How HMRC changes transform R&D tax relief

How does HMRC changes transform tax relief from R&D: what does that mean for your business?

Fuel innovation with tax relief of R&D

The tax and development fiscal reductions (R&D) have long been an essential source of financial support for companies stimulating innovation in science and technology. This incitement has enabled companies – in particular SMEs – to push the limits, to develop new technologies and to remain competitive. However, recent HMRC changes reshape the landscape, introducing new compliance measures that have an impact on the way companies are demanding tax relief.

Key changes in R&D tax relief: what you need to know

Unfortunately, the past few years have seen an increase in R&D complaints with many “specialized” R&D complaints arising and, in some cases, exaggerating the amount which could be considered as real R&D. Therefore, since 2021, to suppress fraud and improve transparency, HMRC has deployed more strict rules. These include:

• SMEs of complaint SMEs – R&D tax credits are now linked to paying liabilities and NIC of a company, which limits available tax relief.
• Officer requirement appointed – An appointed senior officer must supervise each complaint, guaranteeing responsibility and complete disclosure of the tax advisers involved.
• Notification rule in advance – Companies must inform the HMRC of their intention to claim within six months of the end of their accounting period.
• Compulsory digital deposit – All complaints must be submitted online with complete support documentation.
• Elimination of candidates payments – R&D tax credits cannot be paid directly to the complaint company, not to third -party candidates.

Commercial impact: a more difficult route to the relief

These changes made the complaint process more complex, resulting in a significant drop in requests. According to statistics and HMRC R&D report (published in winter 2024):

• R&D tax relief requests have dropped 83,240 in 2021/22 at 65,690 in 2022/23.
• The claims of SMEs were the hardest affected, falling 23% from 71,905 to 55,325.
• THE The HMRC survey rate increased from 10% to 17% in a year, with resolution times of the average survey now exceeding Eight months.

These figures obviously raise critical questions: fewer companies engage in R&D, or does the increasingly complex process discourage real affirmations? For SMEs to rely on tax lounges to finance innovation, these new obstacles could slow down progress and growth.

Maximize your R&D tax relief in an evolving landscape

Although HMRC’s objective to prevent fraud is valid, it is essential that eligible companies continue to access the support they deserve. R&D tax relief should be an innovation engine, not an administrative roadblock.

If your business is engaged in eligible R&D activities, our team can help you navigate the complaint process easily. We ensure full compliance while optimizing your complaint, so you do not miss precious relief.

Following steps

Contact us today to see how we can help you ask for relief to allow your business to continue innovating and prospering.