HMRC Enquiries

An R&D Tax Enquiry is a request from HMRC for additional information or clarification on your R&D tax relief application. Such enquiries aim to prevent overclaiming and fraud. They can range from simple requests for more information to challenges regarding the R&D status of your work under the law. In some cases, HMRC may reject claims, impose fines for inaccuracies, and demand repayment of previously awarded R&D tax credits with interest. Therefore, it’s crucial to work with a trustworthy R&D consultancy to ensure your claims are robust and compliant.

HMRC may initiate an enquiry for various reasons, including changes in company circumstances, issues with documentation, or significant increases in the value of your R&D tax credit claim compared to previous years. They may also focus on specific sectors or technologies as a precautionary measure. Common triggers for HMRC enquiries include:

• Insufficient explanation of the scientific or technological advancements achieved.
• Lack of clarity regarding uncertainties encountered during the R&D project.
• Inadequate evidence supporting why certain information wasn’t readily available to qualified experts.
• Concerns arising from the tax return.
• Inconsistencies or errors in the R&D tax credit claim.
• Exceeding permissible expenditures as recorded in company books.
• Incorrect allocation of costs for subcontractors and third-party personnel.
• Attributing R&D expenditures to personnel not directly involved in R&D activities.
• Omission of all personnel involved in R&D operations.
• Errors in tax return filing or amendments.
• Insufficiently qualified personnel evaluating the R&D project’s compliance.

Due to a recent increase in fraud and misuse of R&D tax credits, HMRC has bolstered its internal compliance team to scrutinise claims more thoroughly. While many enquiries are routine spot-checks or requests for additional information, others may stem from concerns about fraudulent claims. An HMRC enquiry can lead to significant payment delays, reduced claims, or penalties. Therefore, it’s essential to have your claims reviewed by experts like Harmoney Consulting Group. Our team can help minimise the duration and impact of the enquiry process on your business.

Additionally, HMRC may focus enquiries on certain sectors, industries, or regions as part of its risk management strategy. Consequently, companies of varying sizes and industries may experience differing levels of scrutiny at different times. By partnering with Harmoney Consulting Group, you can ensure that your R&D tax credit claims are robust, compliant, and well-prepared to withstand HMRC’s review process.

For more information on our compliance services and how we can support your business, please get in touch: