R&D Tax Grant Service

R&D Tax Grant Service

Author
Discussion

Flooble

5,565 posts

99 months

Wednesday 17th July 2019
quotequote all
Veracity? The truth of their actions?

Not being a pedant, I'm assuming you were thinking of something else when you typed this but it would be good to identify what you meant. Have HMRC started getting aggressive?

StevieBee

12,791 posts

254 months

Thursday 18th July 2019
quotequote all
Flooble said:
Veracity? The truth of their actions?

Not being a pedant, I'm assuming you were thinking of something else when you typed this but it would be good to identify what you meant. Have HMRC started getting aggressive?
Ha! Yes. Vehemence was what I was thinking. Aggressive may equally apply too.

Basically, they've ramped up their reviews and are being increasingly forceful in doing so.

From what I understand, the departments that divvy out the rebates were failing to meet their targets so their review of applications were more generous and benevolent than perhaps they might have been in order to get the money out of the door. At the same time, auditors were tasked with reducing tax avoidance and related issues; ostensibly a policy designed to tackle the likes of Amazon and Starbucks. Those are difficult fish to fry so they're aiming for the low-hanging fruit; SMEs.




DSLiverpool

Original Poster:

14,670 posts

201 months

Thursday 18th July 2019
quotequote all
If your entitled to it you keep it, once again a decent proper specialist won’t claim fir things that don’t stand up.
I’ve referred ours to over 10 companies now and no one has had issue with process and entitlement.

Flooble

5,565 posts

99 months

Thursday 18th July 2019
quotequote all
Interesting.

I have to say that I had some involvement in an R&D claim with one of the specialist firms and was very uncomfortable with what they wanted to claim for. I felt that the "obvious to a competent professional" type test wasn't really met. I found it quite interesting, given the adviser was clearly technically competent himself, that he suggested it was possible to claim for the various items that I considered to just be day-to-day work.

So I'm watching with interest to see if a different part of HMRC has caught up with things - it sounds like you have discovered why claims were going through so easily. Could be fascinating to watch.

EddieSteadyGo

11,717 posts

202 months

Friday 19th July 2019
quotequote all
StevieBee said:
From what I understand, the departments that divvy out the rebates were failing to meet their targets so their review of applications were more generous and benevolent than perhaps they might have been in order to get the money out of the door. At the same time, auditors were tasked with reducing tax avoidance and related issues; ostensibly a policy designed to tackle the likes of Amazon and Starbucks. Those are difficult fish to fry so they're aiming for the low-hanging fruit; SMEs.
I asked the person who submitted my claim about this today - she said it wasn't the case.

She did say specific sectors were being more carefully scrutinised; the example she gave was the construction industry.

I asked for broad figures - her estimate was that 1-2% of their claims get investigated/scrutinised by HMRC. She also said her particular company had never "lost" a claim - so far, their worst case scenario is to the claim values would be adjusted down.

This doesn't make your experience easier to bear, but I think it might be that you have been genuinely unlucky.

StevieBee

12,791 posts

254 months

Monday 22nd July 2019
quotequote all
Flooble said:
Interesting.

I have to say that I had some involvement in an R&D claim with one of the specialist firms and was very uncomfortable with what they wanted to claim for. I felt that the "obvious to a competent professional" type test wasn't really met. I found it quite interesting, given the adviser was clearly technically competent himself, that he suggested it was possible to claim for the various items that I considered to just be day-to-day work.

So I'm watching with interest to see if a different part of HMRC has caught up with things - it sounds like you have discovered why claims were going through so easily. Could be fascinating to watch.
Part of the issue is not necessarily the companies that help in the claiming but the guidelines issued (previously) by HMRC. Let me give you one example.

When we did the initial audit of what might be claimable, one project flagged up in particular. In 2015, I went to New Zealand to undertake a research programme into the viability of our business offering there. This was a £6k trip involving me being there for 2 weeks, commissioning a local research company, running focus groups and the like. As it stood, it was a slum-dunk for a claim being as it was squarely a research project for us (rather than a paid project for a client). However, we received match-funding for the trip via the Export Market Research Scheme so we considered it unlikely to be viable given we had already been supported on it. However, the EMRS funding was classified as de minimis aid and does not have to be declared as long as the total de minimis does not exceed €200,000 over a three year period. Tax Credits (such as R&D) are real State Aid. We sought clarity on this from HMRC and their advice was that the 50% we did pay was indeed claimable. This is now one of the claims that they are re-assessing; a claim they original said was valid and - here's the nub - accepted and paid out on.


DSLiverpool

Original Poster:

14,670 posts

201 months

Saturday 3rd August 2019
quotequote all
17/18 cheque has arrived, just in time to pay the VAT and it’s a similar amount !!

Will now do 18/19 and see how that goes.

db10

275 posts

262 months

Thursday 8th August 2019
quotequote all
I have some experience of this (I undertake due diligence tax reviews on Uk entities)

Hmrc have had a pay now challenge later policy for at least the last couple of years. Just because you get the cash dosent mean they agree the claim

I have reviewed numerous tax returns with r&d claims prepared by “experts” or specialists. They are often wrong In many ways you only need to read one line of the tax rules. You can claim if you advance science or technology, overcome uncertainty, could not be easily worked out by a professional in the field.

Trying to shoe horn random expenses into that definition will always end in tears.

Flooble

5,565 posts

99 months

Friday 9th August 2019
quotequote all
db10 said:
I have some experience of this (I undertake due diligence tax reviews on Uk entities)

Hmrc have had a pay now challenge later policy for at least the last couple of years. Just because you get the cash dosent mean they agree the claim

I have reviewed numerous tax returns with r&d claims prepared by “experts” or specialists. They are often wrong In many ways you only need to read one line of the tax rules. You can claim if you advance science or technology, overcome uncertainty, could not be easily worked out by a professional in the field.

Trying to shoe horn random expenses into that definition will always end in tears.
To be fair, I think that applies to an awful lot of the accounting in small businesses! I've seen some really worrying things go through the accounts and had endless arguments over what's allowable.

DSLiverpool

Original Poster:

14,670 posts

201 months

Friday 9th August 2019
quotequote all
Worst case scenario it’s an interest free loan, best case it’s a rebate, to reiterate the company I used don’t overclaim and spend a while going through the process.

Grrbang

724 posts

70 months

Saturday 10th August 2019
quotequote all
Anyone had experience with the 'Patent Box', which reduces corporation tax by up to 10%? Has it been fairly straightforward?

R&D can lead to both R&D tax credits and patent box, albeit claimed for using different consultants. And the patent box involves applying for a patent first.

Flooble

5,565 posts

99 months

Sunday 11th August 2019
quotequote all
Yes, used both. Patent box was a lot more work, the R&D was simple by comparison. You also need to work a lot harder to make something "work" for patent box.

EddieSteadyGo

11,717 posts

202 months

Friday 30th August 2019
quotequote all
Quick update - received £48k back today into out account from HRMC for our r+d tax claim. Total time frame from submitting the request to receiving the money was circa 6 weeks.

Overall, very good result - and actually it has had a positive effect on encouraging me to consider investing more going forward, knowing we will likely get a helping hand from a tax perspective to help offset some of the costs.

DSLiverpool

Original Poster:

14,670 posts

201 months

Friday 30th August 2019
quotequote all
Good stuff, we’re just doing 18/19 year.

Al Gorithum

3,663 posts

207 months

Tuesday 3rd September 2019
quotequote all
I've paid 12.5% commission (negotiated down from 25%) for the last few years.

DSLiverpool

Original Poster:

14,670 posts

201 months

Thursday 9th April 2020
quotequote all
Application to receipt 20 days, very much appreciated just at the right time.

jammy-git

29,775 posts

211 months

Thursday 9th April 2020
quotequote all
DSLiverpool said:
Application to receipt 20 days, very much appreciated just at the right time.
Receipt as in, money in your bank?

Am I right in thinking this isn't the first year you've claimed R&D credits?

DSLiverpool

Original Poster:

14,670 posts

201 months

Thursday 9th April 2020
quotequote all
Cheque posted to the office we’re not working in on the 7th - I’ll get the best mask in the world and risk it!

Yep did last year and will be doing next year ASAP after 19/20 is closed in May.

StevieBee

12,791 posts

254 months

Friday 30th October 2020
quotequote all
Update time..... HMRC want their (our) money back!

To save you scrolling through the pages; in 2017 we get a call from a company that specialises in making R&D tax claims. Was something we'd looked at previously but considered what we do outside of the realms that would qualify. However, after further investigation, it was felt that we could have a claim and certainly worth the effort of at least trying - after all, the worse that could happen is that they say 'no'.

Actually, the worst that could happen is they say yes; here's the money. And then say, no, we want it back.

The basis of the claim was a lot of work we'd put into adapting a pre-existing bit of software for an application beyond that for which it was intended within a sector and type of work that it was thought previously unworkable. We were able to demonstrate significant technological gains which has translated into tangible economic benefit, profitability, job creation and so on.

A claim was made, accepted and we got £21k. Happy days.

In 2019, we then get notice that HMRC are reviewing this claim and payment. Their policy is pay-now-check-later.

Spent a huge amount of time responding to their various requests for clarification the upshot of which is that the claim was deemed invalid and the money needs to be repaid (via our annual tax return).

The reason is that the net outcome of our R&D was increased efficiency and profitability but the case for technological advancement was too weak.

We are going to appeal.

Knowing that this was a possibility, we've prepared for it so it's not the end of the world but still.....!

Someone mentioned that HMRC reviews only a very small handful of claims. This is not the case. It may have been but every claim is reviewed and the pay-now-check-later approach still applies.

I would imagine that any last vestige of generous spirit within HMRC is rapidly being run out of town at the moment so do be warned!









DSLiverpool

Original Poster:

14,670 posts

201 months

Friday 30th October 2020
quotequote all
That’s why I went with the firm I did, they have a 100% record of defending reclaims and do it as part of the original fee.