Specialist R&D Tax & Grant Funding Advisors

R&D Tax Credit enquiries

Barrie Dowsett

Chief Executive Officer


You and your team have spent a great deal of time compiling and submitting your claim for R&D Tax Credits. You’ve dotted the I’s and crossed the T’s - or have you?

The application process for R&D tax relief is notoriously tricky, and mistakes can happen that can lead to an HMRC enquiry. At the time, these can seem incredibly daunting, but with the right action – and the best professional advice – there shouldn’t be a need to worry.

Here we take a look at what HMRC enquiries are, how to minimise the risk of an enquiry taking place, and how Myriad Associates can help.

What is an HMRC enquiry?

Launched by the UK government in the year 2000, the R&D Tax Credit scheme is a tax incentive designed to encourage and reward innovation in business. HMRC administers and manages the scheme - and sometimes claims may involve an enquiry.

R&D Tax Credit claims that have been submitted to HMRC are usually dealt with very promptly – the guideline is within 28 days. In the majority of cases, claims are reviewed alongside the relevant documentation and this alone is enough for HMRC to give a claim the green light. However, sometimes HMRC will ask for additional information to gain clarification on anything that it deems to be unclear. This process is what’s referred to as an enquiry.

Government funds are limited and enquiries are part of HMRC’s efforts in making sure they distribute these funds fairly and responsibility. As a matter of course, HMRC also opens enquiries into a percentage of all R&D Tax Credit claims simply to test that their own policies and procedures work. Recent changes in HMRC’s approach to R&D Tax Credits have also given rise to more enquiries, again by way of checks and balances.

Why might HMRC open an enquiry?

The reasons behind HMRC opening enquiries can vary massively. It could be something to do with your company’s set up, your documentation or a change in your circumstances for instance - or something completely different.

HMRC may also have some questions about the type of R&D work your company has undertaken, perhaps around the technology you use or the industry you work in.

Common reasons for HMRC to launch an R&D Tax Credit enquiry

Below are some of the most common reasons why HMRC may wish to open an enquiry:

  • There’s been a change in your company’s circumstances - an increased claim value for example - and HMRC wants to know more
  • HMRC believes it has found an inconsistency, for example something they believe is inaccurate or that doesn’t give the whole picture
  • There are questions around your tax return. Although tax returns are not specifically related to R&D Tax Credits, HMRC often wants to look at your tax return in relation to your R&D claim for completeness
  • HMRC has chosen a particular industry or type of technology to focus their enquiries on at a certain time, meaning that the enquiry is not down to anything in your claim specifically but is more general

This is why at Myriad Associates we take putting together your R&D Tax Credit claim seriously. We understand that HMRC enquiries can be stressful (not to mention costly) so we make sure your application is as well presented and thorough as it can be. This means that right from the beginning, you can submit your claim confident in the knowledge that an HMRC enquiry about anything specific to you is highly unlikely.

How can HMRC enquiries be avoided?

HMRC insists that all R&D Tax Credit claims are well-prepared. All questions should be answered fully and accurately and all requested supporting documentation supplied. This gives claims the best chance of standing up to scrutiny and being paid without any further questions. To maximise your claim, you also need to include a high-quality narrative and robust methodology which also helps protect against enquiries, penalties or reductions.

HMRC reserves the right to impose penalties of up to 100% of your claim’s value if it deems your preparation process to have been negligent. A helpful attitude and proactive cooperation during an enquiry is highly recommended in order to achieve the outcome you want.

At Myriad Associates we take the stress out of applying for R&D tax relief by making the whole process simple. Our team consists of a range of R&D tax specialists who will take the time to understand the mechanics of your business, your general tax affairs and your R&D work. We can then work together with you to prepare your claim effectively. This means that our clients can be assured that their claims are robust enough to stand up to HMRC’s closest scrutiny before their claim is submitted.

Top tips to reduce the chance of HMRC launching an R&D Tax Credit enquiry

  • Make sure your methodology is strong
  • Ensure your record-keeping is completely up-to-date and transparent. This will allow you to more accurately relate the costs to your R&D activities
  • In your supporting narrative, make sure you have demonstrated an understanding of the guidelines for R&D and how it applies to your claim
  • Make sure the member of staff who has had the most input into overseeing the R&D project is that one that makes the claim - this may not necessarily be a senior or general manager

Why choose Myriad Associates?

If your claim has become subject to an HMRC enquiry, you’ll need a team of R&D experts on your side. Myriad Associates can advise you on all issues surrounding your enquiry, and guide you through the process in order to arrive at a mutually acceptable outcome.

We have many years’ experience in dealing solely with R&D tax relief claims and we’re incredibly effective at it.

We will help you by:

  • Contacting HMRC on your behalf so that they know we’ve taken on your case
  • Reviewing your claim with you, along with any documentation and HMRC correspondence
  • Rebuilding your claim where necessary
  • Developing strategies to defend the full amount, or negotiating if calculation mistakes have occurred
  • Answering any questions you may have and allaying any worries

If you’ve been contacted by HMRC regarding your R&D Tax Credit claim, or you’d like us to support you in your application, please do get in touch using our contact form, or call our friendly team on 0207 118 6045.

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