Tax authorities arrest eight people over alleged attacks on R&D incentives
Tax authorities have arrested eight people over alleged “organised criminal attacks” on tax breaks for those carrying out research and development.
The individuals are alleged to have set up more than 100 fake claims worth more than £16m, under the £7.4bn scheme which is designed to incentivize innovation by providing tax breaks for R&D, according to The Times.
HMRC confirmed to City PM it has arrested eight people “suspected of conspiring to submit over 100 fraudulent R&D relief claims, including a tax agent suspected of criminally facilitating the fraudulent attack.”
The arrests come on the back of a wider investigation into misuse of the tax schemes, amid concerns about criminal attacks and advisors encouraging clients to submit dubious claims.
Concerns about attacks on the tax schemes saw HMRC pause payments earlier this year, in a shift that has seen continued delays as the tax collector carries out additional checks.
A HMRC spokesperson said the new checks have resulted in more than 1,600 claims being subjected to further scrutiny, of which more than 80 per cent were not paid out on after the checks.
The tax scheme is aimed at supporting investment in the R&D required to overcome scientific or technological uncertainty.
However, a previous Times investigation revealed companies had claimed tax credits for R&D carried out in producing ‘innovations’ such as blueberry croissant recipes and vegan menus.
A series of reforms are currently being put in place to deter dubious claims, including requirements claimants must provide additional information on the nature of their R&D and be endorsed by a named senior officer.
“R&D tax reliefs are being reformed and these changes will help further reduce abuse,” the HMRC spokesperson said.