HMRC is increasing compliance checks on R&D tax relief claims due to the number of people abusing the system.

The additional checks will mean the processing time for claims will go up, following a decision by HMRC to delay payments in response to an increase in irregular claims.

Fraud and errors across both the SME and research and development expenditure credit (RDEC) schemes make up 3.6% of the total tax relief given out through R&D relief, or £311 million in cash.

The estimated total of R&D relief claimed for the year ending March 2020 is £7.4 billion, nearly 20% higher than the year before. This corresponds to £47.5bn of R&D expenditure, 15% higher than the previous year.

With the majority of claims, HMRC aims to pay the credits within 40 days, almost two weeks higher than the usual 28-day processing window.

HMRC says claimants for R&D must follow these procedures:

  • Ensure all entries are completed on the R&D section of the corporation tax return (CT600)
  • Submit additional information to support the claim, such as the R&D report
  • Review the latest CT600 guidance form on the Government website
  • If a claim is incorrect, inflated or fraudulent then penalties may be issued

HMRC has appointed 100 new compliance officers to carry out the more in-depth checks.

Ask us about your R&D tax relief.