Tax and Innovation, Research and Development

Research and Development (R&D) tax incentives are designed to encourage companies to invest in innovation and new technology. However, these claims can be complex and mistakes can occur, leading to R&D tax enquiries by HM Revenue and Customs (HMRC). This article will discuss how these enquiries can help correct mistakes in R&D tax claims.
The R&D tax claim process
When a company makes an R&D tax claim, HMRC will review the claim to ensure that it meets the criteria for R&D tax relief. If there are any discrepancies or errors in the claim, HMRC may initiate an enquiry.
During an R&D tax enquiry, HMRC will request additional information and documentation from the company to clarify any questions they may have about the claim. This can include details about the R&D project, the costs associated with it, and the company’s compliance with R&D tax legislation.
Correcting mistakes in R&D tax claims
An R&D tax enquiry can help to correct mistakes in a claim by identifying any areas where the company has not met the criteria for R&D tax relief. This can include issues such as:
· Not meeting the definition of R&D: R&D tax relief is only available for projects that meet the definition of R&D as outlined in legislation. An enquiry can help to determine whether the project in question meets this definition.
· Incorrect costs claimed: Companies may claim costs that are not eligible for R&D tax relief, such as general business expenses. An enquiry can help to identify and correct any such errors.
· Non-compliance with legislation: Companies must comply with R&D tax legislation in order to qualify for relief. An enquiry can help to ensure that the company has met all relevant requirements.
The benefits of an R&D tax enquiry
While an R&D tax enquiry may seem daunting, it can actually be beneficial for companies. Here are a few ways that an enquiry can help:
· Ensuring compliance: An enquiry can help to ensure that the company is fully compliant with R&D tax legislation, reducing the risk of any future penalties or fines.
· Identifying errors: An enquiry can help to identify any errors in the claim, allowing the company to correct them and ensure that the claim is accurate.
· Improving the claim process: An enquiry can provide feedback on the company’s R&D tax claim process, helping to improve it for future claims.
R&D tax enquiries can be an important tool for correcting mistakes in R&D tax claims. They can help to ensure compliance with legislation, identify errors in claims, and improve the claim process for future claims. It is important to be prepared for an enquiry and to respond promptly and accurately to any requests for information from HMRC.
Our R&D team is made up of Chartered Tax Advisers and Scientists, supporting clients from all sectors to make robust R&D claims. Get in touch to speak to one of our tax experts.

You may also be interested in

    11 September 2023

    Inheritance Tax can seriously decay your wealth

    21 July 2023

    Avoiding an Investigation: What do HMRC look for?  

    06 March 2023

    How to claim a tax refund

    28 February 2023

    Alphabet shares for family companies

    16 February 2023

    Relief for replacement domestic items

    09 February 2023

    Do you need to pay the Annual Tax on Enveloped Dwellings by 30 April 2023?

    01 February 2023

    Doing up a property – Are you trading?

    20 January 2023

    When should a business leave a VAT scheme?

    09 January 2023

    Cryptocurrency transactions and HMRC

    09 December 2022

    How to claim tax relief for employment expenses

    23 November 2022

    Use simplified expenses to save work

    17 October 2022

    Relief for pre-trading expenses

View all insights