One minute with Paul Rosser, Director at R&D Consulting.
What’s keeping you busy at work?
Reviewing R&D claims where HMRC have opened a compliance check and the original adviser who assisted with the claim is either unable, or unwilling, to support the company is keeping me very busy at present.
You recently helped expose alleged R&D claims fraud. What tactics have you seen in this area, and what are the lessons for HMRC?
The advisers behind fraudulent claims use a wide variety of tactics to try and avoid HMRC scrutiny. These include logging into their client’s tax portal to submit the Additional Information Form (AIF) rather than using their own agent services account; not providing their client with any claim documentation, making it impossible for them to have their claim reviewed by a reputable adviser; and forcing clients to sign an NDA with threats of legal action if they speak to anyone else about their claim or any subsequent compliance check.
Since HMRC increased its compliance activities in relation to R&D claims in 2021/22, we have seen several new measures introduced to prevent fraud. The AIF is probably the most effective, as it allows HMRC to risk assess all claims.
Whilst the new anti-abuse measures appear to be working well, HMRC were very slow to react to the issues of fraudulent, and invalid, R&D claims, at a cost to the taxpayer of billions. So, the lesson is that no amount of policy or legislation is going to stop fraud, unless HMRC move much quicker when they suspect an adviser is knowingly submitting invalid tax relief claims.
How could the R&D rules better support companies working to advance science and technology?
It’s a difficult one, as R&D tax relief covers so many fields that it’s impossible for HMRC to issue meaningful guidance which covers them all, whilst also educating those who aren’t tax professionals on the various pieces of tax legislation which might apply to their claim. Having said that, the advance assurance scheme perhaps could be extended to allow companies to speak with HMRC prior to making a claim, with HMRC taking on more of an advisory role to both educate and ensure any subsequent R&D claim is valid, prior to submission.
What do you know now that you wish you’d known at the start of your career?
Never be afraid to quit. If something isn’t working for you, stop doing it and try something else instead.
If you could make one change to a tax law or practice, what would it be?
I would give the public easy access to HMRC if they have any questions about any area of tax. Expecting someone who isn’t a tax professional to understand all of the various rules about tax simply doesn’t work and leads to fraud and error.
Has a recent change in HMRC practice impacted your work?
One of the biggest changes in HMRC’s practice which has impacted all R&D advisers is their switch from using fully qualified inspectors to deal with compliance checks in favour of poorly trained caseworkers who frequently make mistakes, misquote legislation and seem to be heavily reliant on ‘cut and paste’ when corresponding with companies and their advisers.
Every adviser accepts that compliance checks are necessary to prevent abuse of the system. However, as per the HMRC Charter, we expect that those dealing with compliance checks have the right level of expertise, and at present this simply isn’t the case a lot of the time.
Under the current approach, compliance checks which used to take a few months are, in some cases, now dragging on for years, which is putting companies with legitimate R&D claims off submitting any in future.
You might not know this about me but...
I’m a big fan of Halloween – before Covid, my wife and I used to visit Halloween Horror at Universal Studios in Orlando every year.
One minute with Paul Rosser, Director at R&D Consulting.
What’s keeping you busy at work?
Reviewing R&D claims where HMRC have opened a compliance check and the original adviser who assisted with the claim is either unable, or unwilling, to support the company is keeping me very busy at present.
You recently helped expose alleged R&D claims fraud. What tactics have you seen in this area, and what are the lessons for HMRC?
The advisers behind fraudulent claims use a wide variety of tactics to try and avoid HMRC scrutiny. These include logging into their client’s tax portal to submit the Additional Information Form (AIF) rather than using their own agent services account; not providing their client with any claim documentation, making it impossible for them to have their claim reviewed by a reputable adviser; and forcing clients to sign an NDA with threats of legal action if they speak to anyone else about their claim or any subsequent compliance check.
Since HMRC increased its compliance activities in relation to R&D claims in 2021/22, we have seen several new measures introduced to prevent fraud. The AIF is probably the most effective, as it allows HMRC to risk assess all claims.
Whilst the new anti-abuse measures appear to be working well, HMRC were very slow to react to the issues of fraudulent, and invalid, R&D claims, at a cost to the taxpayer of billions. So, the lesson is that no amount of policy or legislation is going to stop fraud, unless HMRC move much quicker when they suspect an adviser is knowingly submitting invalid tax relief claims.
How could the R&D rules better support companies working to advance science and technology?
It’s a difficult one, as R&D tax relief covers so many fields that it’s impossible for HMRC to issue meaningful guidance which covers them all, whilst also educating those who aren’t tax professionals on the various pieces of tax legislation which might apply to their claim. Having said that, the advance assurance scheme perhaps could be extended to allow companies to speak with HMRC prior to making a claim, with HMRC taking on more of an advisory role to both educate and ensure any subsequent R&D claim is valid, prior to submission.
What do you know now that you wish you’d known at the start of your career?
Never be afraid to quit. If something isn’t working for you, stop doing it and try something else instead.
If you could make one change to a tax law or practice, what would it be?
I would give the public easy access to HMRC if they have any questions about any area of tax. Expecting someone who isn’t a tax professional to understand all of the various rules about tax simply doesn’t work and leads to fraud and error.
Has a recent change in HMRC practice impacted your work?
One of the biggest changes in HMRC’s practice which has impacted all R&D advisers is their switch from using fully qualified inspectors to deal with compliance checks in favour of poorly trained caseworkers who frequently make mistakes, misquote legislation and seem to be heavily reliant on ‘cut and paste’ when corresponding with companies and their advisers.
Every adviser accepts that compliance checks are necessary to prevent abuse of the system. However, as per the HMRC Charter, we expect that those dealing with compliance checks have the right level of expertise, and at present this simply isn’t the case a lot of the time.
Under the current approach, compliance checks which used to take a few months are, in some cases, now dragging on for years, which is putting companies with legitimate R&D claims off submitting any in future.
You might not know this about me but...
I’m a big fan of Halloween – before Covid, my wife and I used to visit Halloween Horror at Universal Studios in Orlando every year.
