Will HMRC investigate your R&D tax claim

A calculator, pen, and financial statement. Selective focus.

When making an R&D tax claim, it’s worth being aware that HMRC may decide to investigate. For most businesses, this is something they dread as it can prove a long and expensive process. Of course, there are certain triggers that will initiate an enquiry, so in this post, we explore what these are and what to do if HMRC come a-knocking.

HMRC R&D enquiry triggers

As with any tax claim, there are certain things in an R&D return that flag up an opportunity to investigate. Claims submitted without the necessary supporting information, for example, are generally viewed as risky and likely to trigger an enquiry. As such, it’s best to provide a full breakdown of the costs incurred during the project as part of your supporting documentation.

Another important supporting document is the report explaining how a scientific or technological advance or improvement has been made. Without this, HMRC will consider opening an enquiry into the project’s eligibility for R&D tax credits.

If you’re submitting a claim for the first time, it’s especially critical to provide these two documents in appropriate detail. Without them, an HRMC R&D enquiry is possible, particularly if the claim is large or poorly calculated.

What to do if HMRC raise an enquiry

It sounds obvious, and is inevitably easier said than done, but the best way to effectively field HMRC R and D enquiriesis to get your tax return right in the first place. For those submitting a first claim in particular, it’s a good idea to get a tax specialist involved. That way, you can be sure all your calculations have been checked and will receive advice and guidance as and when you need it.

If you do find that your business is the subject of an enquiry, it’s not too late to enlist the services of a specialist. They will take a look at your claim, check the figures and determine whether it can be defended. If so, they can liaise with HMRC on your behalf, help you to provide any information that has been requested and work to achieve a successful outcome.

If you or your accountant finds a mistake in the original claim, it’s vital to inform HMRC of it as soon as possible. Voluntarily offering this information will work in your favour and could save you a heavy penalty. Bear in mind that if HMRC finds a mistake, they may choose to investigate claims dating back as far as six years from your current accounting period, which could lead to significant repayments if those are incorrect too.

Finding a tax specialist

Finding a tax specialist to help with your R&D claims is advisable. With experience in a range of sectors, R&DTax Solutions offers a dependable and trustworthy service when it comes to both submitting and defending claims. Contact them on 0161 298 1010 for assistance with your claim.