Overview of R&D tax relief
Research and Development tax relief remains one of the most valuable Corporation Tax incentives available to UK businesses. When claimed correctly, it can significantly reduce a company’s tax bill and release cash to reinvest in growth, innovation, and people.
However, we are seeing an increasing number of businesses facing HMRC enquiries, amendments, and outright challenges to their R&D tax claims. In our experience, the issue is rarely that genuine innovation has not taken place. More often, the problem lies in how the claim has been framed, evidenced, and explained to HMRC. It is clear that there has been a strong R&D crackdown by HMRC in 2025 and this is likely to continue.
In the article below, Andy Lynch sets out the key trends and recurring mistakes we see in disputed R&D tax claims, and how businesses can put themselves in a stronger position from the outset.
At a glance
R&D tax relief can provide substantial Corporation Tax savings, but HMRC scrutiny of claims is increasing as are R&D tax credit investigations. Many disputes arise not because genuine research and development has not taken place, but because claims fail to demonstrate qualifying scientific or technological uncertainty, rely on the wrong evidence, or overstate what counts as R&D. Understanding HMRC’s expectations, and presenting claims clearly and accurately, is essential to reducing the risk of enquiry, amendment, or penalty.
Claiming for the wrong type of project
R&D tax relief is tightly defined and is limited to projects that seek to achieve an advance in science or technology. HMRC’s guidance makes clear that work in areas such as the arts, humanities, social sciences, and economics does not qualify, even where it involves detailed analysis or complex problem-solving.
- In practice, qualifying projects are most commonly found in fields such as physics, chemistry, biology, engineering, materials science, and computer science, including software development.
- If a project does not aim to advance knowledge or capability in one of these areas, it is unlikely to qualify.
Submitting a claim for a non-qualifying project increases the risk of challenge, repayment demands, and potential penalties.
R&D relief is about advancing science or technology, NOT general innovation or commercial development.
Failing to demonstrate scientific or technological uncertainty
A core requirement of any valid R&D claim is the presence of genuine scientific or technological uncertainty. This uncertainty must relate to whether something is technically possible, or how it could be achieved in practice. It cannot simply relate to whether a product will be commercially successful or financially viable.
HMRC expects claimants to show that a competent professional in the field could not readily resolve the uncertainty at the outset. Where the solution was already known, or easily achievable using existing knowledge, HMRC will usually conclude that the work does not qualify as R&D.
Key takeaway: Commercial risk is not enough. The uncertainty must be technical and clearly explained.
Not identifying the right competent professional
The concept of the competent professional is central to HMRC’s assessment of R&D claims. This is the individual, or individuals, with the appropriate qualifications and experience to judge whether a genuine technological uncertainty existed.
Problems arise where businesses rely on professionals from unrelated disciplines, such as sales, marketing, or general management, to describe the uncertainty. HMRC will expect the assessment to come from someone directly involved in, and knowledgeable about, the relevant science or technology.
Key takeaway: The uncertainty must be assessed and explained by the right technical experts, not by commercial or administrative staff.
Making “Catch-Up” Claims
One of the most common trends we see is what HMRC often refers to as catch-up claims. These arise where a business seeks R&D relief for work that involves adopting or implementing existing technologies or industry practices, rather than advancing them.
Simply applying known techniques, even if they are new to the business or sector, will not usually qualify. R&D requires an element of experimentation or development beyond what is already established.
R&D relief rewards technical advancement, not catching up with existing industry standards.
Misunderstanding what counts as uncertainty
It is a common misconception that if a technology is new to an industry, it must be uncertain. HM Revenue & Customs takes a different view. If the solution already exists elsewhere and can be applied without significant technical difficulty or risk, it is unlikely to qualify.
True uncertainty involves genuine technical challenges where the outcome could not be predicted with confidence at the outset, even by experienced professionals.
It is clear form our experience of these claims that novelty alone is not enough. The uncertainty must be genuine and technical.
Focusing on results instead of the process
Many claims place heavy emphasis on the end result of a project, particularly where the outcome has been commercially successful. However, HMRC is far more interested in the process than the result.
Crucially, projects do not need to succeed to qualify for R&D relief. Failed experiments, abandoned approaches, and lessons learned can all support a claim, provided they demonstrate an attempt to resolve scientific or technological uncertainty.
Putting it bluntly – HMRC wants to understand the journey, not just the destination.
Providing the wrong level of detail
R&D claims must strike a careful balance.
- HMRC officers reviewing claims are often not scientists or engineers, so highly technical submissions without explanation can obscure the point being made.
- At the same time, oversimplifying the work can undermine the argument that genuine uncertainty existed.
Effective claims clearly explain the background to the project, what was already known, what uncertainty arose, and what work was undertaken to try to resolve it, using language that is accessible but accurate.
Clear, structured explanations are essential. Too much or too little detail can both cause problems. This is where are brilliant R&D tax credit investigations team can step in and help. We know how to convey to HMRC what you have done and why it should qualify.
How we can help with R&D tax disputes
Avoiding these common pitfalls significantly improves the prospects of a successful R&D tax claim. Where claims are challenged, early and strategic advice can make a critical difference to the outcome.
At Francis Wilks & Jones, our specialist tax team regularly advises businesses facing HMRC enquiries and disputes relating to R&D tax relief. We understand how HMRC approaches these claims, where challenges typically arise, and how to respond effectively.
We have been advising business and directors for the past 25 years and our team is headed up by Andy Lynch who spent 18 years at HMRC before joining us at FWJ. His expertise is invaluable.
Whether you are preparing a new claim or dealing with an existing HMRC challenge, we can help you navigate the process with clarity and confidence. Contact our tax disputes team to discuss your position and protect the relief your business may be entitled to.
