With the Research and Development (R&D) scheme rising in popularity over the years and offering cash payments to the claimant company, it’s no surprise that it has been targeted by fraudsters. Last year alone, HMRC predicted around £49 million of fraud occurring within the scheme. As a result, HMRC has employed over 1,000 new compliance staff to tackle fraud and error in the scheme.
Tax inspectors are now tasked with identifying fraudulent claims. However, HMRC seems to be picking up genuine claimants and are opening a significant number of checks based on automated risk checks or random selection.
Enquiries are bad news for claimant companies. The process can take months to complete, which will require a significant amount of effort and time to be resolved. Unfortunately, even if you successfully defend your claim, an R&D enquiry can still delay your cash credit by months or even years. Although some checks are issued randomly or based on the level of qualifying spend, claimants can make several red flag mistakes that trigger an enquiry.