Research and Development
Research and Development
HMRC has adopted a significantly stricter approach to Research and Development tax relief claims in recent years. While successfully submitting R&D claims continues to carry substantial tax and cash benefits for qualifying businesses, enforcement has tightened considerably.
One of the key changes relates to agent authority. HMRC now requires specific authorisation language when agents submit claims on behalf of clients. Generic instructions are no longer sufficient, and claims submitted without the correct authorisation wording are being rejected outright.
HMRC is rejecting a high percentage of R&D claims on technicalities alone, regardless of the underlying merit of the claim. This represents a significant shift from earlier years when the process was more straightforward.
Businesses and their advisors should also be aware that resubmitted claims may face penalties. Simply correcting and resubmitting a previously rejected claim is not without risk, and HMRC has shown a willingness to pursue penalties in these circumstances.
That said, appeals against rejected R&D claims are likely to succeed depending on the specific circumstances of each case. Where the underlying research and development activity genuinely qualifies, there are strong grounds for challenging HMRC’s decisions through the appropriate channels.
Frequently asked questions
Why is HMRC rejecting R&D tax relief claims?
HMRC has adopted a significantly stricter approach to Research and Development claims and is rejecting a high percentage of them on technicalities alone, regardless of the underlying merit of the claim. This is a significant shift from earlier years, when the process was more straightforward.
What authorisation does an agent need to submit an R&D claim?
HMRC now requires specific authorisation language when agents submit Research and Development claims on behalf of clients. Generic instructions are no longer sufficient, and claims submitted without the correct authorisation wording are being rejected outright, whatever the merit of the underlying claim.
Can I resubmit a rejected R&D claim?
A rejected claim can be corrected and resubmitted, but this is not without risk. Businesses and their advisers should be aware that resubmitted Research and Development claims may face penalties, and HMRC has shown a willingness to pursue penalties in these circumstances.
Can I appeal a rejected R&D claim?
Yes. Appeals against rejected Research and Development claims are likely to succeed depending on the specific circumstances of each case. Where the underlying research and development activity genuinely qualifies, there are strong grounds for challenging HMRC's decisions through the appropriate channels.
