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HMRC R&D enquiry support service

Support for businesses having their R&D tax credit claim investigated by HMRC

When HMRC opens an enquiry into your R&D tax relief claim the most important question is, “Am I in a good position?”

At Source Advisors we provide support to businesses – whether they are existing clients or not.

As a Source Advisors client if you face an HMRC enquiry we defend our claims free of charge and run that process on your behalf. We have the confidence to stand by our claims with a proven claim methodology and a rigorous quality assurance process.

If you aren’t a Source Advisors client then there are still ways that we can help. The first step would be an HMRC enquiry report which gives you a full assessment of your position.

Once you have the report you will know what options you have. Then we can discuss your next steps and support you if necessary.

What is an R&D tax credit HMRC enquiry?

In a small, but growing, number of R&D tax relief claims HMRC will ask for more information and an enquiry is raised. An inspector will ask questions to better understand the R&D and the costs claimed.

If you have a robust claim then this should withstand this extra scrutiny and you or your advisor should be able to answer HMRC’s questions. But if not then it can affect the value of your claim and in some cases, penalties are applied. An enquiry might mean your R&D tax relief may be delayed but HMRC can raise an enquiry even if you have received the benefit.

Can Source Advisors help even though I’m not a Source Advisors client?

Absolutely. Source Advisors is one the longest established innovation tax specialists in the UK, with the experience, knowledge and expertise to undertake a quick assessment of your R&D tax relief submission. We will give you a clear and frank opinion.

Your business may find itself facing an HMRC enquiry, but may not have the full support of your current advisor. Equally, you may not want to rely on your current advisor and would like a different, independent pair of eyes to review the claim.

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What is a Source Advisors enquiry report?

Our enquiry report will give you a straightforward opinion which will suggest your next steps.

We will produce a fixed fee enquiry report for you that details what HMRC are asking and how this aligns with the submission you made. We will break down our comments on the technical robustness of the claim, the financial appropriateness of the claim and if there are any other areas in need of attention.

From our enquiry report you will know how to handle the HMRC enquiry and what needs to be done.

We will label the project:

Green – you are in a strong position to respond to HMRC.

Amber – there could be areas of improvement and dealing with the enquiry may be challenging.

Red – a situation needs urgent and significant attention.

Patent analysis to demonstrate the R&D baseline

As part of an enquiry HMRC is likely to ask the question “How did you establish the baseline for your R&D?”. Using patent information can be a fundamental part of demonstrating that an R&D project is seeking to achieve an advance in overall knowledge or capability. This in turn establishes the baseline.

Many businesses assume they know what the baseline is just because they have been in the industry for a few years or decades. But one way to be absolutely certain is to analyse the patent landscape. Often products and technologies never make it to market, so effectively remain “hidden”. This can be because of a change in company leadership, direction, or market strategy. Or maybe the process is still in progress or has stalled because of an issue with the patent or the cost.  Your competitors may have carried out the R&D before you, even if they don’t currently sell an innovative product.

Source Advisors can provide a snapshot of the patent situation for a specific technology that answers the baseline question for HMRC.

Can Source Advisors review an R&D tax credit claim without receiving a letter of enquiry from HMRC?

Absolutely. We can offer the same service against any of your previous submissions so that you have a clear understanding of any potential risks you’re carrying. You will have confidence that you’re in good shape and there are no surprises coming down the line. It also alerts you to any issue to be aware of in your next claim given an ever changing landscape. This proactive approach can be even more valuable when a business is looking to raise money and the value of R&D tax relief is a point of review in the due diligence process.

Can Source Advisors support me in the HMRC enquiry against my R&D tax relief claim?

As a Source Advisors client, if you face an HMRC enquiry we defend our claims free of charge and run that process on your behalf.

For other businesses who want Source Advisors to stand alongside them during their enquiry, we can offer that support. Based on the enquiry report, we will agree the most appropriate approach and agree how that work will be charged.

The important thing to remember when dealing with an HMRC enquiry is that it takes time and cooperation. Acting sooner rather than later and knowing where you stand can significantly improve the experience you have with HMRC.

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