Advisors and Business owners are being warned! A Queensland business has been fined over $4 million for encouraging clients to lodge overstated or ineligible R&D tax incentive claims.
On Tuesday 20 March the Australian Taxation Office confirmed the fine had been secured in the Federal Court against a company and its director for breaching promoter penalty laws relating to financial services.
The company has allegedly been involved in 10 schemes leading to eight business clients receiving more than $3 million in unentitled R&D tax incentive refunds. Subsequently the company is now in liquidation after encouraging their clients to lodge claims about their R&D activities that made them appear eligible for offsets that they should not have been receiving.
The ATO is currently working with the involved clients to attempt recovering the R&D offsets that were wrongly claimed. In addition to paying back wrongly claimed money, penalties have been applied proportionate to the behaviour and actions of the taxpayers.
Michael Hardy the ATO assistant commissioner made a statement that the ATO had pursued the case to help stop businesses being “unwittingly” caught up in tax exploitation schemes.
This case is an example of how vulnerable some SMEs can be to consultants and advisers promising them deals that are too good to be true. It is crucial that SMEs take care when engaging an R&D consultant and gain an understanding of the key elements needed to ensure a claim is genuine.
Swanson Reed is Australia’s largest R&D tax advisory firm, processing claims for over 600 companies every year and employ local chartered accountants and tax agents with specialised R&D experience. Swanson Reed specialises in R&D tax incentive eligibility assessments, R&D tax incentive claim preparation and ATO and AusIndustry reviews of R&D tax claims. Clients can rest assured that they will be correctly advised and their R&D claims are processed by meeting all legal requirements.