Due to the frequency of errors and fraudulent activity in Research & Development (R&D), HMRC has published guidance alongside a new disclosure facility for overclaimed tax relief. Generally, HMRC can charge higher penalties if it discovers an inaccurate claim, compared to the taxpayer coming forward and offering to correct their error. This facility should only be used where it is no longer possible to amend the relevant tax return to correct the tax position, i.e. where the deadline to do so has lapsed and there is tax to repay.

One potential issue is of course that taxpayers may be unaware that relief has been overclaimed, having relied on advice taken at the time the claim was made – which may have been done on a “process now check later” basis. Many R&D claim agents have been found to be untrustworthy as they targeted sectors that HMRC have noted are unlikely to be carrying out R&D, such as care homes, retailers, childcare providers, pubs and restaurants. Businesses operating in such sectors should review historic R&D claims and seek advice from a reputable firm if there is any doubt as to the validity of the claims.

To complete the disclosure, calculations should be submitted with the online form. Within 30 days HMRC should respond to either accept or reject the revised calculations, or to request further information.