A lesson on qualifying R&D tax credits with HMRC

In a recent court case, two men were jailed for a number of financial and tax offences, including attempting to make a fraudulent research and development (R&D) tax credit claim of £850k by creating false invoices.

HMRC worked with Warwickshire Police to secure the convictions of Stephen Murrall and Peter Harris who, amongst a range of activities, attempted to buy Hartlepool United Football Club. They received jail sentences of 8 years and 30 months respectively.

The case serves as a reminder that where generous tax incentives are available, attempts will inevitably be made to claim them via fraud, or by aggressive tax planning arrangements that would lead to outcomes other than those intended by Parliament. Such actions may serve to deprive genuinely innovative companies of benefits targeted at them.

HMRC will review all R&D claims before making any repayment using a risk-based approach, whereby larger or more complex claims are scrutinised in greater depth. It is therefore vital to supply HMRC with appropriate technical and costing documentation to support an R&D tax credit claim and remove the need for further enquiries.