Kirby & Haslam Compliance Check

A Complete Guide: HMRC Compliance Check

HMRC operate on a ‘process now, check later system’, meaning that the only time a claim is ‘approved’ is if a HMRC compliance check is opened and the compliance officer agrees that the project qualifies and the amount claimed is correct. If they do not agree, this can lead to a reduction of the claim, or an outright refusal to allow any money to be released to you. If a company has already been paid out, they may return some or all of the claim value to the Revenue in this instance.

It is an often claimed by R&D tax advisors that they have a ‘100% approval rate’ or ‘100% success rate’. This is simply not true. Receiving the funds for an R&D claim you submit does not mean that HMRC has approved the claim, it simply means that they have processed it.

Therefore, a company can only claim to have a ‘100% approval rate’ if every claim they submit is subject to a HMRC compliance check, which they then go on to win. This is highly unlikely, and that volume compliance checks would be a red flag in itself.

HMRC compliance checks may be opened before any money is paid out, but there could also be a substantial gap (sometimes several years) between funds being received and the start of the check.

This being said, compliance checks are an important part of the R&D claims process, as they help to ensure that only companies that truly deserve the relief receive it. They represent a fantastic opportunity to demonstrate your R&D to HMRC, which can help to support future claims if the project is ongoing. They can also be helpful to claimants, as they offer a fantastic insight into what HMRC are looking for. Moreover, compliance officers will often provide advice for future claims.

At Kirby and Haslam, we specialise in R&D compliance, and will always aim to ensure that our clients are fully prepared for a compliance check.

When we help a client submit a claim, we will always ensure that we have helped them to identify all the qualifying elements of their projects. We can then relay this into an R&D report for them, which will outline their project’s advance, qualifying activities, uncertainties, and competent professionals. We will also look to ensure that the client has all the necessary documentation to support both the project narrative and claim value. Compliance checks can take several months to reach a conclusion, especially if the information and documentation required by HMRC is not in order. That is why it is important to ensure that every claim is fully supported prior to submission.

When we work with a client on a compliance check, we will first conduct a review of the evidence and documentation to decide the best way forward for them. This may include requesting additional information, should HMRC require it.This is especially important for cases that are referred to us, as we may deem it necessary to write our own report, which will then form the basis of our responses to the Revenue.

We have an in-house team of legal specialists who are dedicated to defending your cases. They will use the evidence you provide, alongside their detailed knowledge of the Government Guidelines, to answer any questions the Revenue may have, in order to ensure the compliance check reaches a positive conclusion as quickly as possible.

Sometimes HMRC will request a video call with the competent professionals involved in the project. In this instance, we will ensure to discuss this with you before arranging the meeting, and will fully prepare the attendees from your company. We will explain what questions may be asked and go over the project to prepare detailed and relevant answers to likely lines of enquiry. We will also accompany you on the call, to ensure that you are supported throughout the process.  

To find out more about how Kirby & Haslam can help you with your Compliance Check needs, click here.

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