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. 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.
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.
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.
To find out more about RDP’s best tips and our ICP, please contact us here.