When things go wrong

Correcting a claim

You have found, or been told, that a claim already filed was wrong. What the options are in general terms, why to take advice before contacting the tax authority, and where the official guidance is.

7 minute read

General information only. Take professional advice before you contact a tax authority, withhold a fee or end a contract.

Sometimes a business discovers that a claim already filed was wrong: a project that did not meet the test, costs counted twice, a figure that does not add up, or a new adviser who reads the old claim differently. Every tax authority has a way of correcting a return or telling it about a claim that was too high, and each has time limits.1 What this page does not do is tell you how to use those procedures. That is a decision to take with professional advice, for the reasons below.

Why advice comes first

Three things turn on how a correction is made. The first is money: interest, where it applies, runs from a date set by law, and whether a penalty applies, and how large it is, can depend on how the error arose, with rules that differ by country.2 The second is judgment: whether work qualified is a technical and legal question, and a claim is not wrong just because a second person would have drawn the line somewhere else. The third is the adviser: the person who prepared the claim may disagree with the correction, may have obligations of their own, and may hold the working papers you need.

An adviser, an accountant or a lawyer who can see the claim and the records can tell you whether a correction is needed, which procedure applies, what it is likely to cost and in what order to do things. This page cannot.

What the official guidance covers

Each tax authority publishes how to amend a return or tell it about an overclaim. The pages below are the official starting points. They explain the process; they do not tell you whether your claim needs correcting.

United States: IRS, Instructions for Form 1120-X, the amended corporation income tax return.
United Kingdom: HMRC, "Tell HMRC if you've claimed too much Research and Development (R&D) tax relief" and "Company Tax Returns: making changes".
Ireland: Revenue, Tax and Duty Manual Part 41A-04-01, "Amending returns and self-assessments" and the Code of Practice for Revenue Compliance Interventions.
Canada: CRA, "Requesting a reassessment of your T2 return" and the SR&ED Filing Requirements Policy.
Australia: the Department of Industry, Science and Resources (DISR), "Request an extension or variation on your R&D Tax Incentive application". The ATO's guidance on amending a company tax return is linked from the Australia page.
New Zealand: Inland Revenue, "Fixing mistakes in my return" and "Lowering your shortfall penalty".
Singapore: IRAS, "After filing Form C-S, Form C-S (Lite) or Form C" and the Voluntary Disclosure Programme e-Tax guide.

A tax authority can also review a claim on its own initiative, within time limits set by law, whether or not you have raised it.3

What your contract says

Read the review and audit support clause: it may cover work on a correction, or it may not. Read the fee refund clause: if the claim comes down, it says whether the fee does too. And read the clause on who signs the claim, which explains that the claim is made in your name and on your responsibility. None of those clauses changes what the tax authority expects from you.

Talking to the adviser

Write to the adviser who prepared the claim. Say what you have found, ask for their view and the reasons for it, and ask for the working papers behind the figures in question. The script for requesting your records covers the last part. If the adviser prepared the claim and disagrees that it is wrong, get an independent view before anyone contacts the tax authority; the independent advice page says who can give one. Keep the question of whether the claim was wrong separate from the question of the fee.

Sources

Time limits for amending a return or claiming for a past year: Internal Revenue Code section 6511(a) (United States); HMRC CIRD81800, Finance Act 1998 Schedule 18 paragraph 83E (United Kingdom); Revenue, Tax and Duty Manual Part 29-02-03, section 2.6 (Ireland); Income Tax Act section 37(11) (Canada); Department of Industry, Science and Resources, "Apply for the R&D Tax Incentive" (Australia); Inland Revenue, "Research and development tax incentive due dates" (New Zealand); IRAS, "After filing Form C-S, Form C-S (Lite) or Form C" and Income Tax Act 1947 section 93A (Singapore). More detail on your country page. Back
Interest and penalty rules for an overclaim, including when interest starts and how a penalty is set: IRS, "Interest" and "Accuracy-related penalty" (United States); HMRC, "Tell HMRC if you've claimed too much R&D tax relief" (United Kingdom); Revenue, Tax and Duty Manual Part 29-02-06, "R&D tax credit: clawback of relief" (Ireland); Income Tax Act section 161(1) and CRA, "Avoiding penalties" (Canada); Department of Industry, Science and Resources, "Decisions we make about R&D Tax Incentive applications" (Australia); Inland Revenue, "Interest on overpayments and underpayments" and "Shortfall penalties" (New Zealand); IRAS, "Penalties for errors in tax returns" (Singapore). More detail on your country page. Back
A tax authority can review a claim after it has been paid, within time limits set by law: Internal Revenue Code section 6501 (United States); Finance Act 1998 Schedule 18 paragraphs 24 and 46, via HMRC Enquiry Manual EM1510 and Compliance Handbook CH51300 (United Kingdom); Taxes Consolidation Act 1997 section 959AA, via Revenue Notes for Guidance Part 41A (Ireland); Income Tax Act section 152(3.1) and (4) (Canada); Income Tax Assessment Act 1936 section 170, Income Tax Assessment Act 1997 section 355-705 and the ATO, Request an amendment to a business or super tax return (Australia); Tax Administration Act 1994 section 108, via Inland Revenue SPS 20/03 (New Zealand); Income Tax Act 1947 section 74 (Singapore). More detail on your country page. Back

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