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Taxation has always taken a keen interest in research and development (R&D) relief. We have, on several occasions, raised concerns about the activities of some players in the market, who seem happy to take a considerable fee for submitting claims which have little or no validity. Something had to change and we welcomed the steps which were taken to make it more difficult for unscrupulous advisers to get claims through the system. Inevitably this has had a knock-on effect on genuine claims and many advisers feel that the pendulum has swung too far in the other direction, with HMRC being over-zealous in its approach to claims. The latest development, reported by the CIOT (tinyurl.com/ciotranddsept) is the use of the FA 1998, Sch 18 para 16 powers to remove claims from returns.
I must confess some surprise at this. I, and I expect others, associate para 16 (and the equivalent power in self assessment) with the correction of minor errors such as transposed figures or entries in the wrong box, not as a way of challenging the content of a return. But para 16 does, and frankly I had forgotten this, give HMRC power to correct anything that an officer has reason to believe is incorrect in the light of information available to the officer.
That does of course beg the question as to what information an officer might have about a particular company’s claim that gives them reason to amend the return. Will it be the nature of company’s business or perhaps the track record of its advisers? These are difficult issues and ones that have been little tested in litigation. We could be in for some lively tribunal hearings in due course.
If you do one thing…
If you deal with EMI schemes check the updates to HMRC’s Employee Tax Advantaged Share Scheme User Manual from ETASSUM52105 onwards.
