Urgent HMRC warning over Research & Development (R&D) tax claims in the Nursing and Care sector

HMRC have taken the unusual step of issuing letters to companies operating in the sector with regard to possible incorrect R&D claims.

HMRC are asking company directors to review claims submitted on their behalf to make sure they are correct, stating that those submitted are often ineligible which can have financial consequences down the line.

HMRC do acknowledge that it’s not impossible for nursing and care homes to meet the R&D criteria, but think it’s unlikely, citing that most are rejected due to these being based on:-

•              Normal day to day business activities such as individual patient meals or care plans

•              Observing behaviour

•              Digitising admin

•              Constructing sensory gardens

The above claims do not represent activities that achieve the required scientific or technological advances in their field, and claimants have been unable to provide evidence to support these. 

Unsurprisingly, HMRC go onto say they are checking many more claims from nursing and care homes than usual due to the number of incorrect ones received.

Directors need to be aware that just because HMRC have paid out on a claim it doesn’t mean they have approved it, with their approach being ‘pay a claim first and check it afterwards’. If R&D is claimed incorrectly, the company must pay back the full amount claimed including any adviser fees that may have been deducted before the refund was received. HMRC may also levy interest and penalties.

For more information go to GOV.UK and search ‘Claiming research & Development tax reliefs’ or contact David de Crespigny Brown at Morris Lane Chartered Accountants and Business Advisers for guidance.