We know many clients have been targeted in recent years by so called ‘specialist’ companies promoting Research and Development tax claims.
Our response has always been to be cautious as these firms often submit very aggressive claims seeking to maximise tax relief and as a result their percentage based fees. Many of these claims don’t stand up to basic scrutiny, as confirmed by the ONS who suggest around a quarter were actually fraudulent.
Our warning to clients has also been to ask “Will they be around to defend the claim if HMRC challenge it?” as these so called specialists have often set up a business specifically to exploit the latest tax saving idea, and are not long established professional firms that will defend their work and reputation.
We have already seen HMRC crank up their challenge of R&D claims, and whilst we agree that all claims should stand up to scrutiny, we do disagree with the apparent approach of rejecting almost all R&D claims and ‘bullying’ tax payers into withdrawing legitimate claims.
Recent press has seen one of these so called specialist firms shut its doors and close its website, only 4 years after they started, as they have no doubt concluded that the R&D ship has sailed. This may leave clients that used them, high and dry if HMRC do question any claims.
Of course this is not the only issue. We have seen this in the past with companies purporting to be Rates Specialists that can reduce your rates bills, Capital Allowances Specialists that can claim tax relief on buildings, and many more. The key point is that HMRC usually have 6 years to look into any issue, and you need to know your advisor will still be around to defend you if needed.
Peter Hill
Director