An article by The Times has today revealed further detail on the extent of R&D tax credit fraud in the UK.
HM Revenue & Customs has put the cost of fraud and error on the taxpayer-funded schemes between 2020 and April this year at £4.1 billion. Furthermore, an official review has found that high-value claims for R&D tax incentives were more likely to be fraudulent if they were made with the help of a specialist agent.
While it is important to highlight these serious issues, what this article does not do is explain the difference between reputable R&D tax credit specialists and ‘cowboy’ operators.
Well-established tax firms which specialise in R&D claims pride themselves on providing a fair and honest service. It would never be in their interests to pursue claims which they know are illegitimate.
At Leonid, we always undertake due diligence with our clients and only work with reputable firms. We are completely confident that everyone we work with conducts business in an ethical manner.
The ‘specialist agents’ which this Times article refers to will typically be solo operators with a sketchy business history who make unrealistic claims in their marketing about how much their clients could be receiving.
An earlier investigation by The Times in 2022 revealed several dubious claims, few of which were checked by HMRC. These included a gluten-free menu in a pub and new dryers for a launderette.
The UK’s tax credit policy is intended to allow innovative companies working on science and technology projects to claim tax incentives to encourage innovation – it is certainly not a free-for-all.
R&D tax is a rewarding career path, enabling tax specialists to play their part in helping to boost innovation in the UK. However, as with many other professions, it is sadly not exempt from people wishing to exploit the profession for personal gain.
With awareness rising about this issue – including the recent closure of Green Jellyfish agency, which allegedly submitted claims from a butcher, a baker and a candlestick maker – it is surely only a matter of time before the cowboy operators find themselves out of business for good.