The value of R&D tax credits relief claimed by UK businesses has fallen for the first time since the scheme began in 2000, down by £275m in a year
Recent research found that the value of claims fell by 4% from £6.9bn in 2019/20 to £6.6bn in 2021/21.
The drop has been caused by HMRC becoming more rigorous in approving claims for R&D tax credits following a rise in suspected fraud in 2020. In its 2021/22 annual report, HMRC said it suspected that £469m of R&D relief expenditure involved error or fraud. This is a 40% increase from £336m in 2020/21.
The UK government announced legislation in the March 2021 budget designed to make it harder for R&D to be falsely or mistakenly claimed by businesses. This included adding extra administrative steps to verify applications.
HMRC extended the deadline for processing R&D tax credits from 28 days to 40 days in June 2022 due to ‘increased scrutiny’.
There are reports that many R and D claims in the motorsport sector are coming under increased examination.