HM Revenue & Customs (HMRC) has significantly increased the number of Research and Development (R&D) tax relief claims it has “corrected” using controversial powers, sparking concerns that the tax authority is bypassing due process.
New data obtained by accountancy firm Price Bailey through a Freedom of Information request reveals that HMRC’s Fraud Investigation Service (FIS) amended 2,440 claims for R&D corporation tax relief in 2024 (as of 12 November)—a nearly fourfold increase from 670 claims in 2023. These amendments were made under Schedule 18 Paragraph 16 of the Finance Act 1998.
Price Bailey reports that HMRC established a dedicated FIS team in July 2022 to combat R&D tax relief fraud. However, rather than opening formal enquiries into suspect claims, HMRC has been “correcting” claims under its statutory powers—raising concerns that many legitimate claims are being rejected without proper scrutiny.
Taxpayers who have had their claims amended are still weighing whether to accept the changes or contest them. Many have received letters from FIS warning them that their claims “triggered an alert” and that HMRC “believes that you have fraudulently claimed money to which you are not entitled.”
The controversy has intensified following HMRC’s recent consultation, launched on Budget Day, titled The Tax Administration Framework Review – new ways to tackle non-compliance. The consultation suggests the government may seek to revise legislation, making it harder for businesses to dispute HMRC’s amendments to R&D claims.
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