What does HMRC say?

“companies shouldn’t rely on R&D credits”[1]

Yet according to Jim Harra (First Permanent Secretary, HMRC) , in evidence to the House of Commons Treasury Committee (24.4.24) “R&D credits achieve their policy objectives of promoting innovation and business investment in R&D”

“an unexpected discovery isn’t R&D” [2]

Any scientist or technologist knows that unexpected discoveries are the way in which R&D moves us forward. This assertion is invented by HMRC and not mentioned anywhere in the law. Albert Einstein put it succinctly in the famous quotation: “If we knew what it was we were doing, in would not be called research would it?” Yet HMRC’s made-up rules require the R&D and its outcomes to be fully documented in advance.

“you have not presented the evidence of a competent professional”[1]

Nowhere does the law suggest that claimants must do this. Usually in a small business, the claimant themselves are highly qualified, recognized professionals in the field, yet HMRC repeatedly fails to recognize this. According to Mr Harra [3]: “Our approach to compliance is to ask the claimant to demonstrate that they have thought through why their claim qualifies for relief. The Chancellor has also recently announced, however, that we will appoint an expert advisory panel to assist the Department in the areas where we clearly do not have the scientific expertise.”.

“we believe this is readily deducible by a competent professional in the field”[1]

…and therefore not R&D. This statement never seems to be backed by evidence. In most instances it is obvious to any reasonable person that the writer does not understand the technology, and has not made any attempt to do so.

“you must produce detailed records”[1]

The law does not state this.

[1] Statements from HMRC letters to our members[2] HMRC document CIRD 80560[3] House of Commons Treasury Committee 24 April 2024 https://committees.parliament.uk/oralevidence/14682/pdf/