CASE STUDY

HMRC Enquiry Support

TBAT assisted a company with their incorrect R&D Tax Credits Accountant prepared claim and to resolve an HMRC enquiry.

About

In 2019, a company approached TBAT Innovation Ltd by completing an online R&D Tax Calculator submission through the TBAT website, as they needed support for an R&D claim they had already submitted.

They had used their Accountant to submit their 2018 year-end R&D Tax Credits claim and had not yet received their tax benefit, or any communication from HMRC regarding their claim. This prompted them to approach TBAT for assistance in getting the matter resolved.

Our Approach to the HMRC Enquiry

TBAT Innovation Ltd initially engaged with the client to review for free their 2018 year-end claim and found that the report and financials submitted by their Accountant were not sufficient, confusing the SME and the RDEC schemes and finances did not match with eligible costs. TBAT agreed with the client that the best course of action was to start their R&D Tax claim again and submit an amended corporation tax return to HMRC, containing the updated claim calculations and a new report, for which a contract was put into place.

After a couple of weeks of working together, the client received a letter from HMRC, stating that they had launched an enquiry into their 2018 claim and asking the client to submit additional information and to justify their submitted claim documentation.

This prompted TBAT to help the client to respond to HMRC, working closely with their Accountant, to communicate that TBAT were now assisting with the claim and that they had been employed to re-calculate the entire 2018 claim and re-submit. HMRC accepted this approach, agreed a new deadline, and waited for the re-submitted claim.

In addition, the client worked with our in-house Accountant and Finance Director, Elaine Williams, to give TBAT authorisation to be their Corporation Tax Agent – this was to enable TBAT to communicate directly with HMRC, on the client’s behalf, throughout the investigation.

Within 2 months, TBAT’s expert team had successfully assessed the client’s R&D activities, and built a well-evidenced and robust technical report, detailing the R&D performed within the claim period. TBAT also re-calculated the client’s claim using the correct SME scheme, and identified additional eligible expenditure, resulting in the tax benefit increasing by £50,000 from the original claim. The newly submitted technical report satisfied and resolved HMRC’s technical investigation.

The HMRC investigation continued throughout 2019 and 2020, due to HMRC’s enquiries into particular invoices, contracts and other accounting areas that required responses from the client’s Accountant. TBAT supported the client and their Accountant by reviewing the invoices in question, comparing them to the contract agreements and project milestones to justify the invoices and satisfy HMRC’s enquiry.

Once the 2018 year-end claim was accepted by HMRC the enquiry was closed to the satisfaction of the client. Since then, the client has been been able to make successful R&D Tax Credits claims, using TBAT’s R&D Tax Credits service, without further investigation. For their R&D Tax claims supported by TBAT for financial years between 2018 and 2021, the client has secured over £500,000 in R&D tax benefit.

What’s next?

The client continues to utilise TBAT’s expertise to claim their R&D Tax Credits year-on-year, as they were extremely satisfied with the level of support they’d received and the confidence they have in TBAT’s Consultants to deliver a high-quality and defendable technical report and financial calculations for their claims.

Testimonial

“It’s more important than ever to partner with a reliable R&D Tax Credits support provider, one that you can trust to make a robust claim on your behalf to reduce the risk of you being subject to an HMRC enquiry; and, that will support you to defend your claim, should you receive one.”

Elaine Williams - Finance Director - TBAT Innovation Ltd

Ian Davie

Further Information

Get in touch with
Ian Davie

T: 01332 819740

E: iand@tbat.co.uk