Could Your Business Be Missing Out On R&D Tax Credits?

R&D Tax Credits are a government incentive designed to reward companies that invest in projects advancing a field of science or technology. They work by reducing your corporation tax liability or, if your business is loss-making, by providing a cash credit. It’s not upfront funding, but it can significantly improve cash flow and free up resources for growth.

Since the scheme began in 2000, it has supported companies of every size, with HMRC statistics showing that tens of thousands of businesses claim each year. In 2023–24, more than 46,000 claims were submitted, worth over £7.6 billion in support. Despite these figures, many eligible businesses still don’t claim because they don’t realise their projects qualify.

At the heart of every successful claim is the need to demonstrate a scientific or technological advance and genuine uncertainty. HMRC’s wording is clear: if a competent professional in the field could not easily resolve the challenge at the outset, then the work may qualify.

This means R&D isn’t confined to laboratories or high-tech start-ups. It can happen in almost any sector if the project pushes knowledge or capability beyond standard practice.

To show how broad the scope can be, consider these scenarios:

• A software company explores new techniques to process high-volume data streams in real time, addressing uncertainties in scaling performance and maintaining data integrity where existing solutions proved inadequate. The challenge lies in achieving consistent, low-latency throughput without data loss across distributed systems.
  
• A food manufacturer trials novel packaging materials to extend shelf life without compromising quality, tackling uncertainties in barrier performance and material interactions where existing solutions failed to preserve freshness. Early prototypes failed to achieve the required protection, leading to iterative testing and reformulation to resolve the underlying material behaviour.
  
• An engineering firm designs a lighter yet stronger component for use in transport. Off-the-shelf solutions aren’t suitable, so the company investigates uncertainties in material behaviour and load distribution through structural simulations, stress testing and material trials to achieve the required performance.
  
• In agriculture, a farm business develops precision planting methods using sensor technology. The trials involve resolving uncertainties in sensor calibration and data interpretation that go beyond routine agricultural practice.

These activities meet the test because they involve systematic investigation to resolve scientific or technological uncertainties where the outcome was uncertain.

It’s equally important to understand what won’t count. Market research, customer surveys, and aesthetic or stylistic design changes fall outside HMRC’s definition of R&D. Cosmetic updates to products, even if they enhance appearance, user appeal, or sales performance, are not R&D in this context. A new software interface, a change in branding, or focus groups to refine a recipe will not meet the eligibility test.

The contrast is clear: a project that investigates new methods to process and analyse complex data might qualify if it resolves technological uncertainties, while redesigning the layout or interface of the same software would not.

Despite the scheme’s value, experience tells us that businesses with eligible projects fail to claim unless prompted. Some believe R&D tax credits are only for scientific research or multi-million-pound projects. Others see the process as too complex and avoid it altogether. There is also the misconception that because innovation feels like “business as usual,” it cannot qualify.

Statistics support this concern. Although eligible expenditure has remained relatively steady, the number of claims has dropped by more than 25 percent in recent years. That suggests many businesses are doing qualifying work but not accessing the support.

HMRC has increased compliance activity, which means evidence is critical. A strong claim should clearly set out the uncertainty, the approach taken, and the results. Technical notes, project documentation, and even records of failed trials all support your case.

Equally, the financial side needs to align. Costs must be linked to the specific R&D work undertaken, with payroll, subcontractor invoices, and consumables tied back to qualifying activities. Without this level of clarity, a claim is far more likely to be challenged.

Let’s address two of the biggest misunderstandings:

• “Everything qualifies.” This leads to inflated claims, frustration, and the risk of penalties.
• “Nothing qualifies.” This stops businesses from claiming at all, leaving valuable relief unclaimed.

Both views are damaging. The reality is that eligibility depends on identifying projects that genuinely advanced knowledge or capability in the relevant field.

If you are unsure, ask yourself:

• Did your project tackle a technical problem that wasn’t straightforward?
  
• Did you test, trial, or experiment to find a solution?
  
• Could someone with expertise in your field have solved it easily from the start?

If the answer to the first two questions is yes, and the third is no, then it’s worth exploring a claim.

HMRC’s scrutiny means accuracy is more important than ever. A poorly prepared claim can not only be rejected but can also result in an enquiry being opened, even penalties being applied. On the other hand, a claim backed by evidence gives your business the best chance of securing relief and ensures you receive the maximum relief to which you are entitled.

At Easy R&D, we’ve reclaimed over £100 million for clients since 2014. Our team takes a hands-on approach, working directly with you to identify projects, analyse costs, and prepare claims that meet HMRC’s expectations. Because we specialise in R&D tax credits, we know how to identify qualifying activities that businesses might overlook and present it in a clear, compliant way.

We keep the process simple through three stages: understanding eligibility, reviewing financials, and preparing the claim. Along the way, our customer success team provides timely, personal support, so you’re never left guessing.

R&D tax credits aren’t the only incentive available. Depending on your business and activities, you may also qualify for Patent Box, capital allowances, land remediation relief, or creative industry reliefs. Each has its own criteria but can be combined with R&D claims to maximise your tax savings.

Innovation takes place in more places than you think. From manufacturing to software development, agriculture to food production, businesses are solving scientific and technical challenges every day. We believe many assume their projects won’t qualify and miss out as a result. By recognising the difference between genuine R&D for tax purposes and routine activity, you give yourself the chance to claim the support you deserve.

If you think your business could be missing out, Easy R&D can help you find out. 

Contact Easy R&D today and see how much you could claim through R&D tax credits.