Earlier this year, HMRC announced that it was suspending payments of Research and Development (R&D) tax credits while it investigated some claims. It has now released details of a new campaign to fight fraudulent claims.
R&D tax relief is designed to incentivise innovation in business. It reduces the amount of corporation tax a company pays, having completed eligible R&D activity.
HMRC has identified the current R&D tax relief claim system is attracting fraudsters and is taking appropriate action.
Its investigations have highlighted fraudsters who are submitting claims on behalf of companies in the knowledge that HMRC often makes payment before asking questions, clawing back the amount (with penalties added) if a claim is subsequently found to lack merit. Unfortunately, many fraudsters ask the company to permit HMRC to pay the money directly to them, meaning that when the demand for repayment comes through, the company is out of pocket.
HMRC is now writing to companies where the claim appears to be fake, inviting them to contact the department with further information, and reserving the right to open a criminal investigation.
HMRC is advising companies to be cautious of approaches by third parties offering to make claims that sound too good to be true.