HMRC has dramatically increased its correction of Research and Development (R&D) tax relief claims, with a report revealing a rise from 670 claims corrected in 2023 to 2,440 in 2024. This trend, fueled by a dedicated Fraud Investigation Service (FIS) team established in 2022, has provoked apprehensions that legitimate claims may be dismissed without appropriate examination. Taxpayers are conflicted over whether to accept amendments to their claims or contest them, often receiving alerts that their claims have raised suspicion of fraud. Calls for legislative revisions threaten to complicate the appeal process further, leading to worries about compliance and fairness in tax administration.
HMRC has significantly increased the number of Research and Development (R&D) tax relief claims it has 'corrected' using controversial powers, sparking concerns that the tax authority is bypassing due process.
Price Bailey reports that HMRC established a dedicated FIS team in July 2022 to combat R&D tax relief fraud. However, rather than opening formal enquiries into suspect claims, HMRC has been 'correcting' claims under its statutory powers.
Taxpayers who have had their claims amended are still weighing whether to accept the changes or contest them. Many have received letters from FIS warning them that their claims 'triggered an alert'.
Gemma Thake, Tax Partner at Price Bailey, argues that HMRC's approach is flawed and could lead to legitimate claims being unfairly rejected.
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