There are a whole host of reasons why claims are coming under investigation. Increased requirements for documentation, problems with past claims, and tighter eligibility qualifications are all making it harder to run an R&D tax relief service. Often, even well-constructed claims seem to be caught in the crossfire, with advisors asked to exhaustively justify an already solid case.

Our members have been forthcoming about the challenges they’re facing. Also, their use of our helpline, members-only forum, and claim support service have been particularly useful in further illuminating HMRC’s actions. Despite the difficulties presented by the changes, SMEs and their supporting R&D experts have found success through diligent work to produce well-structured claims and by producing comprehensive and detailed responses to any questions raised by HMRC.

Receiving an enquiry against an R&D claim

A good example of this success came in R&D Community member Kevin Johnson’s enquiry defence of his client’s claim. Kevin was approached by a British business, a deep-sea engineering pump solutions company that works within the oil and gas sector. Much of their work is highly specialised, and often requires entirely new solutions as they encounter new challenges and constraints. The company had successfully filed four claims on their own already, but received an enquiry letter regarding their fifth claim.

They were concerned that their claim might be refused, and they sought additional support from Kevin to try and successfully defend against the enquiry. Upon inspection of their claim, Kevin found that there were several issues which might have caught HMRC’s eye.

The claim had some common problems such as inaccurate costs and incomplete documentation, and the company had also flagged that they were working as a subcontractor. They had also indicated that the R&D projects were subsidised, meaning that they shouldn’t have claimed under the SME scheme.

Responding to the enquiry and accessing the Claim Support Service

After taking a look at the details of the enquiry and identifying these weaknesses in the claim, Kevin began construction of his response. With the response drafted, Kevin was looking to get a second set of eyes to try and ensure a successful enquiry defence. So, he contacted our Claim Support Service:

I contacted Richard through The R&D Community’s Claim Support service with the details of an enquiry that had been opened against an accountant’s client’s claim that had been prepared directly by the client. I was starting at HMRC letter two after the first letter response from the client had been rejected on all nine projects presented. I provided a completed draft response and all the information and documentation about each project, to try and achieve a successful and technically accurate enquiry defence.

Richard quickly got back to me with detailed technical feedback which helped me improve the strength of the claim. He identified specific areas of the claim projects that could be reinforced or removed, and it gave me an additional level of confidence to share when advising the client and really helped in the defence of the enquiry.

The conclusion from HMRC was a closure notice without penalties and the claim was upheld.”

This was a resounding success, both for Kevin and The R&D Community. There has been a lot of news recently about difficulties faced when responding to HMRC, with some saying that getting an enquiry letter is almost a guarantee that HMRC will reject the claim. The effective and efficient measures Kevin took in responding to HMRC, as well as the added reassurance of a second set of eyes, allowed the claimant business to secure the funds they need to continue their important and innovative work. We were thrilled when Kevin came back to us with the news of the positive result, and here is what he had to say when asked about his experience with the Claim Support Service.

It was my first experience using the Claim Support Service, and I found the communication I received to be clear, concise, and promptly delivered even where there were complex technical points to explain. If the need should arise, I would definitely use the Claim Support services in the future.

Sounds like a good fit?

If you’ve been reading Kevin’s story and feel like you share the same challenges and values, we’d love to welcome you to the community too. You can:

We hope these resources will answer all your questions, but if there’s anything you’d like to discuss, please get in touch and let us know!