Will we be seeing fewer enquiries going forward?

Since the introduction of the Mandatory Random Enquiry Programme (MREP) in 2022, R&D tax relief claims have been subject to more enquiries than ever before.

Working with us, you may not have felt the impact of this too much, as only 1.25 per cent of our R&D tax relief claims are subject to enquiry, compared to the HMRC target of 20 per cent.

Now that the tide is turning once more on compliance checks, it is worth understanding how enquiries are changing going forward.

What is changing with enquiries?

The latest updates to the R&D tax relief claims were unveiled in the recent R&D Communications Forum.

While there was much to unpack from the event, one thing that is worth innovative businesses taking note of is the assessment of HMRC’s ongoing efforts to improve the quality of R&D tax relief claims.

The good news is that these efforts have been largely successful.

R&D tax relief had attracted a dubious reputation as untrustworthy practitioners submitted fraudulent claims on behalf of businesses that never innovated.

The resulting measures, including the MREP, have effectively eradicated error and fraud in smaller claims.

Smaller claims were generally those most open to abuse before the new compliance measures, as the hope seemed to be that HMRC would not notice being scammed out of small amounts of money.

With the initial objective achieved, HMRC announced the pivoting of compliance measures to tackle more complex scenarios.

How this will manifest and what it may mean for legitimate businesses submitting complex claims remains to be seen.

For now, the suggestion appears to be that smaller or more straightforward R&D tax relief claims are less likely to be subject to an enquiry than they were previously.

Will my R&D tax relief claim not face an enquiry now?

There was once a time when you could confidently know whether your R&D tax relief claim was going to be subject to an enquiry or not.

Those days are gone and it is unlikely they will ever truly return.

Instead, we are keen to keep emphasising the lessons that have been learned from the MREP.

You should treat each R&D tax relief claim as though it could be subject to an enquiry until too much time elapses for one to be launched.

HMRC have up to fifteen months after submission to launch an enquiry, so anything older than this is entirely safe, as was demonstrated in a tribunal ruling last year.

However, the main takeaway from the changing approach to compliance is that innovative businesses have taken better control of their R&D tax relief claims.

Now is the time to keep this momentum and continue making R&D tax reliefs a better system for all.

We will support you in this by ensuring that only qualifying projects and costs are included in your R&D tax relief claim.

As you continue working with us, you may develop a sense of what should be included and excluded as well, so that you can focus your record-keeping efforts on areas that will be beneficial.

To stay confident with changing compliance measures, get in touch with our team today.

Adam Bointon

Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.