HMRC's R&D Tax Credit investigations are on the rise. Our specialist defence team is here to help. Call today for a free consultation
Increased scrutiny by HMRC
HMRC is scrutinising R&D tax relief claims more closely in 2025. Recent cases across the industry show clear patterns in the types of claims HMRC is challenging, the evidence it expects, and the behaviours it is treating as high risk. These cases are not isolated examples, they reflect a wider shift in HMRC’s compliance strategy and its focus on accuracy across the scheme. And it is likely to continue in to 2026 and beyond.
The FWJ team of experts – here to help
Our team can help you defend these claims. It includes
- Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HMRC in their special investigations team. His experience is unrivalled and he regularly defends complex R&D tax credit investigation claims as well as a range of other tax related investigations.
- Phoebe Pexton. Phoebe specialises in R&D defence work, most recently obtaining a successful result for a lighting company being investigated by HMRC. Her delighted client commented as follows “Simply outstanding service! From the initial enquiry to the final submission, I have been thoroughly impressed with the advice and communication, depth of knowledge and turnaround time from this firm. Specific thanks must go to Phoebe Pexton for her attention to detail“
- Anita Sharma. Anita has over a decade’s experience defending HMRC’s claims.
At a glance
Recent cases demonstrate that HMRC is:
- Questioning technical justification more rigorously.
- Rejecting claims supported by generic or template-style reports.
- Focusing on staffing and subcontractor cost accuracy.
- Challenging claims from high-risk advisers.
- Seeking repayment and, in some cases, penalties.
This article explains the common issues seen in case trends and what they mean for businesses in 2025.
Why are recent R&D tax relief cases so important in 2025?
Recent case examples highlight the types of errors HMRC is most concerned about. Industry reports, including those analysing rejected claims in late 2024 and early 2025, show that HMRC is taking a firmer line even in cases where the business believed the claim was genuine.
These cases matter because they provide insight into the areas HMRC will scrutinise most closely in the year ahead. They also help businesses understand what evidence they need to protect their position.
Key case themes include:
- poor or insufficient technical explanation
- overstated or unsupported financial costs
- claims prepared by unregulated commercial advisers
- assumptions made without contemporaneous records
- confusion arising from the merged R&D scheme rules
FWJ Takeaway: We are aware that HMRC is using real case outcomes to guide its risk-based approach. Understanding these trends helps businesses avoid making the same mistakes. We can help use this information to benefit your business
What types of R&D claims are being challenged most often?
We have seen a consistent pattern is emerging across recent cases. HMRC’s challenges fall broadly into three areas: technical justification, financial accuracy and adviser behaviour.
1. Weak or generic technical reports
Many rejected claims reference technological advances but in reality these provide limited detail of the underlying uncertainty. HM Revenue & Customs is focusing on whether the work truly sought to overcome a scientific or technological challenge.
Cases show that reports using generic descriptions or template language are more likely to be challenged, especially in sectors such as software development.
2. Claims for routine or commercial development
HMRC has disallowed claims where the work amounted to “standard testing, system integration, routine automation or product improvement”. Under the merged R&D scheme rules, routine or purely commercial development does not meet the statutory definition of qualifying R&D, and recent disputes confirm that HMRC expects clear evidence of experimental activity and advancement.
3. Overstated subcontractor costs or staffing costs
In several cases, HMRC challenged staff time allocations that were not supported by timesheets or internal project records. HMRC also queried subcontractor costs where invoices did not clearly relate to R&D activities. Great care need to be taken on this aspect.
4. Projects lacking contemporaneous documentation
HMRC places increasing weight on the quality of project records. Recent cases show that retrospective explanations alone are often not enough to satisfy compliance teams. It is crucial to retain documents as you go through a project and make sure you have contemporaneous notes.
5. Claims linked to high-risk advisers
Some cases were selected because the adviser had a history of submitting speculative or poorly supported claims. HMRC treats these clients as a higher-risk group. There are a number of claims advisers out there who we have come across and who have provided poor advice and taken their fee and simply disappear leaving the company to pick up the pieces.
FWJ Takeaway: Most challenged claims share the same weaknesses: lack of detail, limited evidence and inaccurate cost allocation. These issues are avoidable with the right support.
What do these case trends reveal about HMRC’s compliance priorities?
The cases give a clear indication of how HMRC is approaching R&D enquiries in 2025. In our view. several priorities stand out.
1. A high bar for technical justification
HMRC wants detailed evidence of experimental work and uncertainty. Businesses must show precisely what problem they were trying to solve, why it was challenging and how their approach was different from standard practice. An inability to provide this can quickly lead to difficulty.
2. Greater emphasis on accuracy of costs
HMRC is questioning cost allocations more deeply now. Payroll records, timesheets and subcontractor agreements are being examined to ensure the figures are correct and genuinely relate to qualifying activities. This is because of the value of false or exaggerated claims in the past.
3. Stronger oversight of advisers and agents
Recent cases highlight HMRC’s increased focus on adviser behaviour. Where advisers have previously submitted inaccurate claims, HMRC is examining their entire client portfolio. On this basis you could quickly get caught up in a wider investigation by HMRC.
4. Consistent use of penalties where errors are careless
In some recent disputes, HMRC applied penalties under Schedule 24 to the Finance Act 2007 where it considered the taxpayer had not taken reasonable care. Penalties are set case by case, taking account of the behaviour involved and whether any disclosure was prompted or unprompted, and can often be reduced if the business engages early, cooperates fully and provides clear explanations.
5. Detailed evidence requirements
HMRC is seeking documents that were created during the project rather than only after the event. This includes technical notes, emails discussing challenges, prototypes, test results and work in progress records. Post project documentation may still be taken into account, but it is likely to be scrutinised more closely.
FWJ Takeaway: HMRC is looking for precise, well-supported claims. The more organised the evidence, the simpler the enquiry process becomes.
How can businesses reduce the risk of their claims being challenged?
The recent case trends highlight several practical steps businesses can take – and we are happy to work with you on any challenges and respond to HMRC enquiries.
1. Strengthen technical evidence
Clear descriptions of uncertainty, experimentation and advancement will help HMRC understand the nature of the work. Avoid generic or template-style reports. “Relevant detail” is the key.
2. Keep contemporaneous records
As set out above, this is crucial. Timesheets, design notes, prototypes and testing documents will support the claim if HMRC asks for evidence.
3. Review cost calculations carefully
Ensure that payroll data, staff roles, subcontractor invoices and consumable costs are accurate and clearly linked to the qualifying activities. If you have an accountant (internal or external), involve them in getting this data together.
4. Be cautious with unregulated or high-volume advisers
HMRC is scrutinising claims from certain advisers more closely. If your adviser has been identified as high risk, consider reviewing the claim before submission and ensure that, regardless of who advises you, your claim complies with the merged R&D scheme rules and is supported by robust evidence.
Seek our support if contacted by HMRC
A clear, well-structured response can prevent unnecessary escalation. Our R&D Tax Credit tax dispute team regularly assists clients across England & Wales in preparing evidence, responding to HMRC questions and managing the enquiry safely.
How we can help you – today
We have over 25 years’ experience dealing with HMRC on behalf of businesses and directors. Our team advises on R&D enquiries, tax repayment demands, COP8 and COP9 investigations, and appeals to the First-tier Tribunal.
If you have received an enquiry letter or are concerned about the quality of a past or future claim, we can provide clear guidance on your next steps.
Speak to our tax dispute team today.
