Myth 3 – "HMRC will want to inspect my business"

Many SMEs are unnecessarily avoiding claiming R&D tax credits or making significantly small claims because they fear that if their tax credit claim goes to an enquiry it means that HMRC will request to do a tax audit or VAT inspection.

Having worked on over 2,000 claims for UK businesses, this is not our experience. As well as managing tax payments from businesses, HMRC is also there to support innovation and growth of UK companies by ensuring you receive the credits and payments you are entitled to.

How can I avoid an R&D tax claim enquiry?

The best way to avoid an enquiry in the first place is to compile a robust claim that has been researched and critiqued before it is submitted to HMRC. This is where working with an expert with experience submitting claims is helpful. Our multidisciplinary team includes tax advisers, accountants and sector specialists, who know the system inside and out. Making it easier to understand the complexities of your specific project and build a report which meets HMRC requirements.

What should your claim include?

• Clarity – it is important that you can substantiate what you are putting forward.
• Build R&D activity into company time-sheets – record everything. HMRC will ask you to provide evidence to support your claim.
• Work with a specialist to put your R&D tax credit claim together.
• Put a clear and concise technical report together which includes a breakdown of time and cost spent on each R&D activity.
• Maximise your claim value – Benchmark your claim against other similar claims that have been submitted.

What to do in an enquiry?

It’s not the end of the world if HMRC does raise an enquiry because ultimately what they are looking for is more clarity on the information you have provided. Here is where having all of your business’ R&D information in order, and to hand, is important.

As a standard part of our service we will defend any enquiry for claims that we submit to HMRC. We also provide an enquiry defence service to support businesses who have made a claim with another company or individually and found themselves in enquiry. See our guide to HMRC enquiries for more information.