Will making an R&D claim impact on our relationship with HMRC?
HMRC and UK Government are fully supportive of the R&D tax credits scheme and see it as a major part of the wider industrial strategy to boost productivity and increase R&D investment within UK PLC. But does HMRC paying you money impact your wider tax relationship?
The R&D scheme has a defined set of rules about the types of projects and costs that can be claimed. Submitting a claim with an error or mistake will impact your HMRC relationship and delay payment of any refund.
Errors can cause far more serious issues during any due diligence process as they have the potential to generate concerns with HMRC that there may be other issues to be uncovered. As the corporation tax return is self-assessment this error will be the responsibility of your firm irrespective of whether you have engaged an advisor to prepare the claim.
HMRC are fully supportive of scheme and have been actively promoting R&D tax credits to smaller firms. Therefore, a well prepared claim that helps an Inspector understand why the work is claimable will be gratefully received as it saves time and effort within HMRC to process the claim.
The key take away from this is that any firm must understand the guidelines and the full details of any claim being submitted. If you engage an advisor it is best to work with someone who is open and transparent about the claim they are preparing so there are no nasty surprises if you receive a query from HMRC.