R&D Tax Credit claims that have been filed with HMRC are generally processed or issued an enquiry notice within 28 days of filing the claim. R&D claims that are reviewed by HMRC includes the supporting documentation submitted. It is therefore important to select the right R&D provider to ensure this documentation is “bullet proof”. (Why It’s Hard to Pick the Right R&D Tax Credit Provider RDP Associates)
If your claim is not processed as filed, HMRC will ask for additional information to determine if your projects and R&D expenditures meet the criteria to claim and/or ask for clarification on anything that they deem to be unclear. This process is what’s referred to as an Enquiry. As a matter of course, HMRC also opens enquiries into a percentage of all R&D Tax Credit claims. Simply to test their own policies and procedures work. Recent changes in HMRC’s approach to R&D Tax Credits have also given rise to more enquiries, again by way of checks and balances. (New HMRC Rules for R&D Software Claims).
Best Practices To Reduce Enquiries
HMRC insists that all R&D Tax Credit claims are well-prepared and now have specific guidelines for the submission criteria. The submission criteria are based on the number of projects and R&D expenditures that make up the R&D claim. RDP Associates (“RDP”) finds that the best way for companies to reduce the risk of an enquiry is to ensure that each project and R&D expenditures being filed already have good arguments in place to demonstrate why these projects and R&D expenditures have been submitted. This provides R&D claims the best chance of standing up to scrutiny and being processed without any further queries.
HMRC reserves the right to impose significant penalties on a submitted claim if they are in the opinion that an R&D claim has been prepared without first knowing the eligibility criteria and/or including R&D expenditures that are clearly ineligible. So, finding the right service provider ensures that a company does not have to worry about penalties should a claim be selected for review by HMRC.
At RDP, we take the stress out of applying for R&D tax credits by making the whole process simple. Our team consists of a range of R&D tax specialists who will take the time to understand the mechanics of your company, and your R&D activities. RDP’s motto has always been “you focus on your company; we focus on your R&D claim” . Because we want our clients to be assured that their claims are robust enough to stand up to HMRC’s examination before their claim is submitted.
Avoid HMRC Enquiry
If you haven’t filed an R&D tax credit claim yet. There are a few things you can do to minimise your risk of an enquiry.
- Triple-check the R&D projects that you have selected as eligible and read the BIS Guidelines to ensure it meets the eligibility criteria. We do recommend you do this with a competent service provider as the eligibility is broad in nature.
- Review your claim to make sure every penny of claimed expenditure is compliant with the R&D Tax Relief scheme. Check out this blog for more information on eligible expenditure.
- Hire a competent R&D Tax Credit specialist.
So, There are several types of R&D service providers in the market. It is our recommendation you select one that advises what is eligible and handles 98% of the R&D claim process. RDP has a 100% submission record and has not lost a £ to HMRC.
When preparing R&D tax credit claims, we use our internally developed process, called the Innovation Connection Programme (“ICP”). The ICP allows a company to carry out the R&D claim process in real-time. Rather than waiting to start the process after an accounting period year end.
So, to find out more about RDP’s best tips and our ICP, please contact us here.