Are companies missing out on R&D tax relief due to uncertainty?

As any accountant who has shied away from offering R&D tax relief support can attest, knowing whether a business is able to claim R&D tax relief is not always easy.

Some businesses operate in sectors where innovation abounds, while others carve out advances in niche ways.

Across all sectors, there are barriers to claiming R&D tax reliefs with confidence that accountants can help to overcome with a deeper knowledge of the system.

Is the work innovative enough?

The line between a routine improvement and an advance in science and technology is one that can be difficult to adequately detect.

HMRC has its own view of the issue, but many enquiries still involve a discussion on whether a project, or aspects of it, fall on the right side.

Some innovation will be so earth-shattering in its novelty that it will be clear for all to see that it should count as R&D.

However, the smaller advances cannot be left to the side as these are the ones that form the majority of R&D work.

Nearly everything that is used in our daily lives has undergone some form of R&D to ensure that it is optimised in terms of design, production, sustainability and cost, with changes happening incrementally over the years.

It will be the competent professionals who work in the innovative business who are best placed to know whether something counts as an advance.

They should have a working knowledge of the current state of knowledge in the sector and anything that cannot be readily deduced by these people will typically qualify as R&D.

Even so, having a strong technical narrative can help HMRC to understand what makes the work innovative and how it differs from routine improvements.

Will HMRC accept the R&D tax relief claim?

There is no definitive way to be sure that HMRC will accept any R&D tax relief claim when preparing it.

There are ways to make it more likely, primarily by following all the guidance and ensuring that it is genuine R&D, but there is still a risk that an enquiry will be launched.

Rather than dreading enquiries, innovative businesses and accountants should come to expect them and know what the best approach to handling them is.

This will be especially true for innovation that occurs in what HMRC considers a niche sector, such as the food and beverage, textiles, agriculture or construction.

Provided the R&D tax relief claim has been sense-checked throughout to ensure that it is centred on valid R&D work and only eligible costs have been included, it should be accepted by HMRC.

Working with an R&D tax relief consultant can take much of the stress and uncertainty out of the process.

We can help you to discover whether the work is innovation in the eyes of HMRC and prepare an R&D tax relief claim that meets the relevant criteria.

In the event of an enquiry, we will defend valid claims and provide additional clarification as part of the process to ensure that value is not lost.

Innovative companies should be empowered to make the most of the resources available to them and R&D tax relief claims are a core part of this.

If you want to take the uncertainty out of R&D tax relief support, speak to 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.