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The news that HMRC will be holding up some research and development (R&D) repayments while a number of ‘irregular’ claims are being investigated has been broadly welcomed by many R&D specialists. No doubt some clients will complain about this development, but it is a sign that HMRC recognises that there are parts of the R&D reclaim industry involved in unacceptable abuse of the system, in some cases amounting to fraud.
We have commented before in these pages about the considerable unease expressed by reputable R&D advisers about some of the players in this market: the pressure for the introduction of effective controls over claims is overwhelming. The changes in this year’s Finance Act will go some way to deal with the problem but perhaps the time has come to go further. The problem is not unique to R&D – there have been issues with some high-volume tax repayment agents and only recently I read an impassioned rant about some of the problems with the asset protection and probate avoidance industry. There is a widespread problem which needs addressing.
For most of my tax career, regulation has been something lurking in the background but until recently most professional advisers were against it.
I feel there has been a sea change in attitudes, spurred on at least in part by the excesses I have talked about here. But there is now a strong case to begin a serious debate about what regulation of our profession might look like. Inevitably it would increase administrative burdens and lead to higher costs but that is the price to be paid if we want to drive out the rogue elements. Times have changed and our profession needs to acknowledge it.
