Research and Development claims: what’s new?

To deal with high levels of error and fraud, the Research and Development (R&D) tax relief regime has been significantly reshaped since 2023, and HMRC risk assessment is now much sharper.

Claimant support packages

As part of its drive to make sure that companies understand the rules, HMRC is starting to email some claimant companies, on a random basis, on receipt of the R&D Claim Notification and Additional Information Form (AIF). Applicant companies may now receive a ‘guidance package’ by email, with links to online guidance, or other HMRC information sources. HMRC advises that there is no need for recipients to respond, or take any specific action as a result.

In the past, there have been instances where fraudulent R&D claims have been submitted without the knowledge of the company involved, and HMRC’s new guidance packages are partly meant to ensure that companies are aware that an R&D claim is being made in their name.

Dealing with errors

A recurrent theme in HMRC compliance activity is the number of incorrect and spurious R&D claims submitted by rogue firms in the past. This is something that sometimes only comes to light when a company changes its professional adviser.

To address the position where past inaccuracies in an R&D claim emerge, HMRC now has an online disclosure facility, allowing companies to report historic inaccuracies, and to upload relevant calculations. There is also a letter of offer that can be submitted to HMRC as part of a contract settlement.

Use of the facility is voluntary, and is only appropriate where:

• the company is out of time to amend the Corporation Tax return
• too much R&D tax relief has been claimed
• there is therefore a need to pay Corporation Tax or repay overclaimed tax credits for R&D relief
• the incorrect claim did not arise from deliberate behaviour.

Using the disclosure facility should usually qualify as making an unprompted disclosure to HMRC, and this in turn should lessen any penalty involved. However, care is advised where there is a need for disclosure of any kind, and we would strongly recommend professional advice before taking any action.

Keeping up to date

R&D tax relief is a specialist area, and keeping up with the rules is demanding. HMRC has, for example, recently revised its guidance, following two recent decisions at the First-tier Tax Tribunal. These involved technical issues on what counts as subcontracted work and subsidised expenditure for R&D tax relief under the small and medium-sized enterprises scheme which applied before 1 April 2024. In addition, the Spring Statement 2025 announced a consultation on a facility to apply for advance clearance for R&D claims.

We are always on hand to advise on the detail of the rules such as these, to give you confidence that you know which expenses can correctly be included in any claim for R&D. Do please contact us for a discussion.