For years, R&D tax relief was one of the more predictable parts of year-end planning. You submitted a claim much as you had in previous years, adjusted your tax position, and reinvested. Recently, that certainty has begun to soften: Advisers ask more questions. Forecasts are treated with caution. And for some, a letter from HMRC arrives, requesting details that would once have passed without comment. What had once felt administrative now feels uncertain.
If this is you, you are not alone in this experience. Across the UK, company leaders are asking the same question…
What has changed in the R&D system, and should we be worried about it?
To understand why, it helps to remember what hasn’t changed. For more than two decades, the UK’s R&D tax credit system has quietly enabled innovation. It has allowed companies to take risks, experiment and iterate, often turning ideas that might have stalled into real growth. The system itself has remained a powerful enabler.
So if the value is intact, why does uncertainty now surround something that once felt straightforward?
The short answer is scrutiny. HMRC has increased its compliance activity across both SME and RDEC claims, driven by historic levels of error and suspected misuse. HMRC’s own statistics show that the proportion of claims being filed has fallen, while compliance checks are rising – particularly among SMEs. Despite this decline, the average value of claims has increased, with larger RDEC claims making up a growing share of total relief.
At first glance, this seems contradictory. Why would claims fail if the incentive remains valuable? The pattern suggests something more nuanced: not a retreat from R&D relief, but a filtering effect. Smaller or less well-prepared claims appear increasingly deterred by scrutiny, while larger, more structured claims continue, and in many cases, grow. This raises the next question: why is HMRC intervening more often now?
Why is HMRC intervening more often now?
Three factors are shaping this environment. First, a sustained focus on compliance after years of inconsistent claim quality; second, procedural updates designed to standardise submissions; and third, a growing reliance on risk and data-driven methods to select R&D claims for review. Each factor is neutral in intent, but together, they change the claimant experience.
What this means in practice is subtle but important. An enquiry rarely signals wrongdoing. More often, it tests whether the technical work can be explained clearly and documented consistently. A claim may be entirely valid, but gaps in narrative, timing, or record-keeping can make all the difference. Simply put, clarity has become the real currency.
That shift has consequences: enquiries can delay repayments, affecting cash flow and planning. For growing businesses, timing is as important as outcome. The difference between a smooth review and a prolonged one often depends less on the work itself than on how it has been framed and evidenced.
So, how do organisations navigate this landscape? Experience shows that preparation is everything. The companies best positioned to benefit from R&D relief are those willing to engage deliberately, document consistently, and explain confidently. The system rewards clarity, not just creativity.
So while the environment has not changed, the opportunity remains.
R&D relief continues to support experimentation and growth, but now the path forward requires greater discipline, foresight, and narrative control. Enquiries are not a threat; they are a measure of transparency. For companies that understand this, enquiries become a more manageable part of doing business rather than a source of uncertainty.
In the end, the question isn’t whether R&D relief is worth claiming; it’s whether your organisation is ready to claim it on terms that the modern systems expect. Those who are prepared won’t just survive scrutiny; they can navigate with confidence, turning what once felt routine into a structured conversation that strengthens both innovation and governance.
