Rise of the Rogues
Since I first began visiting factories and writing technical reports for R&D claims some 7 years ago I have seen a sharp rise in dubious and misleading claims for tax relief.
The R&D scheme was set up to help businesses claw back some of the money they have spent developing innovative new technology. After all, there’s blood, sweat, and tears in product development, along with cash spent.
The R&D scheme can really help genuine businesses whose hard work has meant a technological leap forward in a certain field. CD’s for example, nickel-cadmium batteries, or stepper motors to choose some at random.
It’s fairly straightforward to work out too – consider the staff time spent, and your costs, and submit a claim. HMRC even have the criteria for claims available on their website.
Not sure how to claim? No problem, an R&D Tax Agent can help you. They can work with you to identify what counts – “qualifying activities” as HMRC call it, help you work out a percentage of your costs, and submit it on your behalf. They’ll take a negotiated fee for assisting you, once the claim is approved.
Sounds straightforward, right? And it is…most of the time.
However…
Picture this. You get a call out-out-of-nowhere. “R&D scheme? Free cash? You’ll handle all the details? It sounds too good to be true! What’s that? You won’t even need to visit our factory? You’ll write the report based on our website? And all we have to do is send over our invoices and tax returns? Ummmm…£120,000 back you say? Well…how can we go wrong!”
Rogue agents come in many forms. Some are large, some are small, but all have a similar modus operandi – find a client and tell them they could be entitled to thousands of pounds worth in cash.
Quick cash too, with the money arriving in a matter of weeks.
Where does this money come from? Why the Tax Man of course! You pay your taxes don’t you? You work hard? Then you deserve to get something back!
Unfortunately these rogue agents just want the money. They will ignore qualifying activities and write pretty much anything they want. You won’t get to see it before it’s sent. And the finances? They’ll make that nice and high, so they get a tidy penny.
The client? They’ll be happy until HMRC send them a Compliance Check, asking for them to account for every penny and advancement made in the agent’s claim. They may also get fined for not undertaking “due diligence” about that too-good-to-be-true phone call.
And the agent, whose already been paid?
Disappeared – business name changed, trading name changed, “We don’t handle R&D anymore”.
If you get a call, and it sounds too good to be true, then it probably is.