Fiscale R&D tax credits advice – wins groundbreaking legal case against HMRC

Eve Hopley, CTA, Technical Director of Fiscale, the Suffolk-based R&D Tax Credit advisor, said, after the win on the 21^st October at the First-tier Tribunal (Tax Chamber) : “ The Tribunal has found against HMRC in a groundbreaking decision which could bring an end to years of disagreement over the treatment of SMEs claiming under the Government’s R&D Tax Credit regime”.

Andrew Bell, EpiCentre, centre manager said: “The EpiCentre has a broad range of businesses located here, both start-ups and more experienced consultancies such as Fiscale and it is pleasing to see that they have achieved this significant legal victory relating to R &D tax credits.”

HMRC had refused two of the company’s SME R&D Tax Credit claims on the grounds that the R&D was both subsidised and sub-contracted, in contravention of the legislation.  Originally, HMRC had also challenged the existence of eligible R&D activity, but this was approved through the normal enquiry process.

Hopley added: “This Tribunal result confirms that HMRC’s interpretation of the legislation was incorrect and we welcome this decision. Like many advisors, Fiscale felt HMRC had altered its interpretation on subsidised and sub-contracted R&D compared to its position in previous years, and this recent approach has subjected SME businesses to lengthy and costly defences. Many gave up because the cost of defending could dwarf the value of the claim to the business. Only the companies with sufficient reserves could afford to take HMRC on. That was unfair.”

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