Research and development negativity

There has been a lot of negativity around research and development (R&D) tax relief ever since HMRC began its crackdown on fraud and error – and it is having a chilling effect.

It was vital that HMRC improved the robustness of the scheme as it is estimated that the level of fraud for R&D tax relief reached £469m from 2021-22.

Fraud doesn’t just harm taxpayers either as innovating companies are only properly rewarded if tax credits go to those truly breaking new ground. If companies who don’t deserve the relief are receiving significant sums it erodes the financial advantage that should only belong to those making genuine claims. However the approach taken by HMRC since it began its clampdown has at times been heavy-handed with accusatory letters sent to many companies apparently at random with questions asked about matters addressed in...