Men’s sexual health app faces £400k HMRC clawback as R&D tax crackdown bites

The Founder of the Mojo, an application of sexual and luxury health for men, warned that the HMRC campaign on tax and development credits (R&D) has risked punishing real innovations, as his company is fighting for a request to pay more than 400,000 pounds.

Zander Gilbert, 35, said that he feared every new brown envelope from HMRC arrives, after spending a year in conflict with the Tax Authority on the research and development balance granted in early last year. Gilbert and his cousin, Angus Parge Mujo, launched in 2019, after they personally faced challenges about erectile dysfunction. Since then, the application has attracted more than 5 million pounds of investment capital financing from Kindred Capital and Octopus Ventures, and built a base user in 150 countries.

Mojo had stimulated to become what he described as a sexual processor and a relationship working in artificial intelligence, a step that the founders say is necessary in a country where only 300 sexual processors are available to meet the needs of millions. “We help people in their relationships and sexual life – even help people have children,” Gilbert said.

The company’s research and development tax credit was supposed to support technology development efforts, but just months after receiving payment, HMRC wrote to say that he believed the claim is not valid and demanding payment. Gilbert described correspondence as “completely accompanied”, with repeated requests for the information already provided and increasing fears that this process is stacked against the demands.

The conflict has left Mujo thinking about the next step in charge of arbitration, even as they continue to provide more evidence through the Fi Specialized Consulting Group. “It seems that they are trying to choose holes. They are throwing everything at all to achieve this.”

One of the connected points was HMRC’s insistence on seeing the time tables to prove that the employees were participating in the research and development work. Gilbert said Mogo did not keep the official schedules theater, noting that HMRC instructions stipulate that the best appreciation is acceptable. “They continue to request a repeated evidence that we cannot submit physically, and they effectively contradict their own instructions.”

Mujo is far from alone. The most striking HMRC approach follows the widely detecting user abuse of the search and development tax system, with the spread of fraudulent claims in previous years. One of the investigations has found claims related to activities such as creating recipes for Rawasan berries. The National Statistical Office stated that although British companies obtained a tax reduction compared to 47.5 billion pounds of research and development in 2019, only 25.9 billion pounds of research and development in the private sector were implemented.

As a result, HMRC acknowledged an “unacceptable high” level of fraud and error in the scheme, especially among small companies, and more demands for detailed scrutiny are now subject to. An estimated 26 percent of the expenses of mitigating small and medium-sized companies were affected by error or fraud in 2021-22, which costs the taxpayers about 1.2 billion pounds.

However, entrepreneurs warn that real companies are arrested in the crossing. Alicia Navarro, the Focus Platform Foundation, recently participated in LinkedIn, with a narration of how HMRC questioned her eligibility despite 27 years of managing technical projects and computing science certificate.

Philip Hammond, the former advisor, warned that the enforcement of heavy implementation risks the deterrent of the legal creators against submitting claims-that it is possible to undermine the ambitions of the wider growth of the government.

A HMRC spokesman defended his position, saying: “Research and development inscriptions play a vital role in the government’s mission to enhance economic growth and we are committed to ensuring that the claim process is clear to their real demands. Given the important levels of non -compliance in the system, it is necessary to undergo the activity to ensure that tax funds spend on the renider and mellede.

For Gilbert and others, the battle continues – and with every new speech from HMRC, as well as uncertainty on the future of their business.