The first ever case of HMRC using its powers to apply sanctions against a tax agent for dishonest conduct when acting for a client, serves as an important reminder of the importance of using external specialists.
Vicki White, a partner at Luvo Financial, which specialises in advising businesses on R&D Tax credit and relief, explains: “The landmark case saw HMRC using its powers in legislation that specifies where action, or omission of acts, by a tax agent may enable their client to account for less tax, or obtain more tax relief than required by law.
“The case centered on the dishonest conduct of a tax agent and importantly, the intention behind his/her actions, including advising or assisting a client to do something that the agent knew to be dishonest.
“HMRC has recently been given increased powers and this case is a strong indication that it means business, to clamp down and to change how it investigates and deals with any possible dishonest conduct, even if an accountant or professional adviser claims they were simply following client’s instructions.”
Vicki says a shift in how independent accountants approach specialist tax work for some clients is what should happen now: “There is real benefit to advisers and their clients of using external experts for specialised support and advice for highly complex tax and capital allowances claims, including R&D Tax Credits and R&D Tax Relief, and Patent Box claims.
“It is also important that the very businesses these new schemes were introduced to support with vital financial support aren’t put off exploring their eligibility and making a claim. The government has made over £2billion available for R&D tax credit and relief, and it would go against government policy if businesses didn’t take advantage of this great financial support,” says Vicki, “so it is equally important they realise they have the option to turn to specialist tax advisers for help with claims.”
The average R&D Tax Credit claim is worth in the region of £60,000 and is a valuable government tax incentive for limited companies who invest time and money into developing new products, processes and services, or enhancing existing ones.