HMRC is clamping down on R&D tax credit claims, including those made by companies in the motorsport industry, asking for more detail about the research or development that has been undertaken and retroactively denying credit in cases where the information or activity is deemed insufficient. HMRC are also targeting abuse of the system by fraudsters making dubious claims to secure tax breaks. Alongside this approach by HMRC, the Government has scaled back the generosity of the scheme. The R&D tax credits scheme was designed to encourage innovation in SMEs. Many firms did not have the resources to submit claims, so they often used specialist advisors to submit the claims to HMRC. HMRC last year started to vet claims and follow up on how the money was spent. The national chair of the Federation of Small Businesses, Martin McTague, says that the clampdown seems “disproportionate and unproductive.” He said: “These small businesses just don’t have the resources in place to continue running their operations in the teeth of an ongoing cost-of-doing-business crisis while at the same time having to spend hours digging up evidence for past claims.” “We have strong concerns about HMRC’s approach,” he added. An HMRC spokesperson said there is a need to “ensure that only eligible claimants benefit from the reliefs,” adding that the tax office’s “main priority is to stop error and fraud before it starts and help people get their claims right first time.”