Paul Rosser relates a brief history of R&D advisor scams – and it makes for shocking reading…
Since being introduced in 2000 for SMEs and then large companies in 2002, the Research and Development (R&D) tax relief schemes have always been prone to fraud and error. This is due in part to the way a claiming company is allowed to calculate its qualifying R&D spend using reasonable apportionment, and because claims are processed on a self-assessment basis, with very few historically being selected by HMRC for a compliance check.
Overclaiming due to fraud and error, at a cost to the taxpayer, was always a concern, but HMRC tended to focus its attention on the bigger R&D claims. After all, what’s the point in tying up valuable resources investigating small R&D claims, where even if discrepancies were found the tax loss prevented would be outweighed by the cost of the investigation?
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