Professional advisers have observed a gradual improvement in the way HM Revenue & Customs (HMRC) interacts with research and development (R&D) tax claimants. Feedback from technical leads and directors in the tax sector indicates that HMRC has become more responsive and is making more informed decisions on claims, though there remain areas where further progress is necessary.
These observations come at a time when the government continues to emphasise the importance of innovation for UK economic growth, placing R&D tax relief high on the policy agenda.
Overview of HMRC’s Approach to R&D Tax Relief
HMRC administers the R&D tax relief scheme to encourage business investment in innovation across the UK. The system supports companies undertaking qualifying projects by offering tax incentives for their efforts in developing new products, processes, or services. Over recent years,
HMRC has sought to balance the need to deter error and fraud with the objective of ensuring that legitimate claims are processed efficiently.
Experiences Reported by ForrestBrown Advisers
According to directors and technical leads at ForrestBrown, a firm specialising in R&D tax advice, engagement with HMRC has gradually become more constructive.
Katy Long, a director at ForrestBrown, stated that HMRC “has made incremental improvements in its handling of R&D claims”. Technical lead Phil Smith also noted a more open approach to direct discussion, which had previously been lacking.
Reduction in R&D Claim Enquiries
Advisers report a noticeable decrease in the number of HMRC enquiries into R&D claims. While there was a period marked by an uptick in questioning, recent months have seen a lower volume of follow-up requests.
“The number of needless queries has dropped and there is a clearer effort to resolve cases efficiently,” said a ForrestBrown adviser. This trend suggests progress in HMRC’s ability to distinguish between complex and straightforward claims.
Improvements in Decision-Making Consistency
Recent feedback indicates HMRC case workers are now arriving at correct outcomes more frequently. While earlier phases of heightened scrutiny led at times to inconsistent or erroneous decisions, current interactions are perceived as fairer and more predictable.
Advisers say this is vital for fostering trust and certainty in the regime, and it is especially valued by companies relying on timely R&D tax relief to support ongoing projects.
Challenges Persist for Case Workers
Despite the improvements, ForrestBrown’s advisers point out that not all issues have been resolved. Some case workers are viewed as still lacking in technical knowledge or practical understanding of business innovation.
“Case workers are still not great, but there is at least a willingness to engage,” noted a technical specialist. There is recognition that upskilling and further training may be needed to fully address the complexities associated with emerging technologies and R&D methods.
Final Summary
Overall, the engagement between HMRC and R&D tax claimants appears to be improving incrementally. Professional advisers acknowledge a decrease in unnecessary enquiries and an improvement in the accuracy of decisions, balanced by calls for further development in case worker expertise.
These trends are viewed positively within the business and advisory communities, though ongoing attention will be required to maintain consistency and support for innovative British firms.
