An HMRC ‘compliance check’, commonly known as an enquiry, is an in-depth investigation by HMRC into the legitimacy of a company’s R&D Tax Credit Claim. This is a necessary part of HMRC‘s work to maintain the integrity of the tax relief system and prevent potential abuse of the R&D tax credit scheme. An enquiry can last several months before the outcome is determined.
WHAT IS AN HMRC ENQUIRY?
Some potential reasons for HMRC enquiries are:
- Insufficient evidence to support the claim
- Overstated costs or inflated expenses
- Projects not clearly demonstrating qualifying for tax relief
- Sudden increases in claim size
- Inconsistencies between claim and financial records
- Poorly structured technical narratives
Potential outcomes of an HMRC enquiry:
- Insufficient evidence to support the claim
- Overstated costs or inflated expenses
- Projects not clearly demonstrating qualifying for tax relief
- Sudden increases in claim size
- Inconsistencies between claim and financial records
- Poorly structured technical narratives
Prevention and Best Practices
- Keeping clear records of R&D activities and associated costs
- Ensuring consistency between claim and financial statements
- Writing strong technical narratives that demonstrate eligibility
Ensuring Accuracy & Compliance
Before submitting an R&D Tax Credit claim, it must pass our rigorous quality assurance process. This involves our QA team reviewing a technical document prepared by one of our analysts to ensure the claim meets HMRC’s eligibility criteria for R&D tax relief.
At MSC R&D, we speak the language HMRC understands. As industry leaders, we have a proven track record of successfully defending compliant R&D tax credit claims during HMRC enquiries. Our team includes former HMRC inspectors with first-hand experience in the enquiry process, allowing us to communicate effectively with HMRC and navigate claims with confidence. Together, we bring over 150 years of R&D tax expertise and 50 years of direct HMRC experience ensuring you receive the highest level of support.
Many businesses struggle with HMRC enquiries due to a lack of understanding or poor representation. With our deep knowledge of tax law and extensive experience in defending claims, we ensure our clients receive their full tax credit entitlement.
