looking at buildings above

Research and Development (‘R&D’) Fraud

Research and Development (‘R&D’) is an essential component of modern-day business. It is a process through which companies invest in the development of new products, processes, or services that can help them stay ahead of the competition. However, there are instances where companies may try to take advantage of the R&D tax relief system by committing fraud. In recent years, there has been a significant rise in R&D fraud cases reported to the HM Revenue & Customs (‘HMRC’).

The R&D tax relief system was introduced in 2000 as a way to encourage innovation and investment in R&D. Companies that invest in R&D can claim tax relief on qualifying expenditure, which can significantly reduce their tax bill. However, the system has been subject to abuse, with some companies making false claims for R&D tax relief.

What types of R&D fraud are there?

The most common type of R&D fraud involves exaggerating the amount of R&D expenditure or claiming for activities that do not qualify as R&D. Companies may also claim for R&D activities that have already been carried out or for projects that have been abandoned. These fraudulent claims can result in significant losses to the Treasury and undermine the integrity of the R&D tax relief system.

HMRC has been taking steps to tackle R&D fraud, including increasing the level of scrutiny applied to R&D claims. Companies that make R&D claims are required to provide evidence to support their claims, and HMRC may carry out checks and audits to ensure that the claims are genuine. In some cases, HMRC may prosecute companies that make false claims for R&D tax relief.

In 2018, HMRC introduced new rules to combat R&D fraud. These rules require companies that make R&D claims to disclose the names of any third-party advisers who assisted with the claim. This is intended to increase transparency and deter companies from using unscrupulous advisers who may encourage them to make false claims.

HMRC has also established a specialist unit to investigate R&D fraud. This unit is made up of specialist investigators with expertise in identifying and investigating cases of R&D fraud. The unit has been successful in identifying and prosecuting several cases of R&D fraud, resulting in significant fines and penalties for the companies involved.

What can you do

It is essential for companies to ensure that their R&D claims are accurate and legitimate. Companies should seek professional advice and support when making R&D claims and ensure that they have robust systems in place to track and document their R&D activities. Failure to do so could result in significant financial losses, reputational damage, and even criminal prosecution.

How can Richardson Lissack help?

If you are being investigated or charged with an R&D fraud offence our team of expert lawyers can provide expert litigation and representation.  Our lawyers are available 24/7 to assist you and provide legal advice. Contact London 020 3753 5352 or Manchester 0161 834 7284. Alternatively, you can email info@richardsonlissack.co.uk



3 buildings where companies address unpaid tax on crypto assets

Addressing Unpaid Tax on Cryptoassets in the UK: A Comprehensive Guide

The rise of cryptocurrencies has introduced a new dimension to taxation, with individuals and businesses seeking clarity on their obligations. For th...


HMRC’s crackdown on social media influencers

In recent years, HMRC has been cracking down on social media influencers who are not paying the correct amount of tax. HMRC has sent “nudge lett...


HMRC targets offshore corporates owning UK property

The UK tax authority, HM Revenue and Customs (HMRC), has sent out a new round of “nudge letters” to offshore corporates that own UK proper...


Custom Valuation Fraud

What is Custom Valuation Fraud? Custom valuation fraud is a serious offence in the United Kingdom, and it occurs when individuals or businesses delibe...

2 buildings looking up at them

Criminal Tax Investigation

A tax investigation is an investigation by HMRC into your tax affairs and tax history. They have a broad remit to investigate a wide range of potentia...

2 buildings looking up at them

What are the penalties for tax evasion in the UK?

If you are being investigated for tax evasion it is highly likely that HMRC has discovered irregularities which it believes are suspicious or has foun...

2 buildings looking up at them

Civil tax investigations versus criminal tax investigations

HMRC’s policy is to deal with most tax fraud and evasion cases through civil investigation. It does this by making use of the Contractual Disclo...

2 buildings looking up at them

How common are civil tax investigations?

We are often asked how common civil tax investigations are. The accurate figures are difficult to quantify, but some have been released because of Fre...

2 buildings looking up at them

Richardson Lissack quoted in the Law Gazette regarding HMRC Investigations

Managing Director, Ben Richardson quoted in the Law Gazette in relation to an article regarding HMRC Investigations. https://www.lawgazette.co.uk/feat...

Let’s work together

Contact Us

arrow-downarrow-left-greyarrow-leftarrow-right-0c2535 arrow-right-ffffff arrow-right-greyarrow-rightbullet-icon-whitebullet-iconcloseicon-connecticon-cross-double icon-cross-right icon-email icon-nav-lefticon-nav-righticon-phoneicon-pinicon-reachlawyer-linkedin-icon nav-menu-arrow rl-logo-icon social_facebooksocial_googleplussocial_instagramsocial_linkedin_altsocial_linkedin_altsocial_pinterestlogo-twitter-glyph-32social_youtube