Mark Law’s Post

"Given what HMRC now knows about the extent of non-compliance in the schemes, it will need to consider whether the steps it is currently taking are adequate and whether it is striking the right balance with its compliance interventions, to avoid deterring valid claims." - Gareth Davies, Comptroller and Auditor General, NAO Whilst Mr Davies makes a good point here, it's not about balance. Its about inadequately trained staff and poorly thought out processes. We could all do without the extra work a compliance check entails but, if run properly, they're not too much of a headache. However, they are not being run properly and serve no real purpose at the moment but to add stress to companies and deter valid claims (the fact that they also deter invalid claims is just a happy by-product). Caseworkers at ISBC do not understand R&D legislation and do not have the necessary skills to check claims. The new volume approach is not fit for purpose. If HMRC can sort out these two issues, then I don't think increased compliance activity will be a deterrent at all.

Research and development problems ......... So the first professional indemnity insurance firm has lost its appetite to insure accountancy firms that farm out their research and development claims to a third party. No questions on the status of the third party just a no. They clearly see risk to the accountancy practice in these tie ups. Commission probably causes further issues. I detect changes coming for accountancy firms insurance ............as a result of hmrc challenging claims to research and development. Moving from an easy environment to a challenging environment other insurers will most likely follow suit why ? Litigation will follow rejected research and development claims as the costs of preparation are stood by the clients. They will look to recover those costs on earlier claims if clawed back from the firm or the accountant. The r and d market will now change as the ability to claim is beginning to be resolved by hmrc so that most future claims will be scrutinised. Litigators will be aware of the market changes. #insurance #researchanddevelopment #claims #hmrc

If you or your clients have been blessed with the joys of a HMRC R&D volume compliance team enquiry, then please provide the CIOT with examples of the "customer service" you received. At PKF-Francis Clark Chartered accountants & business advisers working with Stuart R. it is fair to say we have had some absolute crackers, but the officer being unable to competently adjust the taxable net profits, then asking us to do his job for him, that really takes the biscuit. Indeed it is hard to see how much lower the Dept can sink from that point. Let's hope it is an upwards trajectory from then on, however the recent reports evidencing from HMRC's accounts that they seem unable to recruit enough new staff to replace the (experienced) leavers, does not bode well. If you are struggling with a stalled enquiry or an intransigent HMRC enquiry officer please do get in touch for a free no obligation phone call. #randd #hmrc #taxinvestigations #disputeresolution #

CG34, just had to spend time (again) chasing these up. Bit of confusion on HMRC's side, the first line operator didn't know what a CG34 was so had to wait around for a technical officer to be available (there is no queue for this). "We have not processed post by that date yet (July 2023)" "OK what are the time scales?" "I don't know" "OK what date of post have you processed up to?" "I don't know, only an inspector knows" "How can you tell me July 2023 post is not yet being worked on if you don't know that?" *some HMRCese that I'm sure makes sense if you live in the HMRC machine but sounds ridiculous otherwise* "so the lead time is at least 8 months?" "yes, sorry there's a lot of post" (it's all a bit paraphrased) --- Is this in line with HM Revenue & Customs 's charter "being responsive"? These delays are rife across all departments. It's particularly galling when millions of people got a £100 penalty for being a single day late. I think there should be financial penalties for HMRC for failing to meet their own deadlines. If our clients miss a deadline it could mean no claim for relief, a penalty or no possibility of an appeal. If we miss a deadline it could mean no fee or a claim on our insurance. Has anyone had any success trying to charge HMRC for time wasted chasing up these ever expanding lead times? I feel that in order to effect change the cost of not fixing the issues needs to be higher than leaving things as they are. The charter is just waffle. NB it's the machine called HMRC I have beef with not the individuals who try to achieve the impossible.

HMRC's annual report was published last week and features some interesting statistics on its ever increasing compliance work on R&D claims. While the estimated level of #error and fraud in claims for 2022/23 is almost unchanged, HMRC estimates that its policy and operational measures in 2023/24, for example the introduction of the Additional Information Form, will have reduced the overall level of error and fraud in claims to 7.8% (down from 13.3% in 2022/23). However, #HMRC also estimates that £4.1bn has been paid out on erroneous or fraudulent claims since 2020 - R&D #investigations into past claims are increasing and look set to continue as it tries to recover some of this revenue. Unfortunately, businesses that are genuinely innovating and claiming R&D correctly are likely to get caught up in these recovery measures - it's really important to get your #RandD #claim right first time and know how to navigate an information request from HMRC. Take the first step in protecting your business by reading our updated #tax #enquiries insight, including a webinar on navigating this turbulent landscape. You can also contact me to discuss the specific impacts on your #business.

Receiving an enquiry for one of your R&D claims is never a welcome sight, especially in the face of HMRC's more aggressive approach to compliance. Despite HMRC's more uncompromising attitude, well-reasoned and researched work is still the best line of defence in a compliance check. A great example of this can be found in the recent success of one of our members, Kevin Johnson. By employing his own experience and expertise, along with a little help from our R&D Claim Support Service, the claim was upheld and no penalties were issued. If you'd like to read more, the full case study is available on our website. #rdtaxrelief #accountantsuk #researchanddevelopment #HMRC #casestudy

Fictional Story but..... Potential Customer: So how many R&D claims have you prepared? Me: To date around 800! Potential Customer: And how many of those have been successful? Me: (Sheepishly) Erm 7! Potential Customer: So you have a less than 1% success rate, a lot of other firms I have seen talk about a nearly 100% success rate, I won't be using you! HMRC recently wrote to firms claiming to have a 100% success rate and said, you can't claim a 100% success rate for your claims, because we don't check every claim. You can only say a claim has been successful if it has been enquired into and has been subsequently repaid. So at the moment we have 7 successful claims, around 793 processed claims and I am not going to tempt fate by telling you how many have been unsuccessful. We currently have one ongoing enquiry into a claim we prepared and submitted and another where we have supported a company who came to us through their accountant for support into an enquiry that has been through four rounds of communication and just been passed to the SOLS team for review. Both have been enquiries led by the ISBC team at HMRC which is leading the volume led enquiries. Both have in our opinion strong cases for a claim. If you've got questions around #RnDTaxCredits, why don't you get in touch.

Just when I think the ISBC team at HMRC might actually be getting better.... During a compliance check, and without our knowledge, a case worker from the ISBC team called the MD of our clients company and proceeded to ask them lots of technical questions about their R&D claim. Even though, the MD is not listed as one of their competent professionals, so wouldn't be the right person to answer such questions. HMRC declined to give us a copy of their notes taken during the call, and in their next letter quoted our clients MD, as though he was one of the companys competent professionals, which he most certainly isn't. In our response we wrote "..to exacerbate this issue even further, you made an unscheduled call to our client.....which has caused a huge amount of confusion and wasted time" To which the ISBC team responded "Lastly, I refer to the point made by your agent regarding telephone calls and/or meetings in relation to your R&D claim. Due to the volume of cases being progressed, HMRC are unable to conduct such calls or meetings with companies or agents as it is not viable for us to do so." Well, it is viable as you did it!! That's the point! If you wanted a call you should have scheduled it, or at least made sure it was with one of the competent professionals on the list we gave you, twice! And off to SOLS we go....*sigh*

Are you considering an R&D claim? Don't be surprised if you hear something like the below when you are talking to an ethical R&D Advisor. Although if you are talking to the sales team of one of the volume claims submitted, you might still hear about their 100% Success Rate! Or their thousands of successful claims. It's probably not entirely accurate or ethical! #RnDTaxCredits #RnDTaxRelief #DontBelieveTheHypeSorryTripe