R&D Tax Rebates - bit of a warning.
Discussion
An advisory post as I know a few here have been looking at this.
Two years ago we were approached by a reputable company that handles claims for the rebate of tax paid on expenditure relating to R&D. They did a good job and our accountants verified the claim to be proper and correct. £22k rebate paid. Happy days.
This week, we have received notification that HMRC are launching an enquiry into this claim.
This - apparently - is common place and part of an internal 'process now; check later' policy within HMRC.
Both the claims company and accountant have said that it is very rare for any enquiry to result in having to repay any rebate but still, we're now facing nine months of worry as our cashflow at the moment is not the best it could be.
The one good thing is that the claims company handles the whole HMRC enquiry as part of the original fees we paid to them.
Either way, do bear this in mind if you're in the process of claiming.
Two years ago we were approached by a reputable company that handles claims for the rebate of tax paid on expenditure relating to R&D. They did a good job and our accountants verified the claim to be proper and correct. £22k rebate paid. Happy days.
This week, we have received notification that HMRC are launching an enquiry into this claim.
This - apparently - is common place and part of an internal 'process now; check later' policy within HMRC.
Both the claims company and accountant have said that it is very rare for any enquiry to result in having to repay any rebate but still, we're now facing nine months of worry as our cashflow at the moment is not the best it could be.
The one good thing is that the claims company handles the whole HMRC enquiry as part of the original fees we paid to them.
Either way, do bear this in mind if you're in the process of claiming.
StevieBee said:
An advisory post as I know a few here have been looking at this.
Two years ago we were approached by a reputable company that handles claims for the rebate of tax paid on expenditure relating to R&D. They did a good job and our accountants verified the claim to be proper and correct. £22k rebate paid. Happy days.
This week, we have received notification that HMRC are launching an enquiry into this claim.
This - apparently - is common place and part of an internal 'process now; check later' policy within HMRC.
Both the claims company and accountant have said that it is very rare for any enquiry to result in having to repay any rebate but still, we're now facing nine months of worry as our cashflow at the moment is not the best it could be.
The one good thing is that the claims company handles the whole HMRC enquiry as part of the original fees we paid to them.
Either way, do bear this in mind if you're in the process of claiming.
Good to know...i've had a large R&D rebate recently too. Keep us posted on the outcome.Two years ago we were approached by a reputable company that handles claims for the rebate of tax paid on expenditure relating to R&D. They did a good job and our accountants verified the claim to be proper and correct. £22k rebate paid. Happy days.
This week, we have received notification that HMRC are launching an enquiry into this claim.
This - apparently - is common place and part of an internal 'process now; check later' policy within HMRC.
Both the claims company and accountant have said that it is very rare for any enquiry to result in having to repay any rebate but still, we're now facing nine months of worry as our cashflow at the moment is not the best it could be.
The one good thing is that the claims company handles the whole HMRC enquiry as part of the original fees we paid to them.
Either way, do bear this in mind if you're in the process of claiming.
My accountant has recently merged with another accounting firm. And it seems the new company is very keen on this R&D rebate stuff. Initially they sent me some general bumph on the subject, which I read and thought "nope, I don't do anything like that since I don't do any R&D, or if I do, it's my clients that would be claiming for my work as you can't claim twice for the same work". Then they sent me a specific email and said they wanted to discuss it with me as they felt sure I could make an R&D claim.
Hmm.. they whole thing looked very dodgy to me and I told them so in no uncertain terms. They said they would not contact me again on the matter - I should think not.
Hmm.. they whole thing looked very dodgy to me and I told them so in no uncertain terms. They said they would not contact me again on the matter - I should think not.
snuffy said:
My accountant has recently merged with another accounting firm. And it seems the new company is very keen on this R&D rebate stuff. Initially they sent me some general bumph on the subject, which I read and thought "nope, I don't do anything like that since I don't do any R&D, or if I do, it's my clients that would be claiming for my work as you can't claim twice for the same work". Then they sent me a specific email and said they wanted to discuss it with me as they felt sure I could make an R&D claim.
Hmm.. they whole thing looked very dodgy to me and I told them so in no uncertain terms. They said they would not contact me again on the matter - I should think not.
It's your decision of course, but it isn't dodgy. Many companies use this mechanism to make substantial tax savings. My company has a claim which is currently being prepared by a specialist, after I saw a thread about it here on PH.Hmm.. they whole thing looked very dodgy to me and I told them so in no uncertain terms. They said they would not contact me again on the matter - I should think not.
What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
EddieSteadyGo said:
It's your decision of course, but it isn't dodgy. Many companies use this mechanism to make substantial tax savings. My company has a claim which is currently being prepared by a specialist, after I saw a thread about it here on PH.
What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
Yes, I know it's not dodgy, but working as a company of one writing process control software for an end client, which is always project work for them, I could not see any way I could claim any of my work as R&D.What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
EddieSteadyGo said:
It's your decision of course, but it isn't dodgy. Many companies use this mechanism to make substantial tax savings. My company has a claim which is currently being prepared by a specialist, after I saw a thread about it here on PH.
What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
Agreed. I usually got back 85% of total dev spend which was upwards of £1m PA. Not dodgy at all. What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
I've been doing this for the last 5 years now. I don't believe it to be dodgy at all. We claim R&D back on the salaries we pay our software developers who are developing new features on our systems. We never claim 100% of their time though as this could be challenged....it seems 80-85% is a more sensible claim. Just don't take the P
snuffy said:
EddieSteadyGo said:
It's your decision of course, but it isn't dodgy. Many companies use this mechanism to make substantial tax savings. My company has a claim which is currently being prepared by a specialist, after I saw a thread about it here on PH.
What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
Yes, I know it's not dodgy, but working as a company of one writing process control software for an end client, which is always project work for them, I could not see any way I could claim any of my work as R&D.What matters is the definition used by the government to define R+D, as that now covers a much wider range of activity than what might have been considered "R+D" in the traditional sense.
You need specialist advice from someone who knows the detail of the criteria inside out. Most specialists work on a no-win/no-fee basis. And most allow you to claw back their fees in the unlikely event of the relief subsequently being withdraw later down the line.
It will take you probably 2-3 hours of time speaking with a specialist, and if they believe you have a valid case, they will prepare the claim on your behalf.
As I said before, it's your decision, but this is a bonafide government initiative - personally I think you would be well advised not to dismiss it quite so quickly.
I went through the process of defending a claim about a year ago. It was a few hundred £K in total. There have been a lot of liberties taken with R&D rebates so HMRC are cracking down.
The process we went through was that HMRC sent us a number of questions relating to our original submission (which predated my involvement).
There was some to-and-fro as they sought clarifications and we provided more info and evidence.
Once that was complete we had a couple of conference calls with a case handler and tech experts from HMRC. While I won’t go into detail about the tech involved, some of it was fairly niche and despite this, experts we spoke with clearly knew what they were talking about.
Overall the process was pretty straightforward. We had been quite modest in our submission and there were no adjustments required.
The process we went through was that HMRC sent us a number of questions relating to our original submission (which predated my involvement).
There was some to-and-fro as they sought clarifications and we provided more info and evidence.
Once that was complete we had a couple of conference calls with a case handler and tech experts from HMRC. While I won’t go into detail about the tech involved, some of it was fairly niche and despite this, experts we spoke with clearly knew what they were talking about.
Overall the process was pretty straightforward. We had been quite modest in our submission and there were no adjustments required.
bga said:
I went through the process of defending a claim about a year ago. It was a few hundred £K in total. There have been a lot of liberties taken with R&D rebates so HMRC are cracking down.
Once that was complete we had a couple of conference calls with a case handler and tech experts from HMRC.
Yes been through an audit / enquiry recently for claim of that sort of value. HMRC are looking in detail retrospectively at claims now where their R&D unit considers there is a that possibility the claim isn't innovative. They apparently have a panel of domain specific experts to call on for technical investigations so the wild west days of submitting any random collection of dubious claims that will stand up the cursory investigation done at submission seem to very much be over due to the amount HMRC are now having to payout. Once that was complete we had a couple of conference calls with a case handler and tech experts from HMRC.
Our claims expert suggested that HMRC have quite a backlog of claims for investigation and strongly advised to be conservative in terms of what is submitted going forward.
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