Factors That Could Trigger the HMRC to Doubt Your R&D Tax Credit Claim

Date: 14th August 2014

A rough HMRC estimate indicates that we lose around £30 billion every year through tax gaps. Naturally, it makes sense for the revenue and customs department to scrutinize every claim carefully. Offering incorrect or insufficient information only provokes the HMRC to probe further and look for a pattern of tax avoidance.  Here we list out a few factors that you may be intentionally or inadvertently be guilty of whilst claiming credits for R&D.

Unclear R&D Technical Justification Documents: A convincing technical justification document is very important for a successful claim. The HMRC scrutinizes the outcome specified in the document. It should be uncertain, but the uncertainty should be only due to technical reasons and not owing to the inexperience of the claimant or for other commercial reasons. The document should clearly mention the scientific or technological advancement was/is expected and the obstacle that the R&D project aims to overcome. The budget allocated for the project, names and qualification of the key personnel involved in the project, etc. should be mentioned.

Claim for Costs That Are in Excess of Industry Norms: When making a claim for cost, make sure that the numbers you quote are reasonable and believable. This includes the number of hours worked per week, material cost, employee cost, etc. The proportion of reasonableness differs from business to business, but the general rule is to ensure that the costs are rational for that sector.

Besides the above some factors that could affect your claims process include claiming costs that your business does not qualify for, an error in computing claims that could be in your favour. To avoid errors while claiming R&D tax credits, consult R&D specialists at

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