Your R&D tax relief claim can’t be an afterthought
For too long, and for too many, R&D tax relief has been a tick box exercise of tax planning. However, HMRC has drawn a line in the sand when it comes to abuse of the R&D tax relief scheme. This change of tack is well overdue and should protect the integrity of the schemes.
Just because you can make an R&D tax relief claim for a tax return period that has already been filed with HMRC, it certainly doesn’t make it good practice. With the change of emphasis in HMRC’s enquiry regime and other factors at play, leaving it to the last minute could represent a significant risk to your ability to claim successfully.
Leaving it to the wire can only impact quality
Running up to the deadline damages the quality of the claim and could put you more at risk of an HMRC enquiry. Timeframes are squeezed and the claim process is rushed. It can mean that your staff aren’t available to our team, other tasks take priority, details get overlooked and important information isn’t shared with us. We sympathise and we will pull out the stops, but we won’t cut corners and submit what we believe to be a non-compliant claim.
The risk of losing key members of the R&D team
Increasingly HMRC focus on the technical report for compliance, rather than the financial report. This means that capturing the full technical aspects of the project is essential. But what happens if this information only resides in the head of a team member and that team member leaves the business?
It is so much easier to capture and document project information in real-time, whilst memory is fresh and supporting evidence is at hand. A badly documented invoice or misplaced contract could be the difference between a successful claim and a year without tax relief for your business.
We may see longer delays from HMRC
HMRC has notified agents that they are pausing a number of R&D tax credit payments whilst they investigate some irregular claims. Most claims will be unaffected, but in order to prevent abuse of the scheme, there will likely be delays to their usual processing times.
Your auditors will want to see your R&D numbers
If you have an audit coming up you should have your R&D numbers ready to go. Your auditors are likely to want to know more about the potential of your R&D tax relief claim in advance. Even if you are not audited, if your R&D tax is material it should be considered at the time and not as an afterthought.
What does good practice look like when claiming R&D tax relief
- Aim to have your claim in your original tax comps
- Start moving to real-time tracking of R&D projects
- Consider an R&D tax relief claim with the same seriousness as a third-party investment, not a tax thing.
Let us help you get ahead of the curve
Here at GovGrant, we work with larger and complex businesses that need advance planning of the claim process and resources. We want to be as efficient with your time as possible – which means working with you throughout the year and taking on the heavy lifting.
We can be a reference point for your auditors – we can make sure you have what they need when they need it.
GovGrant is a market-leading, highly regarded firm and we care about the integrity and longevity of the R&D tax relief schemes. We welcome HMRC’s increased scrutiny in this area and will help you rise to the challenge.
If you or your clients are making an R&D claim, you should be satisfied that it is fair and appropriate. If you would appreciate a fresh pair of eyes, we will be happy to review claims as part of our HMRC enquiries service.