Navigating the Increasing Volume of HMRC R&D Tax Credit Enquiries: What You Need to Know!
The Impact on Bonham & Brook
Recognising the upcoming changes in HMRC’s scrutiny of R&D tax credit claims, Bonham & Brook proactively adapted its approach ahead of time. While making some small adjustments, we remain steadfast in our commitment to delivering a comprehensive and dependable service.
Investment in Compliance Process and Team: Our investment in the compliance team and process over the past two years is proving to be fruitful. We hired Malcolm Henderson, an Ex-HMRC R&D Inspector, to join our team last year as an Associate Director, and we are already seeing the benefits of his expertise. We continue to defend our claims with complete confidence and the increase in enquiries have validated our compliance review process.
Selective Client Filtering: Some advisors may take on any client, we have always had a robust qualification process in place to ensure all claims are doubt-free. This approach has allowed us to continue our business as usual.
No Change in Fees: Our fees have never been the cheapest, but we pride ourselves on providing a comprehensive service. We understand the volume of work that goes into making claims robust and safe from a compliance perspective. While some may see it as a race to the bottom in price, we do not compromise on quality.
Welcoming Enquiries: We welcome enquiries and believe that compliance checks help to weed out questionable advisors.
Assisting Other Advisors: In addition to defending our own claims, we have also assisted other advisors in defending their clients’ R&D tax credit claims. Our team has extensive experience in dealing with HMRC inquiries and has successfully helped other advisors navigate the process.
Here are some important points to keep in mind regarding the latest enquiries
Lack of Technical Knowledge from Inspectors: Some inspectors lack technical/financial knowledge, leading to asking questions that have already been answered via our technical reports. Furthermore, there have been instances different inspector give conflicting information on how best to resolve an enquiry from HMRC.
Lack of Communication: It is difficult to communicate with HMRC as inspectors are not picking up their phones and the numbers stated in their letters often go through to the wrong team. This slows down the whole enquiry process and caused unnecessary delays. Additionally, inspectors repeat questions in their follow-up letters even after we have answered them either in our reports or initial responses. HMRC do not always give the details regarding the inspector undertaking the enquiry, this makes it difficult to communicate effectively with them.
No Strict Deadlines for Informal Enquiries: There are no statutory deadlines for responding to enquiries. However, HMRC often resort to threatening legal compliance notices (Schedule 36 Notices) if their deadlines are not met, these notices allow HMRC to issue fines if responses are not provided within the deadline stipulated in the notice.
Questionable Statements: HMRC often request information that is beyond the scope of an enquiry and directly contradicting Schedule 18 Finance Act 1998. Furthermore, we have found HMRC making technical and grammatical mistakes in the enquiry letter.
Refusal to Extend Deadlines: In some cases, HMRC are refusing to give an extension of time to allow us to compile the necessary information to comply with their requests which causes more stress as we are required to collate a large number of documents within a short period of time.
With our experience and investment in compliance, we are well equipped to handle these enquiries and provide reliable services to our clients. At Bonham & Brook, we are committed to providing high-quality R&D tax credit advice and support to businesses.
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