Marketing from consultancy firm Catax estimated a few years ago that £84billion of R&D tax relief remains unclaimed.  This is a ridiculous statement and one that Catax were called out on in a recent House of Lords sub-committee meeting.

Two other firms were recently named in the Times newspaper for stating that bars and restaurants are categorically eligible for R&D tax relief (Sedulo) and for publishing a case study of a pub claiming almost £30,000 for changes to items on its menu (Radish).

It is marketing like this which has driven the R&D tax relief industry to the state that it is in today, where hundreds of ineligible/overinflated claims are being submitted.

Earlier this year, HMRC sent out 1600 letters to companies asking them to provide further information to support their claim should they wish to proceed.  80% of these letters went unanswered – that’s potentially 1280 claimants without the confidence to support their claim, most of which were prepared by the company’s accountant/advisor.

It is very difficult for a company to compile a robust R&D claim as the rules are difficult to understand but it can be just as tricky finding a competent advisor to ask for help.  As a start, we suggest avoiding any companies who use the following statements:

• Are you entitled to free money from HMRC?
• We have a 100% success rate
• We only need 1 hour of your time
• We advise HMRC and sit on its consultative committee (RDCF previously RDCC)
• R&D tax credits reward your company’s innovation

Accountants submitting R&D claims that may have been prepared by an unknown R&D advisor can also look out for some red flags including:

• Claims with no supporting documentation
• Claims with supporting documentation that doesn’t adequately highlight the projects’ scientific/technological advancements and uncertainties
• Qualifying expenditure that seems to be made up of a percentage of turnover
• Qualifying expenditure that lists a large number of individuals apportioned at the same percentage
• Competent professionals listed that are not trained in a field of science or technology (e.g. Finance Director)

Even knowing all this, it can still be difficult to discern a ‘good’ advisor/claim from a ‘bad’ one.  If you have any concerns, please feel free to speak to us and we will be happy to talk these through with you.

Posted: 09 Dec 2022