The Fraud Investigation Service (FIS) at HMRC is cracking down on incorrect, inflated or fraudulent claims.

For those following the rules and correct procedures, HMRC clamping down on the abuse of R&D incentives is long overdue, with fraud and dubious practices within the sector becoming increasingly common in the last several years.

What steps are HMRC taking?

Last year, HMRC launches its campaign to better regulate R&D claims – initially with the recruitment of 100 new inspectors and then recently R&D payments being paused whilst HMRC investigated an increase in irregular claims. Last month, HMRC announced they will be enhancing their extensive compliance checks. These additional checks will mean the standard processing times will increase from 28 days to 40 days. We’ve recently discussed these delays in more detail here.

Now, while ‘normal’ HMRC R&D enquiries continue much as they always have, the new FIS approach appears to be much more aggressive. Essentially, the FIC’s letters state that they believe claims are invalid and need to be withdrawn. Not responding to these letters will be taken as culpability by HMRC and any response/defence offered will be used as evidence at potentially either tribunal or prosecution.

Whilst it will be a concern for businesses reliant on receiving tax credits, it is a positive step that HMRC are devoting significant resources looking to identify incorrect, inflated or fraudulent claims. It goes without saying that genuinely innovative companies seeking to overcome technological or scientific uncertainty should not be concerned, rather the companies making fraudulent claims, and the agents that help prepare them.

Speak to our team

Our tax team are specialists in R&D claims, ensuring they are maximised but not illegitimately inflated. If you would like advice on an R&D tax relief claim, be it past, present, or future, our team will be more than happy to help. Get in touch below.

The Team

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