Question to the HM Treasury:

To ask His Majesty's Government what is the total value of Research and Development tax relief identified as fraudulent and subsequently reclaimed by His Majesty's Revenue and Customs in each of the past five financial years; and what proportion of that amount has been successfully recovered.

Estimates of the level of error and fraud in Research and Development (R&D) tax relief and information regarding additional tax revenue generated by HMRC’s compliance activity are published in HMRC’s Annual Report and Accounts. The latest publication can be found on Gov.UK and the next publication is due in July.

The methodology used to calculate the level of error and fraud for 2020-2021 was significantly improved for the 2022-2023 Annual Reports and Accounts. Estimates of the level of error and fraud in R&D tax relief for earlier years are not available on a comparable basis.

Analysis shows that around half of all claims, by volume, contained some element of non-compliance with fraud indicators found in fewer than 10 per cent of claims and accounting for less than 5 per cent of the total value claimed.

HMRC’s Approach to Research and Development tax relief 2023 to 2024 details the overall amount of tax recovered through HMRC’s compliance activity for the past two financial years, this information is also set out in the table below.

HMRC seeks to recover R&D tax relief where it was not claimed in accordance with the law and in line with statutory time limits. In the majority of cases, adjustments for incorrect R&D claims will be limited to claims investigated within the normal time limit of 12 months from the date the claim is submitted. HMRC also considers raising assessments outside of this normal time limit where relevant legislative conditions are met, including where there is evidence of deliberate non-compliance.