The widespread problems facing R&D Tax Credit claimants get national coverage again this morning as The Times highlights the collapse of R&D advisory firm RDI Solutions and shines a light on the unprecedented wave of HMRC enquiries that is engulfing both legitimate and spurious claims alike.
The article also explains how more R&D advisors may follow RDI Solutions in closing their doors. It writes that:
“Rufus Meakin, an expert in the industry who runs the R&D Tax Credit Insider blog on LinkedIn, said RDI’s sudden closure “highlights the enormous problems currently facing R&D Tax Credit claimants”. He warned that RDI “may be just the tip of an iceberg”, with industry insiders believing that more advisory firms will “inevitably cease to operate” amid the taxman’s scrutiny.
“He said this would result in thousands more companies “being left at risk of having to repay their claims. Some advisers are unable to handle the sheer volume of work required to defend HMRC enquiries. It is a very worrying time for the clients left exposed by their closure. This is especially the case for claimants that are under a live HMRC enquiry and who, without the support of a specialist, are now at significant risk of having to repay their entire claim, along with potential penalties for misfiling.”
The Times goes on to explain how the current R&D Tax Credit crisis came about:
“There have long been suspicions that R&D Tax Credits had fallen into disrepute. Any small business owner who has visited a trade show in recent years probably could share a story about being told that everything from pizza and cocktail recipes to meal plans in care homes or menus in a pub could qualify for the credits. Regardless of their merits, many dubious claims resulted in payouts because HMRC checks were often inadequate, at best.
“After a series of articles in The Times about attacks on the programme, along with warnings from Rufus Meakin, who runs the R&D Tax Credit Insider blog on LinkedIn, and others, concerns were expressed in parliament, including by the chancellor. HMRC significantly stepped up its compliance activities in response.
“The tax authority has estimated that error and fraud on a version of the tax relief for smaller companies comprised 24.4 percent of relevant expenditure in 2020-21 alone, or more than £1 billion.
“This suggests many billions of pounds have been lost to fraud and error in the years it has been running.
“Whether the right people are being fairly targeted now is questionable, however. Business groups have been complaining that increased compliance work by the tax authority has punished genuine claimants and risks driving investment overseas”
Article Summary by Rufus Meakin (R&D Tax Credit Insider Newsletter)
Find the full article here
