Welcome to our quarterly roundup of Tax Disputes & Resolutions news, updates and more, from April to June 2024.

HMRC R&D compliance activity

Danielle Ford, Partner and Head of Tax Disputes & Resolutions, and Riocard Hoye, Senior Manager, featured in Accountancy Daily, discussing HMRC’s approach to processing R&D claims. R&D remains a hot topic – HMRC has tightened its R&D claims guidelines and processes, in order to address perceived areas of risk. The increased scrutiny has inadvertently affected genuine claimants. Although enquiries are time consuming, we are seeing positive results for our clients, resulting in the closure of enquiries without amendment.

R&D disclosure facility

HMRC has also announced the development of a dedicated R&D disclosure facility and anticipates the Facility will go live by the end of June. Remember this may not be the most appropriate disclosure method based on individual circumstances. Please seek professional advice.

HMRC’s continued use of nudge letters

We are continuing to see HMRC issue nudge letters, the topics of which vary significantly and have the potential to impact a large number of taxpayers. As always, we recommend for taxpayers to approach HMRC before they approach you. See Danielle’s short video here.

General Election tax avoidance pledges

Both the Conservative and Labour parties pledge to tackle tax avoidance, raising in excess of £5bn a year. With these announcements, we expect to see an increase in HMRC activity, no matter which party wins the General Election on 4 July.

HMRC service levels

A report from the National Audit Office (NAO) has found that taxpayers spent the equivalent of 798 years in 2022-23 waiting to speak to HMRC, more than double the time in 2019-20. HMRC also answered 22% fewer calls in 2022-23 compared to 2019-20 which the NAO attributed to more complex queries, chasing for updates and increased sickness by HMRC staff. The NAO estimated that 72% of the calls received were caused by failings, such as HMRC processing errors or delays, taxpayers chasing progress and taxpayer errors. Although HMRC has been trying to deflect queries to online guidance, the NAO found that when it tested HMRC’s digital assistant, half of the tax queries it sampled required the help of an advisor.

HMRC targeting online sellers

HMRC is intensifying efforts to ensure tax compliance among online sellers and content creators who use digital platforms such as eBay, Etsy, Airbnb, and Vinted for sales. This move comes as part of a broader initiative to crack down on unreported income from the rapidly growing online marketplace sector. Danielle Ford comments on HMRC’s latest campaign targeting those who sell on online platforms and apps. Read the article here.