HMRC is tightening its grip on research and development (R&D) tax relief claims, with more businesses than ever facing enquiries. According to official figures, errors in claims amounted to £441 million in 2023/24, and one in five claims was investigated during the year. That is five times the level of scrutiny seen just two years earlier.
This shift highlights the scale of HMRC’s compliance drive and the need for businesses, supported by their accountants, to ensure every aspect of a claim is fully compliant and well-documented.
Increased HMRC resources and new measures
Greater investment in compliance teams is fuelling the clampdown. HMRC recently added 300 staff to its minor business compliance division, bringing the total number of people focused on R&D errors and fraud to around 500.
In addition, two new processes are changing how claims are handled. The additional information form (AIF) now requires companies to submit detailed breakdowns of their projects, costs and justifications upfront. This means less room for vague or poorly evidenced submissions.
The mandatory random enquiry programme (MREP) has also been introduced. Its purpose is to review claims across the board, regardless of size or industry, which significantly increases the chances of a business being selected for review. Even if a claim is valid and error-free, it may still be investigated.
What triggers an HMRC enquiry?
While the random element is unavoidable, there are two other common triggers for enquiries.
The first is errors or omissions. Even small mistakes such as payroll and invoice mismatches, miscategorised costs, or incomplete time records, can be enough to attract HMRC’s attention. The second is complex claims. Subcontracted R&D, larger claims, or businesses running multiple concurrent projects are naturally more complicated and more likely to be reviewed in detail.
For accountancy firms, this underlines the importance of ensuring their clients’ claims are technically and financially watertight.
Three steps to a stronger R&D claim
Accountants are well placed to help clients manage HMRC’s rising scrutiny. Building processes that reduce risk and strengthen compliance can protect clients from unnecessary enquiries and rejected claims.
1. Keep comprehensive documentation
The most effective defence in an enquiry is robust evidence. HMRC will request detailed proof of eligibility, which means businesses need strong records from the outset. Firms should guide clients to document technical details of their projects, track staff time carefully, and validate all costs with payroll data, invoices and receipts.
Using project management tools to capture milestones and challenges, alongside accounting software for expense categorisation, can make claims more transparent and easier to defend.
2. Build compliance into company culture
R&D compliance should not be a task left until year-end. With enquiries now more frequent, delays in relief can seriously affect cash flow and financial planning. Firms can help clients integrate compliance into everyday business processes, from training teams on documentation requirements to scheduling regular reviews with technical staff.
Encouraging businesses to start claims early and build them throughout the year reduces the risk of missing information and avoids the stress of last-minute submissions.
3. Strengthen client relationships through preparation
Rejected or delayed claims can harm a company’s finances and strain relationships with investors and stakeholders. Accountants who go beyond simply preparing claims and instead provide proactive support will add real value. This means ensuring claims are accurate and defensible, working with R&D experts where necessary, and adopting technology to simplify compliance.
The bigger picture
HMRC’s tougher stance on R&D tax relief is unlikely to ease soon. Enquiries are increasing, processes are becoming more complex, and scrutiny is only set to grow.
For accountancy firms, this is both a challenge and an opportunity. By helping clients put the right processes in place, maintain comprehensive documentation, and approach compliance as an ongoing priority, firms can protect businesses from costly mistakes while strengthening their role as trusted advisers.
In today’s environment, a claim that is accurate, well-documented and prepared with expert guidance is preferable and essential.
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