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Does the cancellation of a R&D project mean tax relief must be clawed back?
We provide tax services to a company with a substantial turnover. We tag and file accounts and a major firm of accountants is the auditor.
In the year ended 31 December 2012 the audit firm assisted the company in making a research and development claim relating to expenditure of about £3m. Most of this related to subcontracted costs which were enhanced at the appropriate percentage. About £2m of this expenditure was accrued at 31 December 2012.
In the year to 31 December 2014 the research process failed and it was agreed that £1m would not be paid to the subcontractor.
Our client has been informed by its auditor that if the £1m of expenditure is credited to the profit and loss account there is no need to make a disclosure to HMRC that it has previously over-claimed the enhanced deduction on that £1m.
I fail...
