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HMRC Freeze R&D Payments

26 May 2022

HMRC has paused some R&D tax credit payments while it investigates some irregular claims.

It hasn’t given much further information apart from to highlight the penalties that agents could be liable for if they are found to be submitting incorrect, inflated or fraudulent claims.

We suspected something like this would be coming but didn’t expect it to happen so soon.

There are often 3 parties involved in an R&D claim – the claiming company, their accountant and an R&D advisor.  When a claim is submitted, HMRC can easily identify the first two but the R&D advisor often remains hidden as there is no requirement to disclose this information.

This makes it very difficult for HMRC to spot trends in poorly compiled claims.  It is aware that many of these claims could come from the same R&D advisor but is unable to trace them back to their original source.

All this will change when new legislation comes in next year, making it a requirement to disclose who compiled the claim – a move we welcome and have followed ourselves for years already.

However, it looks like HMRC may have already spotted a particular source of dodgy claims and could finally be taking action against some of the advisors/accountants that submit a lot of invalid/overinflated claims.

Hopefully the outcome of this activity will be publicised and will serve as a warning to others.

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