Checklists for R&D Success - Compiling Correct Claims
Use this checklist to ensure you are compiling your claims correctly
R&D Checklist 2 - are you compiling your claims correctly?
We have put together this checklist because we know that some companies are opening themselves up to HMRC challenge by not keeping or submitting sufficient records on how their Research & Development (R&D) claims were worked out.
The tendency is to think that HMRC has checked and approved a claim just because they have settled it, when this is not the case. In 95% of cases HMRC processes R&D claims without checking them at all. But they may follow up and make a check at any time, so you could be making claims for many years without a single HMRC check and then suddenly HMRC takes an interest. When they do take an interest, if they find your records or claim information wanting, you could be in serious trouble.
If HMRC suspects that errors have crept in innocently, they have a good reason to open an enquiry and can go back over four years. If they think you have been careless with your claims or worse still inflated them – i.e. they become aware of issues – they can go back six years. In both cases if your claims are reduced you will have to pay any underpaid tax or overpaid tax credits with interest and probably penalties as well. On top of that an HMRC enquiry will be time consuming and is often very stressful as well as costly.
If on the other hand you have provided HMRC with robust information as part of making your annual corporation tax return and you have notes to back up your R&D claim information, there should be no problem. You will easily be able to answer any question HMRC may have and therefore HMRC has no reasons they can use to go back over all your R&D claims, so at most they will only look at your past two accounting years and will be much less likely to ask detailed questions.
Are you ready to find out if you qualify or how much your R&D claims could be worth?