UK R&D tax credit claims now under extra scrutiny

UK R&D tax credit claims now under extra scrutiny

From today, 8 August 2023, HMRC is introducing new measures to R&D tax relief claims, in a bid to deter an estimated £1.3 billion in error and fraud. However, there is growing concern that the additional bureaucracy may result in genuine innovation being hampered.

Claimants are now required to complete an “Additional Information Form” and must notify HMRC which agent they used in the claims process.

These changes signal the start of further reforms to come in the UK’s R&D relief scheme. An HMRC-issued report found 16.7% of all R&D tax claims were wrong or fraudulent, which comes at a cost to the tax-payer.

It follows the announced cuts to R&D tax relief which were announced by Jeremy Hunt in the 2023 Spring Statement.

It is likely that we’ll see an increase in the use of specialist R&D tax consultancies, as innovative businesses and accounting firms alike look to their expertise in understanding precisely what HMRC needs, for a claim to be successful.