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The specialist R&D tax credit team at Myriad has once again been successful in its Client’s appeal to the First-Tier Tax Tribunal. Read our latest article to learn more.
The R&D project's intrinsic details can’t be shared publicly, as the business is about to submit a patent application to protect its IPR. However, we can share that it is a pharmaceutical product, and the company’s Chief Scientific Officer is a renowned and respected Professor in the scientific field. The R&D tax credit value for the accounting period was less than £25,000.
“The R&D tax claim from this micro company is the pinnacle of what the UK government should support. If achieved, the scientific breakthrough would be a game changer on a global scale.”
Barrie Dowsett, CEO, Myriad
Myriad disagreed with the decision and appealed, arguing that detailed evidence had been provided to establish the baseline position, and the competent professional had also provided extensive primary source evidence.
Unfortunately, the appeal to the HMRC Solicitors Office & Legal Services “SOLS” team was unsuccessful. This was no surprise to Myriad, as the SOLS team has demonstrated a consistent pattern of supporting the compliance team, and the solicitor handling the appeal has no competency in this field of science.
With no other option available, Myriad, with the Client's agreement, submitted an appeal to the First-Tier Tax Tribunal.
The outcome of this appeal can be found towards the end of this article. Achieving a positive result required perseverance, patience, and confidence that this was a qualifying project.
This was a 22-month ordeal, with the first R&D tax credits compliance letter received in December 2022 and the decision to allow the claim made in September 2024.
The table below details the compliance check and appeal process timeline. It highlights the time and energy that is required to defend an R&D tax claim:
|
Month |
HMRC |
Myriad |
|
Dec-22 |
R&D tax compliance check letter issued. |
Myriad sends a copy of the R&D tax claim report submitted with the tax return. |
|
Jan-23 |
The R&D Tax Credits Compliance Team asks questions about the company, its R&D projects and evidence of costs. |
Myriad answers all questions and provides requested evidence. |
|
Mar-23 |
The HMRC R&D Tax Credits Compliance Team rejected the claim in its entirety, stating that no evidence of scientific or technological advancement was provided. They request information to determine the penalty position. |
|
|
Apr-23 |
|
Myriad prepares a 21-page letter, providing clear counterarguments and challenging the HMRC opinion based on a Google search by a non-competent professional. |
|
Jun-23 |
Final decision from R&D Tax Credit Compliance Team to say claim rejected and a penalty letter for nearly £3,000 |
|
|
Jul-23 |
|
Myriad sent HMRC a letter of appeal requesting that the HMRC SOLS team handle the matter. Myriad also appeals the HMRC penalty decision. |
|
Oct-23 |
|
At the end of October, Myriad sent a letter of complaint because HMRC had not responded to the appeal. |
|
Dec-23 |
The HMRC R&D Tax Compliance team claims insufficient evidence and offers an appeal to the SOLS team or a First-Tier tax tribunal. |
Myriad replies to the HMRC R&D Tax Compliance team with even more evidence prepared by the Client's highly competent professional. |
|
Feb-23 |
The HMRC SOLS team wrote to confirm that they will handle the appeal. |
|
|
May-23 |
The HMRC SOLS team writes to confirm that they support the R&D tax credit team's decision to reject the claim. |
|
|
Jun-24 |
|
Myriad submits an appeal to the First-Tier Tax Tribunal. The Tribunal directs HMRC to provide their statement of case. |
|
Jul-24 |
|
On July 22nd, the Tribunal directs HMRC to provide their statement of case within 60 days. |
|
Sep-24 |
On September 20th, HMRC SOLS requested a 60-day extension to provide their Statement of Case, citing that the Appellant has entered Alternative Dispute Resolution (ADR) with HMRC. |
Neither Myriad nor the clients had been offered or made aware of ADR. |
|
The Verdict |
On September 27th, the HMRC SOLS solicitor emailed to advise that they had “settled” by reinstating the original research and development claim in full. |
|
As Myriad, we're proud of our success in overturning this HMRC decision, reaffirming our commitment to supporting genuine innovation in the UK. This case exemplifies the challenges faced by companies engaged in cutting-edge R&D, particularly in specialised scientific fields. Our persistence and expertise were key in securing a favourable outcome for our Client.
Expertise is Crucial: Our in-depth knowledge of both R&D processes and tax regulations was instrumental in navigating the complex compliance landscape.
Documentation is Key: We always stress the importance of maintaining comprehensive records. This case reinforces how vital thorough documentation is when facing HMRC scrutiny.
Persistence is Necessary: The 22-month journey from initial check to resolution underscores our commitment to defending legitimate R&D claims, no matter how long it takes.
Appeal Process Navigation: Our experience in handling multi-stage appeals involving various HMRC departments and the First-Tier Tax Tribunal proved invaluable.
Leveraging Expert Testimony: Involving recognised experts, like our Client's Chief Scientific Officer, significantly strengthened the claim's credibility.
Never Give Up: This case demonstrates that even after multiple rejections, HMRC can reverse its decision when presented with compelling evidence and arguments.
At Myriad, we're committed to supporting innovative companies in claiming the R&D tax credits they deserve. This case reinforces the value of our expertise and perseverance in navigating complex claims, particularly for groundbreaking projects that push the boundaries of science and technology.
We encourage all companies engaged in R&D to seek expert guidance and maintain meticulous records. Remember, with the right support and persistence, you can successfully defend your innovation against even the most challenging HMRC decisions.
If you’re facing a challenge from HMRC regarding your R&D tax relief claim or have questions about this tribunal judgement, we’re here to help.
Please message or call us on 0207 118 6045 to learn how we can assist you with your R&D tax credit claims or HMRC enquiries.
HMRC will not appeal tribunal rulings favouring SMEs on R&D tax credits. Decisions clarify subsidy rules, offering hope for ongoing claims. Further guidance expected early 2025.
Your company's size impacts your R&D tax claim. SMEs and large companies have different criteria, all the more important to know for scheme changes in 2024.
The new Additional Information Form (AIF) is required for Creative Tax Relief claims from April 2024. Ensure compliance and secure your tax credits with this guide.
Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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