How does HMRC manage R&D Tax Relief Claims?

R&D tax relief is one of the most valuable incentives available to businesses investing in innovation. The relief supports companies working on scientific or technological advancements, and HMRC’s R&D guidance outlines the standards by which each claim is assessed. To benefit fully and with confidence, businesses need to understand both what qualifies and how HMRC reviews the information they submit. Clear records, strong preparation and accurate technical explanations all help the process run more smoothly.

In recent years, HMRC has increased its focus on compliance. As the number of businesses claiming the relief has grown, the level of scrutiny applied to supporting evidence has increased. HMRC’s aim is to protect the integrity of the scheme by ensuring that only activities meeting the statutory definition of R&D receive relief. With the introduction of the new single merged R&D scheme, it’s more important than ever for claimants to present their work clearly and accurately. While the merged scheme now applies to most claimants, one important exception remains.

R&D Intensive

The R&D Intensive scheme continues to operate alongside the merged scheme and remains available to companies that meet the qualifying threshold.

From April 2024, R&D tax relief is delivered through a single unified framework, replacing the previous SME and RDEC schemes. For HMRC R&D processing teams, having one set of rules helps ensure greater consistency in the way claims are reviewed. Businesses now follow one framework for qualifying activities, eligible costs, and the supporting information they must provide.

The purpose of this change is to reduce complexity and simplify the process for both advisers and businesses. A single structure also supports HMRC’s risk-based approach, enabling them to identify where additional clarification might be required. Despite the simplification, the responsibilities for claimants remain the same: clear documentation, accurate cost allocation and well-supported technical explanations are still essential.

All R&D tax relief claims are submitted through the company’s Corporation Tax return. Each claim includes a financial breakdown of qualifying costs and a technical explanation of the project activities. Under the merged scheme, businesses must complete and submit an ‘Additional Information Form’ before filing, setting out adviser details, project descriptions and a summary of eligible expenditure.

Once HMRC receives a claim, they carry out an initial review to ensure the submission is complete and meets the formal filing requirements. Their automated systems also check for obvious inconsistencies, such as missing fields or unusual cost patterns. This early stage is not an assessment of the technical position but a review to ensure the claim is ready to progress.

After the initial checks, HMRC carries out a risk-based screening process. This enables their R&D compliance teams to identify claims that warrant a more in-depth review. A range of factors can influence a claim being selected at this stage. Things such as a sudden increase in qualifying expenditure, unclear explanations of the scientific or technological uncertainties, complex subcontracting arrangements or claims from sectors with a history of inaccurate submissions. Claims prepared by advisers with limited experience can also attract unwanted scrutiny.

Risk based screening does not mean that a claim is incorrect. It simply indicates that HMRC needs to look in more detail at certain aspects.

If HMRC identifies areas requiring clarification, the claim moves to technical review. At this stage, compliance teams assess whether the project descriptions align with the statutory definition of R&D for tax purposes. Their focus is on the scientific or technological uncertainties addressed, the advance being pursued, and the evidence supporting these points. To assess these factors effectively, they rely on the clarity and completeness of the claimant’s explanation.

For projects involving more complex technical issues, HMRC may request additional detail. On occasion, they consult external specialists to better understand the context of the work, however, this is not undertaken as standard. For this reason, claimants should treat the initial submission as their main opportunity to present a full and clear account of the R&D activity.

After reviewing a claim, HMRC will either approve the relief or open a compliance check. A compliance check allows HMRC to request further detail about specific elements of the submission, such as technical explanations, cost allocation, or contemporaneous records supporting time spent on qualifying activities.

A compliance check does not mean that the claim will automatically be rejected. In many cases, HMRC simply needs a clearer understanding of how the project met the statutory definition of R&D. Well-documented claims usually progress through this stage without difficulty.

HMRC may also request items such as staff time records, payroll information supporting qualifying expenditure, project notes, or documentation outlining the experimental or investigative work undertaken. Providing organised, well-structured records helps HMRC reach a conclusion more efficiently.

Once HMRC has reviewed the additional information, they will confirm the outcome of the enquiry. At this stage, a claim may be accepted in full, amended if certain costs or activities are found not to qualify, or rejected in its entirety. If inaccuracies are also identified, HMRC has the option to apply penalties for careless or deliberate errors. The level of penalty depends on the nature of the mistake and whether the business took reasonable care when preparing the claim.

Where claims are well prepared and supported by clear records, enquiries are more likely to be resolved without major adjustment. This is why clear documentation and a strong technical narrative are so important.

The strongest HMRC R&D claims are supported by records created at the time the work took place, rather than written retrospectively. Good preparation reduces the risk of delays and helps ensure the technical and financial information submitted is consistent and well aligned.

To help claims progress smoothly, businesses should maintain:

• Project documentation that captures the uncertainties explored and the steps taken to address them
  
• Accurate cost allocation supported by payroll or time records
  
• Contemporaneous notes from contributing team members while the work is in progress
  
• Clear communication with their adviser to ensure that all relevant details have been captured correctly

Working with an adviser who has both technical and tax experience can help companies avoid common mistakes and present information in a format HMRC expects.

HMRC continues to refine its R&D compliance processes. The merged scheme provides a single structure for claims and supports the use of risk-based analytics to identify where clarification is required. This reflects a long term move towards greater transparency and consistent evidence standards. Businesses that plan ahead and keep clear records throughout their projects will be better placed to claim relief with confidence.

Careful preparation helps companies present their work clearly and accurately. When the technical explanation is well structured and the financial evidence is robust, the claim is much easier for HMRC to review. With the right support, claimants can approach the process confidently and stay focused on progressing their innovative work.

R&D tax relief can transform the way your business invests in innovation, but it needs to be managed carefully. With HMRC placing greater emphasis on compliance, it’s more important than ever to work with a partner who understands both the technical and procedural requirements of the scheme.

At Easy R&D, we do more than prepare claims. We help you build a strong foundation for every submission with careful preparation, clear evidence collection, and transparent processes. Our specialists understand what HMRC expects and structure claims accordingly.

Whether you're planning a new claim or reviewing a previous one, we’re here to help you prepare with confidence. From record-keeping to technical analysis, we’ll ensure your business is ready.