Fraudsters have raked in more than £4 billion in four years from bogus claims under a scheme introduced to boost innovation, the latest annual report from HMRC has revealed.
Set up in 2000 to try to kickstart research and development among Britain’s businesses, the scheme R&D relief scheme has turned into a gravy train of free money, said business analysts.
Firms with successful claims either pay less corporation tax bill or receive a direct payment to the business and must demonstrate a scientific or technological advance.
According to the HMRC, fraud and error in the scheme amounted to more than £4.1 billion from 2020-21 to 2023-24, with redesigning websites and new menus among the things claimed to be R&D.
Covid has played a part in the surge of dubious claims, with HMRC estimating that fraud in the scheme cost £1.1 billion in 2020-21, £1.3 billion in 2021-22, £1 billion in 2022-23, and £601 million in 2023-24.
A quarter of claims for relief from SMEs were either fraudulent or had mistakes with a retrospective checking programme now underway by the tax office to try to recover some of the money.
An HMRC spokesperson told the Guardian: “The levels of non-compliance within these schemes are clearly unacceptable, and the public rightly expect us to take action.”