First-time R&D tax relief claims in freefall – Are accountants the key to getting things back on track?

The recently released R&D statistics enable accountants, innovative businesses and R&D tax consultants to identify issues and trends within the sector and respond accordingly.

One of the major findings is the way in which first-time applications for R&D tax relief claims have been in steady decline for years and have seen another major drop.

Accountants are in an ideal position to address this problem, but only if they know the value of R&D tax reliefs.

Why are fewer businesses approaching R&D tax relief claims for the first time?

There could be a number of reasons why first-time applications for an R&D tax relief claim are in decline.

It is possible that the majority of businesses in the UK that engage in valid R&D work have already been engaging with R&D tax reliefs.

This would be the ideal state of the sector, as every innovative business should be endeavouring to make use of R&D tax relief claims when they have a valid project to claim for.

However, the declining numbers of businesses claiming for R&D tax relief on the whole suggest that this is unlikely to be the case.

What seems more plausible is that measures designed to ward off error and fraud may have deterred a number of innovative businesses from engaging with R&D tax reliefs and accountants could have lost confidence in supporting clients.

It is also possible that a lack of awareness around the Advanced Notification Form (ANF) could be causing some innovators to miss out.

The ANF must be submitted within six months of a business’s year-end and is designed to stop spurious last-minute claims.

Failure to submit this form will result in the entire R&D tax relief claim being rejected, even if it contains legitimate R&D work.

This means that some businesses may not have considered an R&D tax relief submission until eight or nine months after their year-end only to find that they have missed the boat.

Whatever the reason behind the decline, the 2023/24 financial year saw a 43 per cent fall in first-time applications.

Prior to the 2019/20 financial year, the number of first-time applications had increased year-on-year but has been in steady decline since then.

Data from the 2024/25 financial year is yet to be released concerning first-time applications, but the indication from the rest of the statistics about this period indicates that it is unlikely that this trend has reversed.

How can accountants support first-time applications for R&D tax relief claims?

There is no doubt that R&D tax reliefs are more difficult to access than they were when first-time applications were higher, but this should be framed positively.

The measures taken succeeded in reducing the level of error and fraud, reducing the number of claims made while increasing the value of the average claim.

However, the fear of facing an HMRC enquiry could be holding back many innovative businesses, so it is the accountants who are well-placed to start addressing these fears.

By working closely with an R&D tax consultant, accountants should be able to identify which of their clients are undertaking projects that are likely to qualify for R&D tax relief claims.

Our expert team can review the situation and determine whether the project meets the criteria for R&D tax reliefs laid out by HMRC.

If it does, we can assist with the formation of the first-time application for an R&D tax relief claim, as it does require additional documentation.

Accountants should be proactive in helping clients meet the ANF deadline, as only by being organised and aware can innovative businesses access R&D tax reliefs.

Approaching a first-time claim can feel intimidating for both innovative businesses and accountants, but our experts are proficient at handling R&D tax relief claims and defending legitimate claims from enquiry.

To become more confident in preparing for a first-time R&D tax relief application, get in touch with our team.

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.