HMRC recognises that R&D system needs improvements

HMRC has acknowledged that its handling of some R&D tax relief claims has not met its own standards and commitments under its Charter.

Responding to a letter from the Chartered Institute of Taxation (CIOT), HMRC said feedback from tax professionals has "directly informed amendments" to its quality assurance processes.

However, CIOT remains concerned that HMRC's ‘volume approach' to R&D enquiries means that legitimate claims will continue to be rejected.

HMRC stressed that the number of R&D claims year has more than doubled since 2015/16, estimating that half of all claims do not qualify for relief or are inflated:

"As a consequence, we have expanded the work done by our Campaigns and Projects teams to cover R&D claims, which enables large scale compliance activity", HMRC said.

Ellen Milner, CIOT director of public policy, said:

"We accept that there will be an impact on all claimants of R&D enquiries, and we and our members also want bad claims rooted out from the system.

"However, the impact of HMRC's compliance approach should not be the refusal of genuine claims, especially without due consideration of the facts and opinions of experts, reasoned judgments or proportionate engagement with taxpayers and their agents."

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