HMRC must tackle tax credit fraud with 'robust measures to weed out abuse'

International law firm RPC warns 'huge scale' of erroneous claims could put off or delay those entitled to R&D relief

Commenting on tax credit fraud, described yesterday in the House of Lords as 'a major financial scandal' and thought to amount to at least £469million in the last year alone, Adam Craggs, head of RPC's Tax Disputes team, said:

"While HMRC has announced steps towards addressing this problem, it is apparent that it allowed too many false claims to pass through the system without effective and rigorous oversight. 

"Erroneous claims are thought to have amounted to at least £469million in the last year alone, though the true figure may well be higher. 

"The R&D tax credit scheme is intended to encourage companies towards greater innovation and investment – but it has been abused on a huge scale and those businesses that are entitled to R&D relief may be put off from submitting a claim or face an inordinate delay in their claim being processed.

"Robust measures to weed out abuse must be put in place quickly to regain the trust of both the general taxpaying public and those genuine businesses who wish to utilise the scheme."