Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 3 November to Question 74669, answered 3rd November on Research and Development Tax Credit, what resources HMRC allocates to (a) undertake compliance checks and (b) improve data-led risking processes; and whether those resources have increased in the last two financial years.

HMRC has staff deployed on R&D from across the department. This includes dedicated specialist teams focusing on compliance with the SME and RDEC schemes as well as teams working with large businesses on the RDEC scheme. These teams work with HMRC’s specialist Fraud, Risk & Intelligence colleagues as well as with customer service colleagues, lawyers and policy teams to support R&D claims and tackle error and fraud. This means that HMRC’s overall resourcing is difficult to measure exactly as staff from these wider areas also cover other work as appropriate.

The specialist R&D team focused on SME/RDEC compliance has more than doubled in recent years in response to the growing levels of error and fraud. This team is part of HMRC’s Incentives and Reliefs area of the business. As well as working on R&D, the Incentives and Reliefs teams also undertake compliance activity on other reliefs such as Creative Industries and Venture Capital. The total FTE for this wider team (excluding teams in Large Business, Fraud Investigation Service and Risk and Intelligence Service) is 245.

In HMRC’s Large Business Directorate, the resource assigned to R&D compliance is currently 6 full time equivalent staff. They are ring-fenced for carrying out R&D compliance and additional resource is flexed to deal with further risks as identified.