A government scheme aimed at promoting new research and boosting the economy has been marred by widespread abuse, costing over £4bn in fraud and error since 2020. The research and development tax credits scheme, meant to foster innovation, turned into a chaotic system with questionable claims.
Dubious claims included a window-cleaning firm’s safer method to hold a water bucket, adding vegan options to a pub menu, and website redesigns. Agents described the scheme as “free money,” leading to a surge in exploitation.
Recent figures from HM Revenue and Customs show a staggering £4.1bn in estimated fraud and error from 2020-2024, with total relief expenditure in 2023-24 reaching £7.7bn. The scale of abuse has prompted a crackdown on tax fraud by the government, aiming to recover lost revenues.
Experts warn that the lack of proper vetting by HMRC and high commissions for agents fueled the abuse. HMRC faces pressure to tighten oversight and recover misused funds to restore the scheme’s integrity and protect public funds.
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