UK and International Tax news
R&D Tax Relief and HMRC Nudge Letters
Tuesday 28th February 2023
HMRC continue their campaigns to identify fraudulent R&D tax relief claims with the recent issue of nudge letters requesting information in respect of previous R&D claims.
R&D tax relief is one of the most valuable tax incentives available to SMEs and in recent years claims received by HMRC have increased to over £5bn annually. However, R&D tax fraud and improper claims have also increased significantly and HMRC continue to apply measures to identify and expose such claims.
In the November 2021 Budget, provisions were introduced to cap the amount companies could claim in tax relief together with changes to target abuse and improve compliance. Changes were also announced in the November 2022 Budget including reductions to qualifying deductions and the tax payable credit rate for the SME scheme and further targeting of abuse and compliance.
In their recent campaign targeting abuse and fraud, HMRC have issued over 2000 letters to companies asking them to review their previous R&D claims. The letters include a review checklist to make sure that the information they have provided about their claims is complete and correct and, if there is an error, to make amendments as necessary.
Whilst the letter is not a compliance check into a company’s tax return, HMRC indicate that they may need to open an enquiry and possibly reject claims if they are found to be incorrect.
If you have received a letter from HMRC in respect of a previous R&D claim and would like advice on how to respond, please contact Keith Rushen on 0207 486 2378.
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