HMRC has issued letters to around 2,000 first-time R&D tax credit claimants, reminding them of their responsibility for the accuracy of their claims.

Why is HMRC sending out these letters?

In recent years, there has been an increase in error and fraud related to R&D tax relief, and HMRC is redoubling its efforts to decrease this. 

This new letter is designed to give first-time claimants the opportunity to check over their claim again, to limit avoidable mistakes and enquiries. 

It’s also another reminder to fraudulent claimants that HMRC is paying much closer attention to the detail in R&D claims.   

What should you do if you receive a letter?

Don’t panic!

If you’re a first-time R&D tax credit claimant and have received a letter from HMRC titled ‘Research and Development (R&D) tax relief – please check that your claim is correct,‘ it’s important not to panic. This letter isn’t an enquiry; it’s just asking you to double-check that your claim is as accurate as possible.

Review your claim again

Whether you’re self-filing, using an accountant or an advisor for your first R&D tax relief claim, take this opportunity to review your claim again. For instance, check over the guidelines and qualifying conditions for R&D tax relief, and go over your qualifying costs and the content of your technical narrative. If you’ve sought external help with your R&D claim, double-check anything that concerns you with whoever advised you.

Ask your advisor to share the claim report   

If you’ve worked with a reputable R&D tax credit advisor, you will have seen the claim report and discussed its contents. It’s highly likely you’ll be confident that everything is accurate.

Unfortunately, not all advisors share claim reports with their clients before submitting them. If you receive an HMRC letter and you have not seen your report, reach out to your advisor and request that they review the report with you prior to resubmitting it. 

An advisor refusing to share claim reports prior to submission should be a red flag for you. Our client iknowa came to us having wasted lots of time and energy on an enquiry from HMRC when their previous provider wouldn’t share their report!

How can you amend your claim?

After receiving a letter, you have the choice to go online to amend your return. The letter will also provide you with a deadline for re-submitting your claim.

To find out how to amend your tax return go to GOV.UK and search for ‘Company Tax Returns’. Then select ‘making changes’ and follow the instructions.

What should you do moving forward?

With the R&D tax credit scheme becoming increasingly prominent, the number of R&D advisors is increasing. However, many new advisors lack the ability to create a strong and compliant claim, which often leads to mistakes being made or HMRC raising enquiries. This is also true for companies that file their own claims.

The chances of your claim being reviewed by HMRC have increased, so it is now more important than ever to pick a reliable R&D tax specialist. 

First time claiming R&D tax credits? Find out how we work with you to ensure your first claim is compliant and your business receives the full value of credit due here.

Alternatively, if you have any further questions about the scheme? We’re here to help – please get in touch.