HMRC intensifies scrutiny of R&D tax claims

HMRC has significantly increased oversight of research and development (R&D) tax relief, with errors in claims totalling £441 million in 2023/24. In 2024, one in five claims faced an enquiry, compared with just one in 20 two years earlier.

The compliance crackdown includes creating a specialist anti-abuse unit, which added 300 staff to HMRC’s small business compliance team. Around 500 officers now focus on detecting errors and fraud in R&D claims.

Two new measures are also raising the bar. The additional information form (AIF) requires claimants to submit detailed project and cost breakdowns upfront. At the same time, the mandatory random enquiry programme (MREP) increases the likelihood of investigations, even for fully compliant claims.

There are three key steps to reduce risk.

• Strong documentation is the best defence in an enquiry. Businesses should ensure they track project milestones, staff time and costs using reliable systems, and back up claims with payroll data, invoices and receipts.
• Compliance should not be a last-minute task. With regular reviews and early preparation, accountants can guide clients to embed good practice throughout the year.
• Rejected claims damage cashflow and confidence. Businesses that combine robust documentation with technical expertise and innovative tools put their clients in the best position.

With increasing enquiries, preparation and accuracy are essential for every R&D claim.

Talk to us about your R&D claim.