HMRC Loses Landmark Case

HMRC Loses Landmark Case

Last week, HMRC lost a landmark R&D tax tribunal case. This decision is significant because it challenges their current enquiry procedures and sets a positive precedent for companies concerned about making R&D tax credit claims or having their claims unfairly denied.

What This Means for You

Historically, HMRC has often rejected R&D tax claims, ignoring expert testimony about the innovation involved. This is a key method of their rejecting R&D tax claims, and it has now been proven to be wrong in the context of a tax tribunal.

Now is the time for companies who have been wary of HMRC’s compliance activities, to reevaluate the risk and discuss their projects with their trusted advisor to ensure they claim all they are entitled to. So, that’s good news.

But Don’t Get Complacent

While HMRC might change their approach and think twice before challenging claims backed by technical experts, it doesn’t mean they’ll stop their efforts to combat fraud and non-compliance.

Our market engagement shows that HMRC is now routinely asking R&D claimants who sought advice in preparing the R&D tax claim: What steps did they take to verify the advisor credentials and competence to provide advice on R&D for tax purposes? What process did they follow to ensure their advisor had access to all the relevant facts they needed to provide accurate advice?

Our interpretation is that HMRC might use these questions to determine if penalties should apply if claims are rejected due to insufficient due diligence in selecting a competent advisor.

Considering PCRT clearly states that members “must not undertake professional work which they are not competent to perform unless they obtain appropriate assistance from a suitably qualified specialist” (see paragraph 2.11 of PCRT), if HMRC deems you lack the necessary expertise, both you and your client’s claims could be at risk.

We can help

So, you can see that whilst the tribunal decision is likely to yield a positive effect, it’s still incredibly important to select a competent advisor as your partner.

Visiativ supports many accounting firms with R&D tax relief claims and other innovation funding services. They understand that with us, it’s about building a claim to withstand scrutiny, from the start:

■ Our Technical Consultants are qualified with industry experience.
■ We stay updated with the latest regulations and guidance.
■ We handle most of the work, making the process painless for you.
■ We defend your client’s claims free of charge during enquiries until an agreement with HMRC is reached.