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Research and development (R&D) tax credits have been much in the news of late. There has been the arrest of eight people over alleged organised criminal attacks on the system, HMRC nudge letters, a series of investigatory articles in the national press and a House of Lords committee session taking evidence from leading practitioners.
Taxation has played a part in framing the debate on the claims process and highlighting evidence that some promoters are abusing the system. Yet there is also a concern that some businesses are missing out on legitimate claims – perhaps fearing some sort of guilt by association. We will be publishing an article on this shortly.
The reforms due to come in from March next year may have some effect. They will need to be given some time to bed in, but if they don’t then more radical changes may need to be made. I am sure that nobody really wants to get into a situation where every claim is investigated in full by HMRC before it is paid out, but at the very least there needs to be a more effective method of triaging claims before they are approved.
Of course, that principle could be extended much further. The whole self-assessment system is built on the principle of ‘process now check later’. That allows taxpayers early access to repayments but does carry the risk – as we have seen in R&D – of people (or advisers to whom a refund has been made) disappearing into the sunset before HMRC can claw the money back. Is there a case for looking at whether ‘process now check later’ is still the right policy?
If you do one thing...
If you deal with enquiries, read the latest HMRC guidance on who can sign a contract settlement (tinyurl.com/hmrcem6350).
