HM Revenue & Customs (HMRC) has rolled out a new disclosure service for companies that have inadvertently overclaimed research and development (R&D) tax relief and failed to amend their returns.
The move underscores the government’s intensified crackdown on misuse of the scheme, which reportedly cost the exchequer over £1 billion in missing revenues.
The initiative targets firms that may have overstated their R&D expenditure in good faith, rather than those deliberately committing fraud. It follows a surge in HMRC investigations into questionable R&D claims, with the tax under review reaching £641 million this year, according to the department’s annual report.
Generous by design, R&D tax credits encourage companies to invest in innovative projects. However, this same generosity has also attracted fraudulent activity and organised criminal efforts to exploit it, costing the Treasury an estimated £1 in every £4 of the relief in 2020-21.
Dawn Register, a tax dispute resolution partner at BDO, said: “There are also other disclosure routes available to companies looking to bring their tax affairs up to date. We’ve seen many unscrupulous ‘claims’ agents in the R&D market in recent years. If a company now realises its past claims were ‘speculative’, a voluntary disclosure is definitely the best course of action.”