Friday 22 March 2024

Shutting That Stable Door Again…

Some small businesses that received tax breaks for their innovation work are now being chased to pay the money back. HMRC is reassessing past research and development (R&D) tax relief claims, after underestimating the level of error and fraud over many years.

Silly me, thinking that sort of assessment should come before they hand out the cash... 

Optometrist and entrepreneur Mr Patel received the money in 2022 for work during 2020-21 on a potential new lighting product, a portable device which would project light that looked like daylight, even though it filtered out shorter wavelength blue light. In January 2023 he got a "notice of enquiry", informing him that a compliance check on his claim found similar products already in existence.
Mr Patel says that the product he was working on was innovative at the time. He has almost finished developing it but hasn't brought it to market yet.

We gave him taxpayer cash for innovation for a product already on the market? FFS! Still, it's about the level of expertise we've come to expect from HMRC, frankly.

Many small businesses have been in touch about this issue, according to the Federation of Small Businesses (FSB) (Ed: unfortunate acronym!). "It's very clear that HMRC is mishandling its approach to past and present R&D claims in a way that undermines the innovative small firms who are needed if we are to grow our economy," says Tina McKenzie, policy chair for the FSB.

I'm not too sure they are going to do that if they 'invent' things already in existence. 

R&D tax credits were introduced in 2000 and are designed to help start-up companies, by giving them tax relief when they invest in innovation. However, it has been reported that in recent years some companies have been abusing the system. HMRC has estimated that more than £1bn was lost to error and fraud in tax relief to smaller businesses at the height of the pandemic in 2020-21, the year Mr Patel made his claim.

Ah, the pandemic. The answer to all difficult questions about where the money has gone these days. 

5 comments:

  1. Remind me, who was the genius Chancellor behind all these schemes to support businesses during the pandemic?

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  2. " However, it has been reported that in recent years some companies have been abusing the system"

    Have these bureaucrats never met any real people? If the government is giving away free money, somebody will always try to take advantage.

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  3. SSDD.

    'Every' one of these tax-payer "grants", "funds" and "rebates" is a blatant scam to funnel cash from you and I (the productive 'slaves') to ... the friends, fellow ideologues, co-religionists or co-ethnics of ... the people, quota'd, parachuted or just frauded into, positions of power. [Hint: I'd suggest you look for the millions of genuine innovators who were deliberately excluded due to their 'inappropriate' (ie.e. non-PC or non-woke) ideologies, ethnicities, religions or genders to really understand the level of corruption].

    It's not that this particular example showed the level of incompetence (in reality malfeasance) and fraud, it's that you'd be hard-pressed to find a single example where this 'doesn't' happen.

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  4. There were 'consultants' peddling these reliefs within my industry (farming) and I knew from listening to their spiel that it was all a scam. They were suggesting that farmers could claim for using new production processes and techniques that were not new at all, just new to that individual business. It would have been very easy for a gullible person to fall for their patter, beguiled by the huge sums they could get back in tax rebates. Of course its always the business owner whose name is on the application form and who is signing as to the veracity of everything within it. When HMRC come calling the 'consultant' will be nowhere to be seen, his company long since dissolved. The applicant will have to face HMRC alone.

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  5. "Remind me, who was the genius Chancellor behind all these schemes to support businesses during the pandemic?"

    Talk about failing upwards!

    "Have these bureaucrats never met any real people? If the government is giving away free money, somebody will always try to take advantage."

    Since it's something bureacrats themselves do, you'd expect them to recognise it, wouldn't you?

    "'Every' one of these tax-payer "grants", "funds" and "rebates" is a blatant scam to funnel cash from you and I (the productive 'slaves') to ... the friends, fellow ideologues, co-religionists or co-ethnics..."

    Spot on!

    "There were 'consultants' peddling these reliefs within my industry (farming) and I knew from listening to their spiel that it was all a scam. "

    I wouldn't rely on HMRC to claw money back, it's rather a toothless tiger now.

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