12 Jul 2021

How to deal with a HMRC R&D Tax Credit Enquiry

Ian Davie
Senior Consultant

Stack of HMRC letters and envelope

The likelihood of receiving a HMRC R&D Tax Credit Enquiry is rising and we want to help! As a claimant business, legally it’s your responsibility to be able to respond appropriately to defend your R&D Tax claim – but a good R&D Tax Consultant will be there to help you defend your claim.

What is an HMRC R&D Tax Credit Enquiry?

To understand what a HMRC enquiry is, we must first look at the process of making an R&D Tax Credit claim.

Firstly, when your R&D Tax Credit claim is submitted, HMRC begin the process of reviewing your claim and documentation provided to evidence your R&D activities. Understandably, with thousands of claims being made, HMRC is unable to fully investigate all claims as they’re processed, which means that your documents are not always thoroughly checked over.

HMRC do not disclose the amount of claims that are reviewed and this is why they reserve the right to raise an enquiry into a claim for up to 7 years, even after you’ve received your benefit.

On occasion, your R&D Tax claim may be selected for a full review; so if your documents are thoroughly checked and HMRC want to raise a query, they will do this during the processing period – this can delay you receiving your benefit and means you may need to defend your claim.

How to handle an HMRC R&D Tax Credit Enquiry

When you receive an enquiry from HMRC, it’s vital that you respond in a timely and cooperative manner, to reduce any lengthy delays in receiving your tax relief.

Depending on the supporting technical evidence you have already provided to HMRC, you may need to refer them to the documentation already provided, or you may need to provide additional supporting evidence that showcases your eligible research and development activities included within your R&D Tax Credits claim.

There is sometimes a need to make amendments to your claim if a mistake has been made; this can commonly include claiming for ineligible costs or activities. Providing you’re cooperative and make any necessary agreed changes to your claim, you may avoid penalties from HMRC.

Prevention is better than cure – Technical Evidence Reports

Most specialist R&D Tax Consultants will compile and provide a technical evidence report for this purpose, however, there are no industry standards to ensure the report is sufficient. It’s essential that as the claimant company, you know and approve what’s being submitted to HMRC to support your R&D Tax claim, as it’s legally your responsibility to respond to any enquiries.

TBAT are Technologists, not Accountants, meaning we understand your technology and pride ourselves in providing you with a thorough and robust technical evidence report, that will stand up to any HMRC enquiry. You can read more about why a sound technical evidence report is crucial in our blog here.

Our figures speak for themselves – in 10 years of helping clients claim R&D Tax Relief, we have had only a small number of HMRC enquiries on our claims, all being resolved and the clients received the full amount of their eligible tax relief.

How TBAT can help with an HMRC R&D Tax Credit Enquiry

If we’ve compiled your claim, part of our service is to support you start to finish, and this includes helping you to respond to HMRC, should you receive an enquiry.

If you’re not an existing client, we can still assist you. Our team of experts are able to assess the documentation you’ve already provided to HMRC, review the enquiry and then help you compile any additional documentation to support your R&D Tax claim, helping you to respond to HMRC to satisfy their enquiry and come to a resolution.

If you need help with a HMRC enquiry regarding your recent R&D Tax Credits claim, our team are available to discuss the nature of the enquiry and help you to piece together your response. Get in touch today to begin working with us to support your enquiry.

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