"Your R&D claim isn't valid, despite what your advisor told you. The only thing you can do is tell HMRC you made a mistake and pay back the money they sent you." Whilst I seem to tell business owners this a lot at the moment, I spoke to one today which is even more concerning. In this case the company owner signed up with a consultancy firm for a variety of services, R&D got mentioned but they never went any further with making a claim. So, it was a bit of a shock when a few weeks ago they received a letter from HMRC saying they are opening a compliance check into the R&D claim they submitted last year. After their accountant spoke to HMRC it appears that the consultancy firm went ahead with an R&D claim, without the company owner knowing and nearly £50k was paid to the consultants bank account last November. When the company owner asked the consultancy firm what is going on, and more importantly where is the money?, they got fobbed off with some nonsense about it being "normal HMRC procedure" which they will deal with and if the compliance check is successful, then the company will receive the funds. I've seen a copy of the response to HMRC and it's nonsense, no qualifying R&D has taken place and even if it did the competent professional listed doesn't have any qualifications or experience in the correct field. Unfortunately for the company owner if HMRC agree that the claim isn't valid they will have to pay back the funds they didn't receive and as the consultancy firm is only 12 months old, it will likely be liquidated before legal action can be taken. Since 1st April this year HMRC stopped R&D payments being made to agents, but I wonder how many R&D claims were made before then which the claiming company didn't even know about? As if HMRC hadn't opened a compliance check into their claim, the company owner would have been none the wiser that a claim was even made.
This is why one should keep an eye on their company self assessment statements. Any unusual activity would have been questioned. But neither the company or the accountant if they had one spotted it. Any amendments to the company’s self assessment would have been notified to the company via a statement as the payments due would have changed.
that's disgusting behaviour you uncovered there Paul Rosser , and heartening to see you stepping in to help. Liquidation does seem the way for these charlatans , is it to early to see if there is a basis for thew police to loom at criminal proceedings under (say) False representation under the Fraud Act? Fingers crossed for karma to put their DMs on
This is when the “consultancy” should be named and shamed, fully investigated by the HMRC for other potential “claims” and the Crown Prosecution Services get involved … it’s time to stop the rogues in our industry!
Paul Rosser Is it correct that a company would have to re-pay money to HMRC that was fraudulently obtained without the company's knowledge and which they never received? Seems a bit harsh.
Send your client to us and we will sue the company owner by piercing the corporate veil. Fraud defeats everything so there's no where to run. We are happy to undertake a LinkedIn campaign as there will be others out there in the same nboat. The alternative as that they bring a private prosecutions and get their money back via POCA, a breach of which will get the crooks more gaol time. www.elysium-law.com
Presumably someone at the company authorised HMRC to pay the money to a third party, namely the consultancy. Otherwise the question has to be why did HMRC not pay the money to the company direct?
That is terrible. I also wonder how many rogue consultants have done this. It shocks me how people feel ok doing this, the company may end up being ruined because of their actions.
This is absolutely terrible. Thanks for highlighting it Paul Rosser
What a nightmare situation for that company owner! It's incredibly concerning to hear about consultancy firms taking advantage like this. It's a stark reminder of the importance of due diligence and staying vigilant when it comes to financial matters. I hope they're able to navigate this situation and get the resolution they deserve.
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7moAnd I thought that we had the worst horror story in relation to R&D but this takes the biscuit. For us - we had an instance where a client owed us nearly £30k and they were happy for the R&D rebate to be mandated to us to settle the fees. So we submitted the claim and waited for the money. And waited And waited Eventually it became clear that the R&D company went in on the last day of the filing deadline and resubmitted the tax return with themselves as mandated agent. When we tried to complain to CIOT they couldn’t do anything as they weren’t a CIOT member. Something needs to be done in the space (and accountancy in general) for regulation. Anyone can call themselves an accountant- which is absolutely ridiculous.