We share how Buzzacott’s Research & Development (R&D) Tax Credit team helped a client successfully overcome HMRC’s enquiry into their R&D claims, addressing the challenges they faced, and the importance of finding an R&D adviser you can trust.

A rejected claim

After submitting its R&D tax credits claim without the support of an R&D adviser, Business X (client’s name changed to protect their confidentiality) reached out to our R&D team after multiple rounds of correspondence and repeated phone calls with HMRC, which resulted in what it felt was an unjustly rejected R&D claim.

Despite being highly experienced engineering specialists within their field, Business X’s engineers struggled to communicate their project to HMRC, and as such, the HMRC Inspector failed to understand the complexities of the work and rejected its entire R&D claim.

How we helped

Buzzacott’s R&D team has significant experience in assessing the technical basis of R&D claims and has specialists with a variety of engineering and scientific backgrounds. Having this experience outside of accounting and taxation allows our team to communicate in the language of the technical specialist. But the key skill is translating that information into content that HMRC is familiar with.

We started out by discussing with Business X its projects and ensuring there was a valid claim to be made. It’s easy to misunderstand the guidelines and include ineligible projects, such as ones that apply existing technology or work that is trial and error in nature. Our specialist advisers were confident that the claim was eligible under the scheme and then moved on to devising an approach to address HMRC’s concerns.

The key issue we could see was that much of the development work was in software languages that HMRC may have been unfamiliar with. The difficulties in explaining the work without delving into call libraries and security protocols meant the development team had discussed the project at a high level. This made the work seem routine as the HMRC Inspector could find similar examples elsewhere via an internet search. Unfortunately, this masked the technical challenges in the project and therefore the Inspector was not seeing the full picture. That said, the claimant company was extremely frustrated that it could not speak to an Inspector with electrical engineering experience who it was convinced would understand the challenges of the project.

Claim accepted

Our enquiry response provided supporting evidence that the R&D claim was eligible, while also pushing back on the assumptions or misunderstanding the Inspector may have. As a result, after only one round of correspondence with Buzzacott’s support, the R&D claim was approved, with the benefit being paid out in full.

It’s important to find an R&D adviser you can trust to ensure you’re not missing expenditure that could rightfully be claimed, or it may include costs that aren’t qualifying, which could mean risking an HMRC enquiry into your claim. We take time to listen to your business to understand the goal you’re trying to achieve with your innovation, so we can help you overcome problems and challenges along the way. We want to help you understand your eligible activities, without holding you up, so you know how to build a robust R&D claim.

What to do if you receive a claim enquiry/rejection

Have you received an enquiry from HMRC regarding your R&D claim? If you choose Buzzacott to prepare your enquiry response, we will:

• Review the submitted R&D claim to confirm the technical basis and eligibility of the claim.

• Collate any additional information required to strengthen the enquiry response.

• Prepare a written enquiry response to HMRC.

• Communicate in a way that HMRC is familiar with, without the use of generic terms.

• Prepare the response using brash language in order to prevent unjust claim rejections.