The tax relief claim was filed by Convergica (Clinical Information Systems) Ltd, against a purported £137m spend on developing an IT healthcare system for two countries in the Middle East.

Convergica falsely claimed that a company fronted by one of the defendants called Everbright had agreed to lend them £137,471,880 for the project, which was in turn paid to Mediatronix (fronted by the third defendant) in exchange for IT programming work carried out. It is thought that no such project ever existed.

The claim for SME R&D Relief would have allowed Convergica to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction. They would have been able to claim a tax credit if the company were loss-making, worth up to 14.5% of the surrenderable loss.

When HMRC requested additional supporting information for the claim a falsified bank statement was submitted, prompting an investigation that resulted in the arrests. The claim was not paid out by HMRC and all three men were charged with fraud in March 2018.

The men pleaded not guilty to conspiracy to cheat the public revenue but were found guilty after an eleven-week trial.

Information about any type of tax fraud can be reported to HMRC on 0800 788 887 or online at https://www.gov.uk/report-an-unregistered-trader-or-business. 

To find out more about R&D tax credits and to see if your latest project(s) qualify, check out our quick guide here.