Will R&D changes help to plug HMRC’s tax black hole?

Research and development (R&D) legislation is changing. HMRC is getting tougher and looking to reduce the number of spurious claims received. This includes both future claims and clawing back monies from claims that have already been paid. Like other areas of tax R&D is in the spotlight with the government looking to fill a black hole in its finances.

Government figures show R&D claims amounted to £6.6bn in 2020-21 from an estimated £38.1bn of qualifying R&D expenditure.

Real cost

However the government also estimates that error and fraud in R&D claims cost the taxpayer £467m in 2020-21. This relates to approximately 7% of all R&D claims in monetary terms. If the government can identify and take action against just 50% of the claims it believes to be spurious or exaggerated it could be in line for a £230m plus windfall.

While that may not...