Focus on HMRC ISBC C&P R&D caseworkers

One of the most common things you hear and read about an HMRC R&D enquiry, is that it rarely involves the HMRC asking the question: “Was this innovative?”

You see for the caseworker; the enquiry usually begins somewhere less dramatic such as:

·         A figure does not match the accounts.

·         The Additional Information Form is thin.

·         The technical description sounds generic.

·         The technical description is densely worded, full of technical terms and

industry specific jargon.

·         The terms and jargons used are either explained poorly explained at length,

or not at all.

·         The competent professional is unclear.

·         The claim has increased sharply.

·         The project was client funded.

·         The professional adviser has appeared on HMRC’s radar before.

That is how many R&D compliance checks start.

The important point is that HMRC is not only testing the idea behind the claim. It is testing the structure around it.

Who identified the scientific or technological uncertainty?

When did the qualifying project begin and end?

What evidence exists from the time?

How were staff costs apportioned?

Were subcontractor costs paid and allowable?

Did the company bear the risk, or was the work effectively funded by someone else?

This is why R&D claims can unravel even where the business genuinely believes it has been innovative.

The “click” is this:

An R&D claim is not just a technical story. It is an evidential file.

If the claim cannot survive structured questioning, HMRC’s ISBC Campaigns & Projects

process can move quickly from information request to restriction, amendment, repayment delay or penalty discussions.

The practical lesson is simple: prepare the claim as if someone will read it sceptically.

Because that’s how I read them when I worked in HMRC and it’s what all good HMRC caseworkers are trained to do.

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C&B Partners Limited is a tax advisory & consultancy firm led by former HMRC professionals. We support businesses, directors, HNWIs & professional advisers with complex tax matters & tax risks & provide practical commentary on the UK tax system.