HMRC aiming to recover £612 million in tax
Posted on 12 Dec 2019 and read 1223 times
According to the accountancy and business advisory firm BDO (www.bdo.global
), HMRC estimates that businesses have incorrectly claimed R&D tax reliefs amounting to £612 million.
This high level of ‘tax under consideration’ suggests that businesses should be more cautious when claiming R&D tax reliefs to avoid unnecessary — and potentially expensive — tax disputes.
R&D tax credits are worth more than £4.3 billion to UK businesses, and BDO says that this is one of the most generous tax breaks that UK businesses can benefit from.
Eyad Hamouieh, a partner at BDO, said: “HMRC’s tough stance on the mis-use and over-claiming of R&D tax credits will no doubt become an area of increased focus.
“That said, while some businesses are getting into a fix by over-claiming, many more businesses are failing to claim the money they are entitled to.”
HMRC is also targeting businesses for £90 million in underpaid tax relating to Patent Box in 2018/19 — up 15% from £78 million in 2017/18.
Patent Box allows companies to pay tax at an ‘effective rate’ of 10% on patent-related profits, as opposed to the standard 19% rate of corporation tax.
BDO says identifying the profits that result directly from a patent can be confusing, leading to businesses over-claiming the Patent Box relief.
One problem has been the growth in unregulated ‘tax boutiques’ offering advice to businesses on how to maximise their tax rebates.