HMRC has estimated that businesses have incorrectly claimed £612m in relation to R&D tax reliefs.
The high level of tax under dispute – described by HMRC as ‘tax under consideration’ – suggests that businesses need to show enhanced caution when claiming R&D tax reliefs to avoid potentially expensive and unnecessary tax disputes.
HMRC is expected to launch more investigations into businesses that have incorrectly claimed R&D tax relief claims over the coming year.
R&D tax credits are worth more than £4.3 billion to UK businesses. BDO says it is one of the most generous tax breaks that UK businesses can benefit from.
Eyad Hamouieh, Partner at BDO, comments: “HMRC’s tough stance on the misuse and overclaiming of R&D tax credits will no doubt become an area of increased focus.
“However, with the right advice, businesses should not be put off claiming this valuable tax incentive. The ability of UK firms to invest in R&D will be paramount to their success post-Brexit.
He adds: “Whilst some businesses are getting into a fix by overclaiming, many more businesses are failing to claim the money they are entitled to.”