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What happens when HMRC open an Enquiry into Research and Development Tax Credit claims?

Although most of the Research and Development (R&D) Tax Credit claims that we submit, sail through and are resolved quickly, HMRC have a duty to ensure that they’re applying a consistent and fair process for all so can open an enquiry into submitted R&D Tax Credit claims.

The very nature of R&D Tax Credit claims means that there will be times when HMRC require a bit more information or further explanations, especially in the first couple of claims.

Why do HMRC take a closer look at some R&D tax Credit claims and what happens when they do open an enquiry?

At Fiscale, each claim that we submit on behalf of our clients is extensively researched and written, to remove any ambiguity. As a result, we’re very fortunate to hold an extremely low enquiry rate. In fact, of all of the claims that we’ve ever submitted, we have only had HMRC conduct a compliance check a handful of times (less than 1% of all claims submitted). However, they do happen. But what does it mean when they do?

The purpose of these enquiries is:

to ensure that the company is in receipt of the correct amount of relief and that it has paid the correct amount of tax

Unlike general enquiries that HMRC can launch, Research & Development (R&D) Tax Credit enquiries tend to focus on their need for additional information or a better understanding of the R&D being claimed for. This is why every report we file ranges between 25-50 pages in length, as our aim is to make the entire process as transparent, easy and as quick as possible. You can find out more about what qualifies as R&D here.

However, it’s inevitable that some Research and Development Tax Credit claims will require a closer inspection from HMRC. We call this process and “enquiry” or a “compliance check“.

Any letter from HMRC can be intimidating for a company to receive, however, we’re here to help you. Whether you’re an existing client or have submitted your claim yourselves or with help from someone else, we will take the lead and work with you to resolve any enquiries to ensure the best possible outcome for you and your business. We will handle all the correspondence with HMRC and if they need to speak to you, we will be present to guide you.

What happens during an HMRC enquiry into a Research and Development (R&D) Tax Credit claim?

The first stage is that you will receive a letter to inform you that they have some questions relating to your claim. At this stage any payments will be placed on hold, pending the outcome. Enquiries usually last around four to five months, however, can sometime take a little longer, or they can be resolved much sooner.

Once their questions have been answered, it’s possible for the enquiry to be closed. Under these circumstances, the R&D Tax Credit claim will be processed as usual. However, in some situations they may like to speak with the “competent professional” who was involved in preparing the claim.

How can Fiscale help during an HMRC enquiry into Research and Development (R&D) Tax Credit claims?

The importance of understanding what HMRC are asking and why, cannot be understated. This is our speciality.

Our whole business model revolves around not only having experts who know the R&D Tax Credit system intimately but also have years of experience in dealing with HMRC enquiries. Fiscale’s CEO, Stephen Bunting, is ex-HMRC and every claim that Fiscale work on will be reviewed by at least one of our Chartered Tax Advisors, Accountants or former HMRC inspectors.

It’s a simple idea – we hire the best people to ensure the best possible outcome for you. Our team of experts know exactly what to present and how, to ensure the best possible outcome for our clients.

  1. Step 1.

    We will start by conducting an extensive review of your claim by looking at all documentation and correspondence to date.
  2. Step 2.

    Upon completion of this review we will then be able to advise you on the next step, this often involves us responding to the questions by providing additional information or expanding upon the information relating to a technical uncertainty. This can be completed simply in writing, however, could require face-to-face or telephone discussions – don’t worry, we would do all of this for you, often acting as an “interpreter” to their (sometimes quite technical) questioning.
  3. Step 3.

    Discussions will continue until a satisfactory resolution is reached, in some cases claim numbers will need to be reassessed, in which case we will always achieve the very best result possible for you.

At Fiscale, we do everything that we can to prepare and submit claims that pre-emptively answer all questions and show complete workings for our claim value. This in turn results in less ambiguity when being processed by HMRC.

At Fiscale, we do everything that we can to prepare and submit claims that preemptively answer all questions and show complete workings for your claim value. This in turn results in less ambiguity when being processed by HMRC.

For assistance, please call us