The recent AAT article on R&D tax relief changes highlights the evolving challenges facing SMEs and advisors in navigating the new landscape of tax compliance. The shake-up of the R&D tax credit system in 2024, with the merging of SME relief and RDEC into a single scheme, represents one of the most significant overhauls in years. However, alongside these structural changes, the increasingly aggressive stance taken by HMRC in compliance cases is raising concerns across the industry.
As a compliance director at RandDTax and an AAT member, I believe it is crucial to take a measured, common-sense approach to these changes. The importance of innovation in the UK economy cannot be overstated, yet many SMEs are now facing a hostile claims environment, leading some to abandon claims altogether. This is not just about tackling fraud, something we all support, but about ensuring that legitimate businesses receive the relief they are entitled to without undue pressure or unreasonable scrutiny.
The AAT article describes a growing concern among R&D advisors and accountants, HMRC appears to be working under an assumption that claims are incorrect, shifting the burden onto claimants to prove their validity under increasingly rigid interpretations of the law. Experienced professionals have reported cases where claims that meet the letter and spirit of the guidelines are being rejected without sound reasoning, often handled by underqualified compliance officers. This leads to wasted time, unnecessary disputes and ultimately a deterrent effect that discourages businesses from investing in innovation.
I have personally been involved in two claims where enquiries began in 2022 and were fully resolved in our clients' favour, with the claims being fully allowed in late 2024. In another two cases, we have seen enquiries result in fully allowed claims only after acceptance for Tribunal but before a hearing, when at last HMRC considered them fairly and correctly. The problem in these cases is that nobody truly wins, the time, stress and uncertainty involved are significant burdens on small businesses, often making the process feel like an unfair endurance test rather than a legitimate route to tax relief.
Professional bodies such as AAT, CIOT and ICAEW play a crucial role in shaping how these issues are addressed. HMRC’s compliance approach must be balanced with a practical understanding of commercial reality. At RandDTax, we consistently advocate for fair and proportionate treatment of claims, ensuring that businesses can access the reliefs designed to support innovation while adhering to the highest standards of compliance.
This is why active engagement with HMRC is critical. Industry professionals and representative bodies need to continue pushing for:
- Clearer guidance on R&D definitions and claim methodologies
- Better training and supervision for HMRC compliance officers to ensure consistent decision-making
- A shift away from an automatic presumption of invalidity, replacing it with a constructive approach to claim verification
Rather than accepting the chilling effect of the new compliance landscape, we must encourage HMRC to work with the profession rather than against it. Tax reliefs exist to promote investment, not to punish those who legitimately seek support for their research and development activities.
I encourage all R&D tax professionals and AAT members to read the full article and engage in discussions about how we, as an industry, can ensure sensible, fair and transparent treatment of claims.
Read the full AAT article here: Research & Development Tax Relief Changes: Fallout for SMEs
Christopher Toms MA MAAT Compliance Director – RandDTax