A lesson on why you should choose an experienced R&D tax credits advisor

HMRC is set to refuse a claim for R&D tax credit relief, six years after originally opening an enquiry in February 2012. The claimant company, Hadee Engineering Co Limited, is likely to lose out on a previously claimed tax refund of over £85,000.

The First Tier Tribunal case is unusual in that the enquiry was opened within the context of an existing investigation into suspected fraud. The notes of the decision highlight that HMRC approached several third parties during the course of the enquiry, including the original third party who prepared the claim, but were unable to obtain sufficient evidence that the company had undertaken any qualifying R&D expenditure.

It also appears that the company and its advisors were unable to prove to HMRC that they had correctly considered the rules surrounding subcontracting within the context of the R&D tax credit scheme.

The decision highlights the need for companies to choose an advisor with experience in the field of R&D tax credits, and particularly in liaising effectively with HMRC where queries arise or extra information is sought concerning a claim. It is imperative to supply HRMC with the appropriate technical and costing documentation to support an R&D tax credit claim so that the need for further enquiries is removed.

See our page for further information on what activities qualify for R&D tax credits and how to start the process of agreeing claims with HMRC.

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