An HMRC enquiry can bring pain not just for the client, but also for their advisers. The good news is that Enquiry Defence is included in our fee. We can even provide this to clients who haven't used Jumpstart, as well as providing advice to you or your clients, should either of you be concerned about previous claims.
It won't happen to me.
Figures suggest that HMRC's Large Business Directorate are now challenging 1 in 4 claims. But surely they don't have the resources to really look at all the SME claims? Tax avoidance, evasion and non-compliance are big issues for HMRC - and they are getting the resources they need to really tighten up.
The UK 'Tax Gap' - the difference between what is owed and what HMRC actually collect - is one of lowest in the world - at 6%. But that still amounts to £34 billion.
The Government has invested around £2bn in HMRC since 2010 specifically to target the tax gap and in the Autumn Budget 2017, the government announced 18 measures and additional investment in HMRC to further address the issue. Together these are forecast to raise an additional £4.8 billion between now and 2022/23.
But R&D tax relief is only a small part of the tax landscape isn't it? The popularity of the R&D tax relief scheme and rapid growth in claims - particularly from SME's - make it a clear area of focus for HMRC.
Ian Hyder, Partner at Pinsent Masons, commented: "R&D tax relief is now clearly a target for HMRC in ensuring that they maximise their tax take from businesses."
When HMRC looked at the breakdown of the 'tax gap' they found that:
10% is from taxpayer errors
18% is down to failing to take reasonable care
18% is from difference in how to interpret legislation
And when they looked at taxpayer groups, SME's made up 46%.
The R&D tax relief scheme cost the Treasury almost £2.9bn in 2015/16. It's a popular scheme - and a generous source of tax relief for SME's - so it is, of course, a focus for HMRC in terms of non-compliance.
With 10 years experience and over 1,400 happy clients, we've learned a thing or two about building successful claims (over 4,300 of them).
And should HMRC, ask questions, we know how to defend them.
Jumpstart stands behind every single claim that we do. We do not consider a claim to be successful until it has been processed by HMRC and any questions or issues have been resolved to the clients satisfaction. We consider enquiry defence to be an integral part of our offering and provide this at no extra cost to our clients.
We're also happy to offer this service to those who haven't used Jumpstart, and are facing an HMRC enquiry.
If you or your client are concerned about previous (non-Jumpstart) claims, Claim Check is a desk-based review that will provide you with a detailed report on risks and opportunities, as evident from the claim documents.
We will assess the merits of an existing claim and any inherent risks with a view to mitigating those risks before they escalate into an HMRC enquiry. This service would benefit any potential investors in your client's business as part of their due diligence process.