HMRC officers made a dramatic raid on a city-centre office block this week on the same day that 11 people were arrested at locations across the country on suspicion of tax relief fraud.

Wearing black HMRC vests, officials from the tax authority infiltrated the Union Building on Norwich's Rose Lane on Tuesday (September 24).

Warrants were executed at the companies Green Jellyfish and Kirby & Haslam, but both firms said they had “nothing to hide”.

HMRC said the arrests were part of a coordinated operation to tackle suspected abuse of the Research and Development (R&D) tax relief system.  

HMRC raided the Union Building, in Norwich's Rose Lane on Tuesday HMRC raided the Union Building in Norwich's Rose Lane (Image: Newsquest) Green Jellyfish, which has its registered offices at 46 Rose Lane, claims to be a specialist in R&D tax relief that helps companies to claim tax refunds from HMRC.

“We understand that HMRC has a job to do, and we are fully cooperating and supporting them with the investigation as we have nothing to hide,” the firm said.

Kirby & Haslam, an accountancy firm registered at the same address as Green Jellyfish, said: “We welcome the investigation from HMRC and understand they have to look into all claims made.

“We have been and will continue to be fully cooperative as we have nothing to hide.”

A HMRC spokesman said a number of other individuals had been invited to attend an interview under caution. Rose Lane on Tuesday (Image: Newsquest)

It refused to confirm the names of the businesses raided, stating: "We do not comment on identifiable taxpayers.”

Jonathan Smith, HMRC’s director responsible for agent compliance, said: “These arrests are just one small part of the comprehensive and wide-ranging action we’re taking to tackle suspected R&D fraud.

“We’re committed to supporting honest businesses, and their agents, to get the tax reliefs they’re entitled to. We urge anyone with information about any type of tax fraud to report it to HMRC online.”

WHAT IS R&D TAX RELIEF?

R&D tax relief was created by the government as an incentive for small companies to invest in innovative projects in science and technology.

It costs the UK around £8bn each year and HMRC has identified more than £1bn of this is through fraudulent claims.

To qualify for R&D tax relief, companies must provide proof of projects that have: looked for advances in a specific field; overcome, or tried to overcome, a scientific or technological uncertainty; or could not have been easily worked out by an existing professional in the field.

Green Jellyfish Green Jellyfish (Image: Green Jellyfish)

GREEN JELLYFISH

Green Jellyfish was accused of submitting fake and suspected fraudulent tax relief claims in a report by tax and legal experts Tax Policy Associates, published last month.

The report claimed the firm had been making false claims on behalf of small businesses and then covering it up with the help of an affiliate, Kirby & Haslam.

It told the story of a small therapy company which was cold-called by Green Jellyfish and promised a “no win no fee” R&D tax relief claim.

However the report said there was never any basis for the claim, and when it was later challenged by HMRC, which ordered the small business owner to refund the claim, she was left with thousands in bills to pay. Meanwhile, Green Jellyfish took its fees.

The report stated that in other cases where HMRC does not pick up on Green Jellyfish’s false claims, it is the taxpayer who pays the price.

Both Green Jellyfish and Kirby & Haslam strongly denied the allegations made in the report.