If your claims company has been contacted by HMRC or threatened with an R&D tax credit investigation, we have the team to help. Early intervention from our specialists can make all the difference.
Navigating HMRC investigations – how we can help
If your claims company is under an R&D tax credit investigation by HMRC for providing incorrect advice to SME clients regarding R&D tax credit claims, you may feel overwhelmed. However, navigating this challenging situation with the right support and knowledge can help you resolve these issues effectively and protect your reputation.
Our R&D defence team at FWJ
Our expert team have been defending R&D tax credit investigations for many years. Our team includes
- Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HMRC in their special investigations team. His experience is unrivalled and he regularly defends complex R&D claims as well as a range of other tax related investigations.
- Phoebe Pexton. Phoebe specialises in R&D defence work, most recently obtaining a successful result for a lighting company being investigated by HMRC. Her delighted client commented as follows “Simply outstanding service! From the initial enquiry to the final submission, I have been thoroughly impressed with the advice and communication, depth of knowledge and turnaround time from this firm. Specific thanks must go to Phoebe Pexton for her attention to detail, care and dedication throughout”.
- Pembe Ramadan. Pembe previously worked as a solicitor at HMRC before joining FWJ. She has considerable experience in a wide range of tax related areas, including R&D claims.
Understanding HMRC investigations
HMRC R&D tax credit investigations can be triggered by various factors, including
- discrepancies in submitted claims,
- random audits, or
- client complaints.
The goal of these investigations is to ensure compliance with R&D tax credit regulations and to recover any overclaimed amounts.
The latest data from HMRC
According to HMRC’s latest published annual report for 2022-2023, the estimated overall level of error and fraud for R&D tax credit schemes for 2020 to 2021 was 16.7%, amounting to £1.13 billion.
- This is a significant increase from the previously published estimate of 3.6% (£336 million) for the same period.
- Specifically, the level of error and fraud in the SME scheme was 24.4% (£1.04 billion), while it was 3.6% (£90 million) for the RDEC (Research and Development Expenditure Credit) scheme.
- Given that the expenditure on R&D reliefs during the year was £6.8 billion, these figures underscore the importance of accuracy and compliance in R&D tax credit claims.
Given the figures, HMRC have made it very clear that they will be cracking down hard on claims companies they think haven’t been providing a proper service. The mandate has gone out around HM Revenue & Customs to collect in more tax, particularly wrongly paid R&D claims.
Steps to take when under investigation
There are a number of key steps to take if you are threatened with an investigation by HMRC. These include the need to
- Gather and review documentation. It is vital to collect and safeguard all relevant documentation related to the R&D tax credit claims in question. This includes project reports, financial records, and communication with clients.
- Conduct an internal review. This will identify potential areas of non-compliance or errors in the advice provided. You can of course do this yourselves, but we would highly recommend you do it in conjunction with an independent party to get a second opinion on the claims made.
- Seek expert legal advice from our team at FWJ. Engaging one of our specialised tax dispute lawyer with experience in R&D tax credit claims will help relieve your stress and give you the chance to step back and consider the allegations against your company. Expert guidance can help you navigate the investigation process, prepare necessary documentation, and communicate effectively with HMRC. Our experienced lawyers can also provide insights into mitigating potential penalties and negotiating settlements.
- Communicate transparently with HMRC. Responding promptly to HMRC’s inquiries and requests for information is critical. But it is also vital that your communications do not inadvertently make matters worse. This is where our team can help, ensuring you avoid mistakes, or send incomplete responses which would otherwise just lead to more problems.
- Review and improve internal processes. Whilst it might be the last thing on your mind, learning lessons from the investigation and how to do things better can be a vital use of time. In conjunction with this, additional training to your team to ensure they are well-versed in the latest R&D tax credit regulations and best practices can help.
Benefits of proactive resolution
Addressing an HMRC investigation proactively can yield several benefits:
- Reduced penalties Demonstrating cooperation and transparency can lead to reduced penalties and a more favourable outcome.
- Reputation management. Handling the investigation professionally can help maintain your company’s reputation and client trust.
- Improved compliance. Enhancing your internal processes can strengthen your compliance framework, reducing the risk of future disputes.
- Moving forward with confidence. While an HMRC investigation is undoubtedly challenging, it also presents an opportunity to strengthen your company’s practices and showcase your commitment to compliance and client satisfaction. With the right legal support and a proactive approach, you can navigate the investigation successfully and emerge stronger.
We can help you – free initial call
For expert advice and representation in HMRC investigations related to R&D tax credit claims, please get in touch with our team today. We are here to help you through every step of the process, ensuring a positive and constructive resolution.
Contact Andy Lynch, Phoebe Pexton or Pembe Ramadan for immediate help today.
Andy Lynch is outstanding. Dealt with an R&D tax query at a time of great stress for me due to a recent bereavement. Clear, calm, practical advice delivered with compassion and action. Quite simply heaven sent. I can’t recommend him highly enough.
A client for whom we successfully assisted in a tax query
