HMRC Penalties for Incorrect R&D Tax Credit Claims: What You Need to Know

If your business is claiming Research and Development (R&D) tax credits, it's important to be aware of the potential penalties for making incorrect claims. In this blog post, we'll take a look at HMRC's stance on incorrect claims, and what you need to do to avoid any penalties.

HMRC will charge penalties for R&D tax credit claims that are deliberately made incorrectly. The penalty can range from 0% to 100%, depending on the severity of the incorrect claim and how deliberate it was. There’s no guarantee that you won't be charged a penalty if you make an R&D tax credit claim incorrectly, even if it was a genuine mistake. 

In 2020, three men involved in a fraudulent £29.5 million R&D tax credit claim on a bogus IT project were jailed for a total of 21 years.

However, HMRC is unlikely to penalise you for incorrect R&D claims made in good faith and there are several steps you can take to ensure your R&D tax credit claims are as accurate as possible:

- Make sure that everyone involved with your R&D tax credit claim is aware of HMRC's guidelines,

- Keep accurate records of your R&D activity.

- Seek advice from an R&D tax Credit Specialist if you're unsure about whether your project qualifies for R&D tax credits.

If you're not sure whether a particular project qualifies for R&D tax credits, or you have any other R&D tax credit claims questions, get in touch with us today.