Why Did HMRC Create This New Service?

An analysis released in 2023 revealed that nearly a quarter of claims under the SME scheme and 3.6% under the larger RDEC scheme were incorrect or fraudulent, amounting to an estimated £1.13 billion in false claims. This significant financial impact has prompted HMRC to call for transparency and honesty among taxpayers, and on 31 December 2024, they launched a new disclosure service designed to help companies review their R&D tax relief submissions and self-report any discrepancies before further action is taken.

How the R&D Disclosure Service Works

A company can only use the service if:

• It has claimed too much R&D tax relief
• It cannot amend its tax return to correct an R&D claim, because the time limit has passed
• It needs to pay further Corporation Tax or pay back overpaid tax credits for R&D relief

A company should not use the service if:

• It is still within the time limit to amend the Company Tax Return.
• The company’s behaviour was deliberate — use the Contractual Disclosure Facility (CDF) instead
• There is no Corporation Tax to pay and no tax credit to repay — In this case, you should contact RD.IncentivesReliefs@hmrc.gov.uk with revised computations, an explanation of the error, and evidence-based reasons for the inaccuracy.

Seek Help from Reputable Advisors

The R&D tax relief landscape has seen an increase in unethical agents, making it crucial for businesses to verify their claims. Companies that have relied on claims prepared by such agents are advised to seek guidance from reputable tax specialists to avoid potential risks and ensure compliance. Prompt consultation can help identify any errors and determine if a disclosure is necessary, potentially avoiding hefty penalties. Specialist tax advisors can guide companies through the appropriate disclosure routes and ensure accurate and compliant claims.

Our Enquiry Defence Team Can Help

At ABGi, we have a dedicated in-house enquiry defence team ready to support businesses, whether they have completed their tax returns independently or used an external provider. We work closely with your technical and financial teams to address any HMRC queries, formulate strong responses, and provide necessary technical explanations. Our primary objective is to ensure that your claim is presented in the most robust manner possible, ensuring accuracy and compliance throughout the process.

Final Takeaways

HMRC’s new disclosure service is a key step to ensure R&D tax relief claims are accurate. By encouraging openness and allowing businesses to correct overclaims, HMRC aims to create a fair and compliant tax system. If you need to use the R&D disclosure service, working with trusted advisors like ABGi can help you use the service correctly, protect your interests, and stay compliant.

If you have any further questions about the new HMRC Disclosure Service or R&D tax relief in general, please get in touch with ABGi. A representative will get back to you to discuss your unique needs and explain how we can assist.