You may have been in a position where you have worked tirelessly to compile your client’s R&D claim only for it to be rejected regardless.
This disheartening moment may cause a moment of quiet contemplation and a consideration over the steps you have taken.
Was the work innovative and not readily deducible by a competent professional?
Did you file the Additional Information Form (AIF) correctly?
Will your client now miss out on the vital funding that you believed they were rightly owed?
All might not be lost as it is worth digging deeper into the reasons why the claim was rejected.
HM Revenue and Customs (HMRC) has an obligation to ensure that the funds secured through R&D tax relief are being used for innovation in the UK.
As more business become better versed in the world of R&D tax relief, the number of claims has historically been increasing year-on-year until recently.
To root out bad actors and poorly handled claims, HMRC has imposed two significant ways of controlling who receives the funding.
The AIF serves to ensure that HMRC has all the information required to validate any claims that are being made.
The Mandatory Random Enquiry Programme (MREP) is another notable measure.
What is the Mandatory Random Enquiry Programme (MREP)?
The MREP is a system by which claims are selected at random and subjected to additional enquiries.
Although this does not necessarily mean there is anything wrong with the initial claim, the MREP can appear as a rejection of the claim by default.
When this occurs, a representative from HMRC should outline the reasons why the claim is being rejected at which point the rejection can be disputed.
If the dispute is not resolved in a satisfactory manner, additional representatives from HMRC can be brought onto the case to further validate the claims being made.
There is scope for the dispute to reach a tribunal hearing if no satisfactory outcome is determined by both parties during the course of conversing.
Too intimidating to challenge
The MREP, almost by design, may seem to be too intimidating to challenge.
Your client may not wish to pursue the matter further given that the MREP often comes with warnings of financial punishment if the claim is proven to be fraudulent.
However, it is worth assuring your client that a properly constructed R&D claim can still be subject to an MREP investigation.
Provided that the reasoning for submitting the claim initially remains true, and that the claim was correctly filed, then it is likely worth disputing the MREP.
Guide your client through the process and ensure they understand the rebuttals being put forward on their behalf as well as the criticisms being levelled by HMRC.
It may be necessary during this time to secure additional information from clients, most likely relating to the professional competency of those involved.
This is so that HMRC can fully verify the degree to which competent professionals worked on the project – a vital component in a claim’s eligibility.
Let randd uk help you client secure vital funding. Contact our team today!
