Most of us in the tax industry are very aware of HMRC’s recent change of treatment for R&D tax credit claims. Lots has been said and written about the changes, and to some degree, they were long overdue.
With HMRC cracking down on R&D claims and introducing a new information form which must include details of any agents involved in the claim, it is important to get the proper help and expertise required for your company.
There are far too many “experts” in the R&D claims arena – many of which are definitely not experts at all, just opportunists riding the waves of fee income and trading on unprepared or ignorant businesses as to what the whole process is all about.
HMRC have recently sent out 2000+ enquiry notices / fishing trips to the most recent batch of R&D claimants, requiring clarity on various points of the claim’s submission. Some erroneous, some just needing clarity, but some definitively seeking out false claims.
It is somewhat of a political hotcake as well, with the Government busy promoting that they want the UK to become Europe’s home of innovation. However, the plan to “cement the UK’s place as a science and technology superpower by 2030” seems counterintuitive of their and HMRC’s actions in changing the regulations and value of achieving any R&D rebates. Add that to the ever present IR35 debacle and constant unfounded attacks on SME businesses. Go figure!
Fee protection insurance claims from accountants doing reactive/defence work for their clients are starting to come through fast and furious to TFPI providers. The prior annual statistic from insurers showed R&D made up only 2% of claims in 2022 (an increase from 1.5% in prior years), but it is predicted that this will most likely reach 4%-5% by the end of 2023. This is purely a volume of claims stat, not actual £ value.
Be aware that many insurers simply do not cover any R&D work, including one of the most popular providers. However, to those that are genuine experts in the R&D tax claims market, be aware that the TFPI (Tax Fee Protection Insurance) providers and underwriters have either completely taken away the previous cover provided in their policies for R&D claims, or have strict new terms for the claims (that is the TFPI claims for costs when dealing with any enquiry) before they will consider the R&D claim against their policy i.e. stricter T&Cs apply here.
To be more precise, enquiries into R&D claims where a detailed report that substantiates the claim has not been produced in line with HMRC’s new legislative requirements (effective 1st April 2023), or where the report has been produced by somebody other than the Policyholder i.e. the client or another “specialist” that made the actual claim and the accountant is now wanting to claim costs via their TFPI policy, WILL NOT be accepted and rejected forthwith.
So, get it right! Use a vetted expert in the process, and make sure your TFPI scheme has the relevant cover in place.