, it is important to be prepared. They can have a significant financial impact. Furthermore, if an enquiry isn’t handled effectively, it can seriously damage your relationship with the tax authority – not to mention the time and resources required.