Lord Turnbull, former Cabinet Secretary under PM Tony Blair and current crossbench peer in the House of Lords says of the recent spike in claims of tax credits “This is a major financial scandal…What we have is a system which is basically a help-yourself”.
“There is no way that R&D has grown 50% compound for 6 years, that is completely implausible”
The Research and Development Tax Credit system was introduced in 2000 and is a means of encouraging innovation in the UK by offering companies a tax incentive to do so.
In the financial year 2019-2020, £7.5 billion was claimed through nearly 90,000 claims This represents an increase of approximately 15% increase on the previous year.
This increase can be partly attributed to more SMEs being aware of the scheme and whose accountant/advisors had previously no knowledge or expertise in. However, it is also certainly down to fraudulent claims, either intentional or through poor advice from by R&D tax claims companies.
The Chartered Institute of Taxation highlights the ineffective oversight in the past, leading to too many claims getting through that shouldn’t have.
HMRC is pushing through reforms intended to cut down on the abuse, whilst also preventing significant organised criminal attacks and fraudulent abuse of the tax relief.
Where can you get advice on a claim?
Friend Partnership has been dealing with R&D tax credits since their introduction over 20 years ago. We have gained a detailed understanding of the R&D tax credit system. This depth of knowledge and experience, coupled with our successful track record defending clients from HMRC enquiries in all areas of tax and accounting.
If your organisation has recently received communication from HMRC about a claim previously made, or you would simply like to explore whether your company qualifies, you can contact us on a no obligation basis.
Friend Partnership is a forward-thinking firm of Chartered Accountants, Business Advisers, Corporate Finance And Tax Specialists, based In The UK