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Continuing research
I have read Andrew Hubbard’s articles on research and development (R&D) claims (‘Researching the researchers’, Taxation, 10 September 2020, page 8 and ‘More research may be needed’, 8 October 2020, page 20) . He highlighted some serious problems and I hope these articles will contribute to their resolution.
I have been preparing R&D claims since the first year they were introduced, replacing the old scientific research allowances (SRAs). I set up the internal arrangements for a major manufacturing group which had significant research activities into new products and processes. Latterly, my firm has made a successful six-figure claim for a company that manufactures a product with a novel feature. It was that aspect which persuaded the HMRC officer, dealing with the case under the advance assurance scheme, of the merits of the claim – particularly after speaking at some length to the company’s joint founder and technical genius.
This company had been approached by a ‘boutique’ firm offering to make a vastly more substantial claim for a fee of 30% of its value. However, I was able to assure the client that our methods of approaching the claim would be both more accurate and less expensive, and would establish good working relationships with HMRC for future claims. The most important point I made was that I would audit any claim made by the boutique firm before it was submitted, as part of our letter of engagement terms, and I would refuse to submit any claim which I did not feel was justified by the relevant tax law.
A possible mechanism for curbing the unscrupulous activities plaguing this part of the tax market is that all R&D claims should be submitted solely by the registered tax adviser; it would be that firm, not the ‘boutique’, which would always be responsible for the figures submitted.
While I can see that there may be reasons for several firms dealing with one client’s overall tax affairs – such as a VAT specialist, an inheritance tax expert – within one tax category, corporation tax for example, there should – in my view – be only one registered agent who may call on specialists for specific aspects, but who takes responsibility for the overall return and computations submitted.
It would be much harder for an unscrupulous boutique salesman to convince a tax agent, who has legal and professionally enforceable responsibilities to his client, to submit a dubious claim, than for that salesman to ‘sweet talk’ a director into making such a claim for his company. I know this because I have attended, out of curiosity, some of the boiler-room type sales presentations by one or two of the more aggressive promoters. The pitch is made to businessmen who are told that their existing accountants and tax advisers are old-fashioned and slow on the uptake, and should be bypassed.
Christopher Arkell, SMB Professional Services Ltd.
Self-assessment liabilities
We reported in Taxation, 8 October 2020, page 4 that HMRC had increased the threshold for paying tax liabilities under a time-to-pay arrangement. The upper limit is now £30,000 for self-assessment taxpayers, which should help ease any financial burdens experienced as a result of the coronavirus pandemic. Perhaps interestingly, there is a minimum level of debt that can be paid in this way by direct debit payment of £32 (tinyurl.com/hmrcttpsept).
Taxpayers who do not either apply to pay their tax bill in instalments or pay in full by 31 January 2021 may receive payment reminders, but reminders are not issued to self-assessment taxpayers with outstanding liabilities of £99 or less. It would only be when either accumulated interest charges, penalties or other self-assessment tax charges took the total above £100 that demands would follow.
Contact us
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