Can you justify your R & D tax credit claim?

As reported in Accountancy Today, HMRC has shifted its focus from dealing with Covid fraud to R & D claims.

The shift in focus will examine more closely the technical justification of the R&D submission.

According to specialists at Markel Tax: “between 2020 and 2021, HMRC have increased the volume of its inquiries into R&D claims by around 450% year on year.”

Furthermore, where previously HMRC investigated claims in excess of six figures they are now looking at submissions of relatively small value.

The article advises Accountants to thoroughly assess their R&D adviser by looking at track records and the quality and quantity of technical experts able to properly assess what are usually complex technical developments.

According to the Government’s advice on what qualifies as R & D is “work on innovative projects in science and technology.”

 Specifically, it says, the project must relate to your company’s trade, either an existing one, or one that you intend to start up based on the results of the R&D.

SME R&D relief allows companies to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction.

There is more information here.

There is also a Government-published PDF giving further guidance.

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