Have you had a call from HMRC about your R&D claim?

We were recently made aware that in an effort to clear enquiries on an R&D claim under investigation, HMRC called a client directly to ask them some ‘quick questions’.

On the face of it, this sounds fairly innocuous, and it’s great to see HMRC being pragmatic in trying to close enquiries. However, you need to take a moment and consider the impact of this approach on your claim.

If you have ever been involved in an R&D claim, you will know that it is a complex area of tax law. Often in an R&D claim very technical questions need to be answered and evidence required to meet certain eligibility criteria. HMRC investigations tend to delve into those technical questions in greater detail, exploring whether uncertainties really did exist and what technological or scientific advances were sought.

Generally, in preparing the narrative for an R&D claim, it’s necessary to hold detailed lengthy conversations with technical engineers involved in the projects, including the competent professionals who assess whether a claim was readily deducible or not, to be eligible for R&D tax credits.

HMRC consulting a director directly could be potentially disastrous to the claim.  Whilst a director may have good knowledge of the projects, they may not be the technical expert involved and as such they might not have access to the sufficient level of detail to be able to fully answer the questions.

If HMRC calls you as the director, my advice would be to avoid answering their queries at that point, but take their contact details in order to schedule a future call with the relevant people involved in the project. I would also suggest that you contact your R&D advisor and ideally include them on the call with HMRC.

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