July 20 2023

UK – Enhanced R&D Tax Relief Claims: Additional Information Required from 1 August 2023


Research and Development (R&D) tax relief aims to support innovative projects in science and technology, fostering economic growth in the UK.

R&D Tax Relief Schemes

HMRC administers two R&D tax relief schemes - one for small and medium-sized enterprises (SMEs) and the other for large companies and ineligible SMEs (RDEC). The number of R&D claims has been increasing over the years.

Qualification for R&D Tax Relief

To be eligible for R&D tax relief, the work must be part of a specific project to make an advance in science or technology. Claims cannot be made for projects in arts, humanities, or social sciences. The work must be related to the company's trade and seek to resolve a scientific or technological uncertainty.

Government Action on Non-Compliance

Concern over abuse and boundary-pushing involving R&D tax reliefs has grown in recent years, particularly amongst SMEs. The government launched a review of the R&D tax relief schemes in 2021, aiming to ensure effective use of taxpayer money and maintain the UK's competitiveness in cutting-edge research.

Operational Changes

HMRC has increased efforts to combat non-compliance, doubling the number of staff working on R&D compliance and creating an R&D Anti-Abuse Unit. Additional measures, including payment identification controls, aim to expedite legitimate claims.

Policy Changes

The government has announced new policy measures to counter non-compliance, some already in place with others taking effect from August 2023. These measures include requiring digital claims, additional information for higher-risk claims, and limiting relief for offshore companies. Proactive outreach to new customers and limited opportunities sectors is also planned.

Changes from August 2023

HMRC will risk assess all claims, receiving more data on individual claims. Claimants or their R&D advisers will complete an additional information form to help HMRC assess the claim's validity and the expertise level of any R&D agent used in preparation.

Full report available here: HMRC’s approach to Research and Development tax reliefs