In response to media coverage about R&D tax credits, HMRC has confirmed that eight people have been arrested on the suspicion of conspiring to submit over 100 fraudulent R&D relief claims. ‘The arrests include a tax agent suspected of criminally facilitating the fraudulent attack. More arrests are expected in the coming days. By acting quickly to pause payments and implement additional checks on claims, we've protected £46m of public money,’ HMRC said.
HMRC noted that R&D tax reliefs are being reformed and said the changes would help further reduce abuse. However, in a submission to the Public Accounts Committee, the CIOT repeated its concerns that some of the measures being proposed in the forthcoming Finance Bill will prevent genuine claimants from accessing the relief to which they are entitled, while not necessarily leading to a significant reduction in abuse.
In particular, the CIOT does not support the proposed measure that would require companies to inform HMRC of their intention to make a claim within six months of the end of the period to which the claim relates, rather than the current two years.
The CIOT said: ‘This measure is poorly targeted because, although it will prevent some dubious claims, it will also mean that many genuine claims will fall out of time. It will exacerbate an existing unfairness that can arise between taxpayer companies that undertake R&D activities, based on whether or not they have an awareness of the tax relief rules at the appropriate time. It will disproportionately hurt smaller and newer companies – the kinds of companies that may only get tax advice during the year end compliance process (and often after the six-month window for pre-notification), rather than all year round.
Other issues raised by the CIOT in its 16 page submission to the PAC included:
concerns over the complexity and frequent changes to the coronavirus job retention scheme (CJRS), which the CIOT said were the cause of many taxpayer errors in relation to the scheme;
a request for the government to take a more systematic approach to evaluation of tax reliefs;
there apparent lack of consistency in decision-making following time to pay arrangement requests
In response to media coverage about R&D tax credits, HMRC has confirmed that eight people have been arrested on the suspicion of conspiring to submit over 100 fraudulent R&D relief claims. ‘The arrests include a tax agent suspected of criminally facilitating the fraudulent attack. More arrests are expected in the coming days. By acting quickly to pause payments and implement additional checks on claims, we've protected £46m of public money,’ HMRC said.
HMRC noted that R&D tax reliefs are being reformed and said the changes would help further reduce abuse. However, in a submission to the Public Accounts Committee, the CIOT repeated its concerns that some of the measures being proposed in the forthcoming Finance Bill will prevent genuine claimants from accessing the relief to which they are entitled, while not necessarily leading to a significant reduction in abuse.
In particular, the CIOT does not support the proposed measure that would require companies to inform HMRC of their intention to make a claim within six months of the end of the period to which the claim relates, rather than the current two years.
The CIOT said: ‘This measure is poorly targeted because, although it will prevent some dubious claims, it will also mean that many genuine claims will fall out of time. It will exacerbate an existing unfairness that can arise between taxpayer companies that undertake R&D activities, based on whether or not they have an awareness of the tax relief rules at the appropriate time. It will disproportionately hurt smaller and newer companies – the kinds of companies that may only get tax advice during the year end compliance process (and often after the six-month window for pre-notification), rather than all year round.
Other issues raised by the CIOT in its 16 page submission to the PAC included:
concerns over the complexity and frequent changes to the coronavirus job retention scheme (CJRS), which the CIOT said were the cause of many taxpayer errors in relation to the scheme;
a request for the government to take a more systematic approach to evaluation of tax reliefs;
there apparent lack of consistency in decision-making following time to pay arrangement requests
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