Importance of providing the right evidence

It is not so long ago that research and development (R&D) disputes were relatively uncommon certainly in the First-tier Tribunal (FTT). This has changed significantly over the last decade. As the number of taxpayers seeking to rely on R&D relief has grown rapidly there has been a corresponding uptick in compliance activities to root out non-qualifying projects. HMRC now investigates a substantial proportion of R&D claims.

This more sceptical approach has caused consternation for research-intensive small businesses which are often dependent on receiving these tax credits. Although HMRC has a duty to ensure that the system is not being abused the investigative process is perceived as costly and uniquely frustrating even for the most apparently clear-cut projects. Although some of the key legal concepts in the regime can seem vague the problem is mainly caused by the inherent factual complexity of many R&D projects and the...