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UK government cracks down on business tax credits

The UK government has been accused of being overzealous in its pursuit of companies claiming research and development tax credits. HM Revenue and Customs (HMRC) has admitted that officers have been assigned to review thousands of cases of research and development tax credits being claimed by small, medium and large companies in the UK.

Despite the fact that the reduction of any claims will have a detrimental effect upon the balance sheet of the companies involved, HMRC believes it is doing nothing but working to the rulebook and attempting to eradicate illegal claims. It believes a number of research and development tax credit claims are in fact ultimately connected with production making many claims therefore illegible under the current tax regime.

Many people in business would point towards this as yet another penny pinching program from the UK government at a time when companies around the UK need as much help as they can get. It would appear that the refocus of certain tax inspectors towards the research and develop tax credit system was done without any fuss or any mention in the press, although somehow this has leaked into the financial papers over the last few days. Whether tax inspectors are being "overzealous" and interpreting the rules differently than they have done in the past is open to debate.

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