{"id":3701,"date":"2023-07-18T11:42:34","date_gmt":"2023-07-18T11:42:34","guid":{"rendered":"https:\/\/magnumaccountancy.com\/?p=3701"},"modified":"2023-07-18T11:42:34","modified_gmt":"2023-07-18T11:42:34","slug":"half-of-all-rd-claims-by-smes-at-least-partly-non-compliant","status":"publish","type":"post","link":"https:\/\/magnumaccountancy.com\/half-of-all-rd-claims-by-smes-at-least-partly-non-compliant","title":{"rendered":"Half of all R&D claims by SMEs at least partly non-compliant"},"content":{"rendered":"

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\n In a report published alongside its annual report and accounts for 2022-23, HMRC also noted the smallest claims had the highest value of non-compliance and confirmed compliance behaviour varied according to industry sector. <\/p>\n

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HMRC\u2019s paper<\/a> highlights the significant rise in the number and value of claims for R&D tax relief and credits in recent years. Claims increased from 43,665 in 2015\/16 (worth \u00a34bn) to 89,300 in 2020\/21 (worth \u00a36.6bn). HMRC expects the cost of reliefs claimed in 2027\/28 to total \u00a39.5bn.\u00a0<\/p>\n

As a result of this rapid expansion in claims, HMRC has shifted its methodology in dealing with them. It has doubled the number of staff working on R&D compliance, including an additional 300 tackling non-compliance. It introduced a dedicated R&D Anti-Abuse Unit in July 2022 and has introduced several \u201cupstream\u201d activities such as nudge letters to encourage compliance in advance of company tax filings.\u00a0<\/p>\n

It has also introduced a mandatory random enquiry programme (MREP) for SMEs claiming under the SME or R&D expenditure credit (RDEC) regimes. This has allowed HMRC to better assess the level of compliance present in the regimes in the 2020\/21 tax year. It estimates that the overall level of error and fraud in that year was 16.7% (\u00a31.13bn), compared to its previous estimate of 3.6% (\u00a3336m).\u00a0\u00a0<\/p>\n

According to its own figures, around half of all claims, by volume, contained at least some element of non-compliance. HMRC found fraud indicators in fewer than 10% of claims, which suggests that most non-compliance is down to other behaviours. Other key findings from those figures include:\u00a0<\/p>\n