Lengthy enquiry

Application for closure notice

An engineering company applied for a refund for research and development (R&D) expenditure. In May 2010 HMRC opened an enquiry under code of practice 9 (civil investigation into cases of suspected serious fraud) on the basis that the taxpayer had not shown it met the criteria for R&D tax credit relief.

The taxpayer applied for a closure notice on the ground that it could produce no more information or documents. After an enquiry lasting seven years its adviser said HMRC had not discovered any fraud. HMRC said it required more information before it could close the enquiry.

The First-tier Tribunal decided the Revenue no longer had reasonable grounds for keeping the enquiry open and directed that a closure notice be issued within 30 days of the release of its decision.

In a separate appeal hearing before the same tribunal the same day the...