The biggest hurdle in R&D claim for R&D Tax Credits or R&D tax relief is HHMRC’s enquiry. As have noticed an increase in HMRC’s enquiry rate to deal with false claims, this blog intends to provide a complete guide to those deserving innovative businesses who are intending to make R&D claims for R&D Tax credits or R&D Tax Relief in the future.
What is HMRC’s Enquiry for & What are the Reasons for HMRC’s Enquiry of R&D Claims?
HMRC opens an enquiry for any R&D Tax credits or R&D tax relief claim with insufficient documents or lack of clarification. HMRC’s enquiry aims to review your R&D claims for further clarification and asks you for more evidence. The severity of enquiry varies depending on the claim. Usually, enquiry demands data to support your R&D claim but in case of false representation or fraudulent claim, HMRC will not only reject your claim but also add retrospective penalties for carelessness or fraud on you.
The rate of HMRC’s enquiry has been increased since last year, specifically for RDEC claims made by large companies one reason for the increase in enquiry is a prevalent increase in fraudulent claims which makes the process slower for rightful R&D claims too. For the very same reason, HMRC has added another requisite form CT600L demanding more details of the project which will reduce enquires for R&D claims and make the process faster.
Taking consultation from an R&D tax credit expert on your R&D claims might be a great idea to save your time and avoid a terrible experience of enquiry. Our R&D tax credits consultants can help you assess your R&D claim to avoid enquiry from HMRC.
Following are the possible ways to avoid HMRC’s enquiry and get your R&D claim process faster:
• Provide Supporting Evidence
HMRC requires details of your R&D project in your R&D report along with supporting documents. Your technical narrative and documentation should be a precise demonstration of your project. Make sure that beginning at end of the project is mentioned clearly in the narrative.
• Include technical staff in documenting the R&D claim
Ensure inclusion of your technical staff who are directly involved in the R&D project while documentation your R&D claim and take their judgments on the section of narrative their work is mentioned in the claim.
• Accurate representation
Ensure that data is an accurate representation of your project and can be verified by an audit trail.
• Verifiable details
Make sure that all the operational as well as technical details mentioned in the technical narrative as also accurate and verifiable if required.
• Evidence
Collect R&D project data and evidence as much as you can as evidence is very helpful in R&D claims and in case of enquiry it can also come in handy, as you will have enough evidence to prove your eligibility for R&D Tax Credits.
• Consult R&D tax credits specialists
It is better to consult R&D Tax credits specialists, as every project is different so specialists can guide you according to your project and even tailor a convincing narrative for you to diminish any need for enquiry by HMRC. R&D Tax Credits specialists can also provide you with a complete guide regarding R&D claims. In the case of HMRC enquiry R&D tax credits, specialists can deal with HMRC’s enquiry but first informing you regarding HMRC’s concerns.
Even if you are SME or large company if your R&D claim is prepared properly then it will be able to stand HMRC’s scrutiny and reduce chances of enquiry. Just keep the above-mentioned points while creating your R&D claim and make it enough convincing for your claim. If you want to consult our R&D Tax credits specialists feel free to contact us any time. Our R&D tax credits specialists will guide you, tailor technical narrative and also defend your claim against HMRC.
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