The importance of professional advice for R&D Tax Credit

R&D Tax credits are invaluable to many businesses, including SMEs, who can benefit from substantial tax credits or refunds for work that many firms regularly undertake as a matter of course. Due to some recent R&D tax credit changes, it’s more important to work with a professional so you can learn how to calculate R&D tax credits. Learn more by reading on.

In the tax year 2021-22, £7.6 billion (an 11% increase from the previous year) in tax relief support was paid out by HMRC. This is great for the many businesses that invest in research and development, where further funds can be reinvested in their firm’s growth while at the same time helping innovation in the UK. Find out more about all the recent R&D tax credit changes here to see if you might be eligible for relief.

Unfortunately, this increase in focus on R&D tax relief has also given rise to the number of advisors providing bad or incorrect information, either through a lack of knowledge and professionalism or sheer fraud, looking to cash in on the situation and instigating improper or even fraudulent claims on behalf of businesses.

R&D Tax fraud

This increase in improper claims has been very much the focus of HMRC, who are investigating more and more claims and cracking down on both businesses and their advisors. In fact, HMRC recently updated their policy for R&D tax claims in 2023 to counter non compliance in companies, stating that ‘concern over abuse and boundary-pushing involving R&D tax reliefs has grown in recent years’.

HMRC is taking a hard line with both businesses and their advisors who exaggerate or make misleading or fraudulent R&D claims. Recently, in 2023, HMRC found lots of fraudulent claims for companies developing software and code, with claims being prevented as a result.

Caution also for inaccurate R&D Tax claims

It is not only outright cases of fraud that are attracting the attention of HMRC. Many businesses have fallen foul of less scrupulous advisors, either exaggerating claims or making claims on behalf of clients for activities that are typically not eligible for R&D tax relief, including R&D tax credits. These have included:

• A restaurant making a claim for new recipes
• New CRM systems where there was no advancement in science or technology
• A routine installation of flooring by a floor fitting company

In R&D tax claim examples like these, claims may have slipped through the net and been approved. However, as HMRC cross references and investigates existing and previous claims, it is possible HMRC will request a refund (with interest), and in many cases, it could even instigate proceedings for fraud.

Research & development tax advice from professionally accredited firms

Given the serious implications of R&D tax credit restrictions and filing claims incorrectly, it’s important to speak to a professional. Professional advice is always the safest route forward. Advisors currently do not need to be regulated to provide R&D tax advice or more general tax advice (although the government is rightly looking to change this). This has led to an increase in unregulated companies that do not follow professional conduct in relation to taxation guidance.

Tax legislation is complex and fast-changing. Advisors without the correct levels of experience and expertise can wrongly assess a business’s eligibility or not provide the required level of analysis and records to support a claim.

When a business engages with an agent, they should look for one that is governed by a professional body, such as the ICAEW (Institute of Chartered Accountants in England and Wales), and whose staff are also suitable and accredited.

How Alexander & Co assists with R&D Tax claims

R&D tax credits are an important tool for businesses. Accurate, trustworthy advice is key to unlocking invaluable R&D tax relief, and businesses undertaking R&D activities should not be deterred from utilising this resource. We have been successful in securing robust R&D tax claims for many businesses across a wide range of sectors.

Alexander & Co is regulated by the ICAEW and follows their professional conduct guidelines.

Unlike many companies, we take care of all the processes regarding R&D tax claims. This includes carrying out detailed analysis and writing all the accompanying reports to support the claim. All we require from a business is typically an hour or two with the relevant personnel, typically the financial director (or equivalent) and a member of the project team. 

Having dealt with numerous claims across many sectors, including IT, manufacturing and food processing, we are already familiar with the processes of many industry sectors. Learn more about how we can help at Alexander & Co below, or explore other business sectors to see some of the clients we work with.

Get in touch Alexander & Co for assistance

With an expert team of qualified tax advisors, you can be sure of accurate advice that you can rely on. With a proven track record in securing R&D tax claims, we advise and assemble robust claims for clients.