HMRC has recently introduced a new platform for taxpayers to disclose overclaimed research & development relief. In this article, Matthew Greene (partner), Alex Lerner (partner) and Guy Bud (associate barrister) of our Tax Litigation & Resolution team write about a new initiative introduced to tackle questionable research and development tax relief claims.

This area has been a particular target for HMRC’s compliance activities, and there has been extensive coverage of the extent to which speculative or even baseless claims were made by some intermediaries exploiting HMRC’s “pay now, check later” approach to processing claims, often to their own client’s detriment. Analysts estimate the amount of missing revenue at over £1bn.

The new voluntary disclosure platform that opened on 1 January 2025 will enable companies or their agents to notify HMRC about inaccurate historical claims where they are out of time to correct the position by amending their tax returns. Disclosable claims must have been made innocently or carelessly. Deliberate inaccuracies must be dealt with separately through the Contract Disclosure Facility (CDF). Once the issue has been fully disclosed, it is envisaged that the taxpayer will enter into a contract settlement to resolve the matter.

The incentive for taxpayers

A company making a voluntary disclosure will still have to repay the tax in full, together with interest and penalties. The most important incentive for many users will be that early and unprompted disclosure will allow for substantial mitigation of the inaccuracy penalties that might otherwise be levied for careless mistakes at up to 30% of the tax at stake. In some cases, this will allow taxpayers to have these reduced to zero in recognition of their assistance in bringing the error to HMRC’s attention and helping resolve it.

The new platform will clearly benefit taxpayers who have only recently discovered that they or their agents may have submitted inaccurate claims. Companies considering using the disclosure platform should carefully review their position before making a disclosure and satisfy themselves that the claim was erroneous.

Although much attention has been focused on historical abuse in this area, many other taxpayers have made fully justified claims but have nonetheless been caught in the wider crackdown. HMRC’s interpretation of the law relating to “subcontracted” R&D expenditure, for example, has been heavily litigated and repeatedly rejected by tribunals.

Disclosure should be considered carefully

Disclosure will be a welcome opportunity for some, but it needs to be considered carefully. Companies concerned that they may have been a victim of mis-selling or negligent advice should take advice on their position as soon as they can, rather than waiting to conclude a settlement with HMRC, as there are strict time limits to consider when pursuing any redress from the adviser.