R&D tax relief claims – HMRC’s approach


Tax enquiries can occur from time to time across any aspect of the company’s affairs and this very occasionally includes your Research and Development claim. Many people are understandably uncertain as to what an HMRC enquiry of an R&D claim can involve.

We know that any tax investigation is unwanted and potentially worrying. However, R&D tax relief enquiries can be the perfect platform to agree your client’s claims process with HMRC for many years to come. We are here to ensure that this is the outcome.

Our experience with HMRC
Our in-house R&D division has spent over 10 years discussing the best way to process R&D tax claims with HMRC to ensure that we provide just the right amount and balance of information. There are five specialist HMRC R&D units in the UK with around five Inspectors in each. Abbey Tax enjoys good working relationships with the Inspectors and is constantly ensuring that the standard of our paperwork meets with the individual Inspector’s requirements.

HMRC have always asserted that they require a layman’s summary of the technical projects and they expect that a particular set of questions is answered. However, they also assert that they do not want to be provided with large volumes of technical information.

Occasionally, however, it is difficult to get this balance correct. HMRC recognise this too. When companies claim for a particularly large amount of tax relief or the nature of the R&D is less clear than in other cases, HMRC have the right to ask further questions to gain sufficient assurance that the claim is right and proper.

Our R&D experts have an in-depth understanding of every aspect of the R&D tax legislation and a working knowledge of what the individual Inspectors expect to see. As a result, we can effectively guide your client through the enquiry to ensure that a successful outcome is achieved.

What happens when an enquiry is raised?
The Abbey Tax R&D team prepares several hundred R&D tax relief claims each year and a tiny fraction (less than 1%) are investigated by HMRC. We welcome these enquiries as they can pave the way for future claims to be accepted with minimal fuss. Enquiries also give us an insight into HMRC’s latest “hot topics”.

Below is a concise summary of the usual outcomes of an enquiry into an R&D tax relief claim.

1. Nothing happens
The overwhelming majority of R&D claims prepared by our R&D team are accepted by HMRC with absolutely no further questions. Our carefully developed reporting format ensures claims are robust and reliable, offering the right amount of information to HMRC to ensure swift processing.

2. Informal telephone questions
In the event that the claim is large, unusually complex or sometimes even because the Inspector has a personal interest in the area of R&D, a specialist R&D Inspector may contact us with further questions. Normally the Inspector will require further clarification or evidence of certain points. When this happens, a friendly phone call or an informal letter requesting the required detail is directed to our in house R&D specialists.

3. Meeting in person
If the claim is the company’s first, or the claim is substantial, it is becoming increasingly likely that an R&D Inspector will request to visit the company’s premises to obtain the necessary assurance. Again, friendliness should be the overtone of this meeting although it does worry some claimants unnecessarily. Claims are prepared correctly; therefore such meetings should not be a cause for concern. Our success record is unrivalled and we will endeavour to ensure the claim is accepted as soon as possible. Our experience of HMRC meetings of this type has always been positive.