Historically, HMRC has checked very few R&D claims which has led to two main problems:

1. Claimants/advisors receiving no feedback on claims they have submitted and taking this as evidence that the claim was ‘successful’ rather than un-checked, so any inaccuracies have gone unnoticed and provided false confidence in a lot of cases.  As the schemes have been around since 2000 there is a lot of misinformation in the public domain which has not been helped by various marketing campaigns by R&D advisors over the years making wildly inaccurate statements, which HMRC should have, but didn’t, challenge at the time.
2. Dishonest advisors have felt confident in submitting invalid claims as they know these are unlikely to be checked – this has become a £multimillion scam.  

Please read the previous blog to hear our views on how HMRC are tackling point 1) and see below for our thoughts on point 2).

Some dishonest advisors planned their exit from the R&D industry well and seemed to have disappeared at just the right time with the maximum financial gain and avoiding any repercussions. Whether they will ever be held accountable is anyone’s guess.

The same can’t be said for many of their clients who find themselves facing a compliance check without support into a claim they were assured was valid, and with the likely outcome being that they need to pay back any benefit received and with no way of recouping the fees paid to their advisor.  There are even some cases where the claiming company didn’t receive any funds from HMRC as these were diverted to the advisor and, even more extreme, some companies who didn’t even realise a claim had been made on their behalf.

Other dishonest advisors are still operating, even with HMRC’s advanced compliance activity and are employing increasingly devious tactics to stay off HMRC’s radar.

HMRC are visibly trying to identify those involved in preparing R&D claims but those wishing to remain hidden seem to always find a way.

HMRC stated that 8 arrests had been made in 2022 but have given no further update.  This is the only evidence that those knowingly committing fraud are seeing any ramifications to their actions.  We sincerely hope that more is being done behind the scenes and that this is made public soon as that is the only real way to combat point 2) above.

If you have any questions on this blog or anything R&D related, please contact us at [email protected].

Posted: 11 Jul 2024