# LimestoneGrey > Chartered tax consultancy specialising in R&D tax relief (Cardiff, UK). Founded 2017 and regulated since inception; led by founder Matthew Jones ACA CTA. Specialists in the current UK schemes: the merged R&D Expenditure Credit and Enhanced R&D Intensive Support (ERIS), with deep work in life sciences, biotech, medtech, agritech, AI and robotics. The full text of every page listed in llms.txt, in the same order. Each entry gives the page title, its URL, its description and its full main text. Nothing is truncated. --- # R&D tax relief guide: schemes, rates and how to claim URL: https://www.limestonegrey.com/rd-tax-relief/ Description: UK R&D tax relief now runs through two schemes: the merged scheme worth up to 16.2p per £1 and ERIS worth up to 26.97p. Find the guidance your claim needs. R&D tax relief R&D tax relief: the complete guide UK R&D tax relief now runs through two schemes. For accounting periods beginning on or after 1 April 2024, most companies claim the merged R&D expenditure credit: a 20% credit worth 15p per £1 of qualifying spend at the 25% corporation tax rate, 16.2p for loss-makers and companies paying tax at 19%, and as low as 14.7p where marginal relief applies. Loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure can claim Enhanced R&D Intensive Support (ERIS) instead, worth up to 26.97p per £1 in cash. The relief comes with a compliance regime to match. First-time claimants, and companies returning after a gap in claims, must notify HMRC within six months of the end of the period of account, every claim needs an Additional Information Form, and HMRC checked around one in six claims in 2023-24, its latest published figure. This page collects our guides to all of it, each written and reviewed by a chartered adviser. Start with your situation New to R&D tax relief. Begin with what counts as qualifying R&D, then which costs qualify, then which scheme applies to your company. Read the claim notification requirement early: for a first claim, the deadline can pass before anyone mentions R&D relief to you. Already claiming. The rules changed substantially for accounting periods beginning on or after 1 April 2024. Check your position against the merged scheme, and if you hold grant funding, read grant funding and R&D tax relief: the old restrictions are gone, and much of the advice still published online is out of date. Worried about an enquiry. Start with HMRC R&D enquiries: what to expect, how the process runs and how to respond. Enquiry support is included in every LimestoneGrey engagement as standard; if the claim under enquiry was prepared by someone else, HMRC enquiry defence is the standalone engagement that covers it. If you already suspect a past claim was wrong, voluntary disclosure sets out what coming forward first is worth. Loss-making and R&D-intensive. You may be entitled to the most generous rate in the system. Read the ERIS guide and test yourself against the 30% threshold with the ERIS intensity calculator. In financial difficulty. The going concern condition decides whether a merged-scheme credit arrives as cash and whether an ERIS claim can be made at all, and the order of events matters: R&D tax relief when a company is in trouble sets out what to do before an administrator or liquidator is appointed, and what can still be claimed afterwards. The schemes The merged R&D scheme explained: the 20% credit, the net benefit by tax position, the standard worked example and the PAYE cap. Enhanced R&D Intensive Support (ERIS): the 186% deduction, the 14.5% payable credit and how the 30% intensity test really works. Which R&D scheme applies to your company?: the decision page, by accounting period start date, profit position and intensity. R&D tax relief rates by year: every SME and RDEC rate from 2015 onwards, and what each was worth per £1 of qualifying spend. R&D tax relief worked examples: five claims calculated in full — profitable, marginal-rate and loss-making merged scheme, ERIS, and a project that qualifies for nothing. HMRC’s R&D statistics, explained: what the annual release measures, the trend lines that matter, and what the latest one showed. Accounting for the merged credit under FRS 102: above the line, what lands in the tax charge, and the judgement calls to settle with the auditor. R&D tax credits under FRS 105, IFRS and FRS 101: where the treatment differs from FRS 102. Auditing the R&D tax credit: what auditors ask, assertion by assertion, and what a well-prepared claim answers. What qualifies What counts as qualifying R&D?: the DSIT definition in plain terms: the advance, the uncertainty and the competent professional test. Which costs qualify for R&D tax relief?: staff, subcontractors, consumables, software, data and cloud, and what falls outside a claim. Grant funding and R&D tax relief: why grants no longer block or reduce relief under the current schemes. Compliance and deadlines The R&D claim notification requirement: the six-month deadline that silently invalidates late first claims. The R&D Additional Information Form (AIF): what HMRC requires with every claim and where forms go wrong. HMRC R&D enquiries: the process, the timescales honestly stated, and how defensible preparation changes the outcome. R&D voluntary disclosure: what to do when a past claim was too high and the return can no longer be amended. R&D tax relief deadlines: every date, from the legislation: the filing date, the claim window, notification, the AIF, enquiry and discovery windows, with worked examples. R&D tax case law: the tribunal decisions: one cited entry per decision — what was at issue, who won, and what it changes for a claim being prepared now. Backdated claims and the March 2027 deadline: the closing window for claims under the old SME and RDEC schemes. Contracts and cross-border work Contracted-out R&D: who claims?: the intended-or-contemplated test and why contract wording decides the claim. Overseas R&D costs under the merged scheme: the UK-only default and the narrow exception for R&D that can only be done overseas. Groups, deals and distress R&D tax relief in groups: connected companies, surrender and who claims: why every group company claims separately, how connected-party costs are capped, and where the credit or the loss can be moved. R&D tax relief in due diligence: what a buyer’s tax due diligence tests, and how the deal itself moves SME status and the intensity ratio. R&D tax relief when a company is in trouble: going concern, what an administrator or liquidator can still claim, and why the merged scheme and ERIS diverge. The rules, sector by sector The legislation is the same whatever you build, but the arguments that decide a claim are not. Where the boundary falls in software development is a different question from proving an advance in life sciences or biotech, and different again for the contract analysis that runs through aerospace and defence or the trial records behind a manufacturing claim. Our sector guides set out the complication we meet most often in each. Quick answers and tools Shorter questions are answered in the FAQ. Terms defined in one line each, with a link to the guide behind every one, are in the R&D tax relief glossary. For working estimates on your own numbers, use the claim value calculator, the ERIS intensity calculator or the claim notification deadline checker — all free, and collected on our tools page. If you would rather talk than read, talk it through with a chartered adviser. We will tell you which scheme applies, what a claim would involve and whether it is worth making, and the fee is agreed before any work starts. Which scheme applies Position depends on when the accounting period begins, tax position and R&D intensity. The 30% ratio includes connected companies. Written by Matthew Jones ACA CTA. Last reviewed August 2026. The merged R&D scheme explained What the 20% expenditure credit is worth after tax, who falls into the merged scheme, how contracted-out R&D is treated, and worked examples for both. Enhanced R&D Intensive Support (ERIS) The 30% intensity test, the grace period, and what the credit is worth to a loss-making company: up to 26.97p per £1 of qualifying spend, tax free. Accounting for the merged R&D expenditure credit under FRS 102 Where the merged R&D expenditure credit goes in FRS 102 accounts, when to recognise it, what hits the tax charge, and where practice legitimately differs. R&D tax credits under FRS 105, IFRS and FRS 101: where the treatment differs from FRS 102 What changes when the reporter is a micro-entity, an IFRS group or an FRS 101 subsidiary: the caption, the netting option, and the deferred tax answer. Auditing the R&D tax credit: what auditors ask and what a well-prepared claim answers What evidence supports an R&D tax credit in the accounts — entitlement, measurement, cut-off, recoverability and going concern, assertion by assertion. Which R&D scheme applies to your company? Which R&D scheme applies depends on when your accounting period began, then your profit and R&D intensity. A clear decision guide with current rates. R&D tax relief in groups: connected companies, surrender and who claims Each group company claims in its own return. How connected-party costs are capped, who claims intra-group work, and where the credit can be surrendered. What counts as qualifying R&D? A project, an advance, a scientific or technological uncertainty, the competent professional test — what each limb requires and where claims fail. Which costs qualify for R&D tax relief? The six cost categories that qualify for R&D tax relief, the restriction attached to each, and the costs companies most often get wrong. Grant funding and R&D tax relief Grant funding no longer blocks or reduces R&D tax relief. Since April 2024, an Innovate UK grant and a full R&D claim can sit together on the same project. The R&D claim notification requirement First time R&D claimants must notify HMRC within six months of the end of the period of account or the claim is invalid. Who must notify, and by when. R&D tax relief deadlines: every date, from the legislation Every R&D claim deadline derived from the statute: notification, filing, the two-year claim window, enquiry and discovery, with three worked examples. The R&D Additional Information Form (AIF) Mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. What the AIF asks field by field, and why no template exists. HMRC R&D enquiries: what to expect and how to respond An HMRC compliance check asks you to evidence the projects, uncertainties and costs. What an enquiry involves, what HMRC asks for, and why claims fail. R&D voluntary disclosure: what to do if a past claim was wrong HMRC runs a disclosure service for overclaimed R&D tax relief. What it involves, what it costs, and why coming forward first costs less than waiting. Backdated R&D claims and the March 2027 deadline Add an R&D claim to a filed return for two years from the end of the period of account. The last standard old-scheme deadlines fall in late March 2027. Contracted-out R&D: who claims? The customer claims contracted-out R&D only where it intended or contemplated R&D of that sort when contracting. Otherwise it is the contractor's claim. Overseas R&D costs under the merged scheme The restriction on overseas subcontractors and externally provided workers, the narrow exception that survives it, and how to evidence a claim under it. R&D tax relief when a company is in trouble: going concern, administration and liquidation A company in administration or liquidation is not a going concern. What that costs under the merged scheme and ERIS, and what an office-holder can claim. R&D tax relief in due diligence: what buyers check and sellers should prepare A paid R&D claim is not a settled one. What a buyer's tax due diligence should test, and how the deal itself moves the target's SME status. R&D tax relief rates by year Every rate from 2015 to 2026 in one table — SME enhancement, payable credit and RDEC percentages, with the dates each took effect. How to choose an R&D tax adviser Six things you can verify before appointing an R&D tax adviser: the professional registers, PCRT, AML supervision, insurance — and the one you cannot. R&D tax specialist or your accountant: who should prepare the claim? An R&D claim is tax mechanics plus a technical case. When your accountant is the right choice, when a specialist earns the fee, and how they work together. HMRC's R&D tax credit statistics: the series explained What HMRC's annual R&D statistics measure, the 2025 release in full, every UK region including Wales, and the whole series free to download as CSV or JSON. R&D tax relief worked examples Five worked R&D claim examples under the current UK rules: profitable and loss-making merged scheme claims, ERIS at 26.97p per £1, and one paying nothing. R&D tax relief glossary: the terms defined Definitions of the terms used in UK R&D tax relief, from the Additional Information Form to the PAYE cap, each linked to the guide that covers it in full. Common questions, answered in full Single questions, each answered directly on its own page. Shorter versions of many of these sit in the FAQ. Eligibility Can I claim R&D tax relief for a failed project? Can a sole trader claim R&D tax credits? Who counts as a competent professional in an R&D claim? Is there a minimum R&D spend to claim? What happens if my company outgrows the SME definition? What is a scientific or technological uncertainty? What doesn't count as R&D for tax purposes? What qualifies for R&D tax credits? Who can claim R&D tax relief? Can a partnership or LLP claim R&D tax credits? What are qualifying indirect activities? Can a charity claim R&D tax relief? How do linked and partner enterprises affect an R&D claim? Can a UK subsidiary doing cost-plus R&D for an overseas parent claim? Schemes and value Does grant funding stop me claiming R&D tax relief? What is the 30% R&D intensity condition for ERIS? What is the PAYE cap on R&D tax credits? How much is an R&D tax relief claim worth? Is there a maximum amount I can claim in R&D tax relief? Is R&D tax relief state aid? Can I claim Patent Box and R&D tax relief together? What are R&D allowances? What is subsidised expenditure for R&D tax relief? How does R&D tax relief affect the Patent Box nexus fraction? Does claiming R&D tax credits affect EIS or SEIS status? Compliance and enquiries Do I need to tell HMRC before I make an R&D claim? What goes in the Additional Information Form? How likely is an HMRC enquiry into my R&D claim? What penalties can HMRC charge if an R&D claim is wrong? Can I get advance assurance for an R&D claim? What will HMRC ask for in an R&D enquiry? Can HMRC make me pay back an R&D tax credit? How long does an HMRC enquiry into an R&D claim take? What happens if my R&D claim is rejected? Do I need a technical report for an R&D claim? Does my R&D adviser have to be registered with HMRC? HMRC paid my R&D claim — does that mean it was approved? What do HMRC's Guidelines for Compliance expect from an R&D claim? What is an HMRC nudge letter about R&D, and what should I do? How do I appeal an HMRC decision on an R&D claim? Costs and process How far back can I claim R&D tax credits? Can I claim R&D tax relief for subcontracted R&D? Which software and cloud costs qualify for R&D tax relief? What records do I need for an R&D claim? How do I calculate staff costs for an R&D claim? How long does it take to receive an R&D tax credit payment? How do I claim R&D tax credits? How long does an R&D claim take to prepare? What happens to my R&D claim if I change my accounting date? Does the R&D expenditure credit reduce quarterly instalment payments? How do I enter an R&D claim on the CT600 and CT600L? Can I claim R&D tax relief on a prototype that is later sold? --- # The merged R&D scheme: rates, RDEC rules and worked examples URL: https://www.limestonegrey.com/rd-tax-relief/merged-scheme/ Description: What the 20% expenditure credit is worth after tax, who falls into the merged scheme, how contracted-out R&D is treated, and worked examples for both. R&D tax relief •11 min read The merged R&D scheme explained MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The merged R&D Expenditure Credit (merged RDEC) is the single R&D tax relief scheme for accounting periods beginning on or after 1 April 2024. It pays a taxable credit worth 20% of qualifying R&D expenditure, which works out at between 14.7p and 16.2p per £1 spent once tax is accounted for. It applies to companies of every size, profitable or loss-making, with one exception: loss-making SMEs that are R&D-intensive can claim at a higher rate under Enhanced R&D Intensive Support (ERIS). £100,000 of qualifying spend, worked through Standard figures used across this site so the arithmetic always agrees. A real claim needs cost boundaries, subcontracting and the PAYE cap checked first. The rates and rules on this page reflect the law in force in August 2026. What is the merged R&D scheme, and who does it apply to? The merged scheme is one expenditure credit for companies of every size, and every company claiming R&D tax relief for an accounting period beginning on or after 1 April 2024 uses it, unless it qualifies for ERIS. The old division between the SME scheme and RDEC has gone. A ten-person software company and a listed manufacturer now claim under the same rules, at the same rate. The date test matters. It is the start of the accounting period that counts, so a 12-month period that began on 1 March 2024 sits entirely under the old schemes. If you are unsure which side of the line you fall, our guide to which R&D scheme applies to your company works through it step by step. The one carve-out is ERIS. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure claims under ERIS instead, at up to 26.97p per £1 rather than 16.2p. How does the 20% credit work? The merged scheme pays an expenditure credit equal to 20% of your qualifying R&D spend, and that credit is itself taxable. It is an “above the line” credit: it is recognised as income in your accounts before the tax charge, so it increases your pre-tax profit and is visible to investors, lenders and boards as part of operating performance. That treatment is carried over from the old RDEC. For a profitable company, the credit reduces the corporation tax bill. For a loss-making company, it is paid in cash after a series of adjustments described below. In both cases, because the credit is taxable, the headline 20% overstates the true benefit. It does not reduce what that company pays on account: quarterly instalment payments are worked out gross of the credit, and the tax on the credit raises them. What is the merged scheme worth? Between 14.7p and 16.2p per £1 of qualifying expenditure, depending on your corporation tax position. Here is the standard worked example on £100,000 of qualifying spend. Tax position | Qualifying spend | Gross credit (20%) | Tax on the credit | Net benefit | Per £1 Profitable, 25% main rate | £100,000 | £20,000 | £5,000 | £15,000 | 15p Profitable, 26.5% marginal rate (augmented profits £50,000 to £250,000) | £100,000 | £20,000 | £5,300 | £14,700 | 14.7p Profitable, 19% small profits rate | £100,000 | £20,000 | £3,800 | £16,200 | 16.2p Loss-making, any size | £100,000 | £20,000 | £3,800 notional | £16,200 in cash | 16.2p Loss-makers do slightly better than main-rate taxpayers: with no profits chargeable at the main rate, the notional tax deducted from their credit is applied at the 19% small profits rate rather than 25%. For an estimate on your own figures, use our claim value calculator. Longer versions of these calculations, including a loss-maker with the PAYE cap checked and a project that produces no claim, are set out in our worked examples. How do loss-making companies receive the credit? In cash, after HMRC applies a seven-step process set out in the legislation. For most loss-makers the practical effect is straightforward: notional tax of 19% is deducted at step 2 (this is why the net rate is 16.2p rather than 20p), the PAYE cap is applied at step 3, and the balance is paid to the company. The amount withheld at step 2 is not forfeited: a group company can take it by surrender, and anything not surrendered must be set against the company’s corporation tax for a later period. It only ever discharges tax, though — it is never paid in cash, so a company that stays loss-making does not see it. Terms like notional tax are defined in one line each in the R&D tax relief glossary. The payment is a genuine cash receipt, not a deferred tax asset. For pre-revenue companies it is often the single largest non-dilutive cash inflow of the year, which is why the claim deserves the same care as a funding round. What is the PAYE cap? The cash payable under the merged scheme is capped at £20,000 plus 300% of the company’s relevant PAYE and National Insurance contributions for the period. A company with a modest UK payroll and a large subcontracted R&D budget can therefore find its payable credit restricted. The restricted amount is not forfeited: it is carried forward and treated as an expenditure credit to which the company is entitled for the next accounting period, so a lumpy payroll year defers the cash rather than losing it. Deferred is not the same as banked. The carried-forward amount is added to the next period’s credit and enters the payment steps at step 1, so it goes against that period’s corporation tax first and meets that period’s cap again before any cash is paid — a company whose payroll stays small can see the same amount deferred more than once. The notional tax deduction is not taken twice, though: in working it out, the initial amount of the credit excludes anything added by an earlier period’s carry-forward. ERIS has no equivalent carry-forward of the credit, and the difference is a trap. Only the loss a company actually surrenders is written off, and nothing reduces that amount to match a capped credit: surrender the full loss, take a capped credit, and the balance of the loss goes with it for no payment. Keeping the loss means surrendering less in the first place, which is why an ERIS claim has to be sized to the cap before it is filed. There is an exemption. Broadly, a company escapes the cap where its own employees are creating relevant intellectual property, taking steps towards creating it, or managing IP the company holds, and its spending on connected-party subcontracting is low. Whether the exemption applies turns on the detail of your arrangements, and it is one of the points we test early in every engagement. What changed from the old SME and RDEC schemes? Four changes matter most in practice. Grant funding no longer restricts relief. The old subsidised-expenditure rules are abolished. An Innovate UK grant, or any other subsidy, no longer blocks or reduces a merged-scheme claim. Most online guidance still gets this wrong, so we wrote a full correction: grant funding and R&D tax relief. Contracted-out R&D has a new test. Who claims now turns on what the customer intended or contemplated when the contract was made, set out under how the merged scheme treats contracted-out R&D below. Overseas costs are restricted. Subcontractor payments qualify only where the R&D is undertaken in the UK, and externally provided workers only where they are subject to UK PAYE and Class 1 NIC, subject to a narrow exception for qualifying overseas expenditure. One scheme, one rate. Company size no longer determines the scheme (ERIS aside), which removed a whole layer of boundary disputes. The old schemes still matter for accounting periods that began before 1 April 2024, many of which remain open to amendment until the final deadlines in March 2027. See backdated R&D claims for the windows and R&D tax relief rates by year for the historical rates. Which costs qualify? The main categories are staffing costs (apportioned to R&D activity), externally provided workers from unconnected providers at 65% where they are subject to UK PAYE and Class 1 NIC, payments to unconnected subcontractors at 65%, consumables used up in the R&D, software, data and cloud computing costs, and payments to clinical trial volunteers. Capital expenditure, rent and patent costs do not qualify for the credit, though capital spending on R&D can instead attract R&D allowances. The full category-by-category breakdown is in which costs qualify for R&D tax relief. The costs only count if the underlying project qualifies: a project seeking an advance in a field of science or technology through the resolution of scientific or technological uncertainty that a competent professional could not readily resolve. That definition does more work than any rate, and we set it out in full in what counts as qualifying R&D. How does the merged scheme treat contracted-out R&D? By statute rather than by who paid the invoice. Where R&D is contracted out, the customer claims only where it is reasonable to assume, from the contract and the surrounding circumstances, that the customer intended or contemplated when it entered the contract that R&D of that sort would be undertaken; otherwise the contractor claims in its own right. Payments to unconnected subcontractors qualify at 65%. A contractor also claims in its own right where its customer is not acting in the course of a trade, profession or vocation within the charge to UK tax, or is a body that cannot claim the relief itself, such as a university or a health service body. The same R&D cannot be claimed twice, so relief taken on the wrong side of a contract is an incorrect claim, and the contract rather than the payment decides which side that is. The detail, including contract drafting implications, is in contracted-out R&D: who claims?. How do you claim under the merged scheme? Three compliance steps, in order, and the first is the one that catches companies out. 1. Check whether you must notify HMRC in advance. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must submit a claim notification within six months of the end of the period of account. Miss the window and the claim is invalid, even if the amendment deadline is still open. The detail, including a wrinkle affecting companies whose last claim was an amendment, is in our guide to the claim notification requirement. 2. Submit the Additional Information Form. The AIF has been mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023. It must reach HMRC before or with your CT600, and it names your senior internal R&D contact and every agent involved in the claim. See the Additional Information Form explained. 3. File the claim in the CT600. The credit is then processed, and for loss-makers paid, subject to the steps above. The seven steps have their own boxes on the CT600L: how to enter the claim on the CT600 and CT600L follows them down the form. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, so the claim should be prepared from the outset as if it will be read by a compliance officer, because there is a fair chance it will be. Our page on HMRC R&D enquiries explains what a check involves and how to respond. How the credit is presented in your statutory accounts — above the line as operating income, what lands in the tax charge, and the judgement calls to settle with your auditor — is covered in accounting for the merged credit under FRS 102. Where the treatment differs under FRS 105, IFRS or FRS 101 is covered in its companion page. Talk it through with a chartered adviser The merged scheme is simpler than the system it replaced, but the compliance apparatus around it is stricter, and the cost of a casual claim is an enquiry. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim we prepare is signed off by a chartered adviser before it reaches HMRC. Enquiry support is included as standard. If you want a considered view on your position under the merged scheme, get in touch for an initial conversation, or start with the wider R&D tax relief guide. Sources Merged scheme & ERIS guidance — the 20% merged credit rate, the PAYE cap and the ERIS alternative. CIRD140000: PAYE cap — the £20,000 plus 300% cap and its exemption. CIRD112100: payment steps — the seven-step process, the step 3 carry-forward of the amount restricted by the PAYE cap, and confirmation that no fresh claim is needed for the carried-forward amount. CTA 2009 s1042I — the seven steps in order: discharge of the company’s corporation tax for the period at step 1, the notional tax deduction at step 2, the PAYE cap at step 3, and cash paid to the company only at step 7. CTA 2009 s1042J — subsection (2), adding the amount restricted by the cap to the credit for the next accounting period. CTA 2009 s1042K — the notional tax deduction taken at step 2, with subsection (9) excluding any amount added under section 1042J from the initial amount it is computed on, so a carried-forward amount is not notionally taxed twice. CTA 2009 s1042L — subsection (2), surrender of the whole or part of the deducted amount to another group member; subsection (3), the balance applied in discharging corporation tax for a subsequent accounting period. CIRD161000: contracted-out R&D — the intended-or-contemplated test and customers outside UK corporation tax; CIRD162000, HMRC’s worked examples. CTA 2009 s1133 — subsection (2)(c), the contracted-out test: it must be reasonable to assume, having regard to the terms of the contract and any surrounding circumstances, that the customer intended or contemplated when entering into the contract that research and development of that sort would be undertaken. CTA 2009 s1042F — the contractor’s own claim where the R&D is contracted out to it by an ineligible company (section 1142) or by a person not acting in the course of a trade, profession or vocation within the charge to tax. Check what R&D costs you can claim — 65% of payments to unconnected contractors, and of staff provision payments to unconnected providers of externally provided workers. Merged scheme RDEC reform (policy paper) — the merged scheme from 1 April 2024, with subsidised-expenditure rules not carried forward. Tell HMRC you plan to claim — the six-month claim notification window and three-year test. Additional information form guidance — the AIF, mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023 — and filed before or with the CT600. --- # ERIS explained: who qualifies as an R&D intensive SME URL: https://www.limestonegrey.com/rd-tax-relief/eris/ Description: The 30% intensity test, the grace period, and what the credit is worth to a loss-making company: up to 26.97p per £1 of qualifying spend, tax free. R&D tax relief •8 min read Enhanced R&D Intensive Support (ERIS) MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Enhanced R&D Intensive Support (ERIS) is the R&D tax relief for loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure. It pays a cash credit worth up to 26.97p per £1 of qualifying spend, the most generous rate in the current UK system, against 16.2p for the same company under the merged scheme. It applies to accounting periods beginning on or after 1 April 2024. The 30% intensity test *For loss-making SMEs, in accounting periods beginning on or after 1 April 2024. Connected companies are aggregated on both sides, with payments between them excluded from the total. A one-year grace period can hold ERIS where intensity dips below 30%, but only where the company both met the condition in its most recent prior 12-month accounting period and obtained relief for it: eligibility without a claim does not bank the protection. If you want to know straight away whether you pass the 30% test, our ERIS intensity calculator works through the ratio on figures that include your connected companies. Who qualifies for ERIS? A company qualifies for ERIS in an accounting period if it meets all three of these conditions. It is an SME. Fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less. Connected and partner enterprises are aggregated, so a company that looks small on its own can fail the test through its investors or group. It is loss-making for the period. It is R&D-intensive. Its relevant R&D expenditure is at least 30% of its total relevant expenditure, with connected companies included on both sides of the ratio — see how groups and connected companies are treated. A company that misses any one of the three claims under the merged scheme instead, where loss-makers still receive 16.2p per £1 in cash. If you are not sure which side you fall on, start with which R&D scheme applies to your company. How is the ERIS credit calculated? In two steps. First, the company deducts an additional 86% of its qualifying R&D expenditure from its taxable profits, on top of the normal 100%, giving a total deduction of 186%. Second, it surrenders the resulting loss to HMRC for a payable credit of 14.5% of the surrenderable amount. Unlike the merged scheme credit, the ERIS credit is not taxable, so nothing is clawed back from the headline figure. Here is the standard worked example, for a company with £100,000 of qualifying spend and sufficient losses: £100,000 x 186% x 14.5% = £26,970 payable credit. That is 26.97p per £1 of qualifying expenditure, paid in cash. The “up to” matters: the full rate assumes losses at least equal to 186% of the qualifying spend. Where the company’s losses are smaller, the surrenderable amount falls and the credit falls with it. Companies can also choose to surrender less and carry losses forward, a decision that depends on when they expect to reach profit. For an estimate on your own numbers, use the claim value calculator, or see the ERIS calculation alongside the merged scheme alternatives in our worked examples. How does the 30% intensity test work? Divide your relevant R&D expenditure by your total relevant expenditure. If the result is 30% or more, you pass. Total relevant expenditure is broadly the trading costs in your accounts for the period, not just the R&D ones. A worked ratio makes it concrete. A pre-revenue company spends £800,000 in the year, of which £300,000 is relevant R&D expenditure. Its intensity is £300,000 divided by £800,000, which is 37.5%, comfortably over the threshold. Now suppose the same company scales up its commercial team and total relevant expenditure rises to £1,100,000 with R&D unchanged. Intensity drops to just over 27% and the test fails, even though the R&D itself has not changed at all. Two features of the test catch companies out. Connected companies count on both sides. The ratio is worked across the company and its connected companies together. A deeply R&D-intensive company connected to a larger trading business can fail on the group numbers despite passing comfortably on its own. Total relevant expenditure moves the ratio as much as R&D does. Hiring a sales team, a large one-off cost, or a step up in overheads can push a previously intensive company under 30%. This is worth modelling before year end, not discovering after it. The ERIS intensity calculator lets you model both, on figures that include your connected companies. Can a profitable company claim ERIS? No. ERIS is only available to loss-making SMEs, however high their R&D intensity. A company that becomes profitable claims under the merged scheme for that period, where the 20% credit is worth 15p per £1 at the 25% corporation tax rate and 16.2p where the 19% rate applies. For companies approaching break-even this creates a real planning question, because the value of each pound of R&D spend changes with the tax position of the year in which it lands. What is the grace period? A company whose intensity has slipped below 30% can still claim ERIS for one further period, provided it meets the other conditions. What it needs is a prior accounting period of twelve months’ duration — the most recent one — in which it both met the intensity condition and obtained relief. Eligibility on its own banks nothing; the relief has to have been claimed. A single lumpy year of spending therefore does not immediately cost the company its 26.97p rate. The relief obtained need not have been ERIS itself. A claim under the old SME scheme counts, but on that scheme’s own terms: the period has to have ended on or after 1 April 2023, and the threshold it had to clear was 40%, not 30%. What does not count is a merged scheme claim — the statute looks for relief given under the SME provisions, so it has to have been old SME relief or ERIS. The grace period is a buffer, not a plan. A company whose intensity is trending downwards should model when it will move to the merged scheme and what that does to its cash forecast. What counts as an SME for ERIS? Fewer than 500 staff, and either turnover of €100m or less or a balance sheet total of €86m or less. The thresholds are stated in euros, and connected and partner enterprises are aggregated when testing them. Venture-backed companies should check the aggregation position early: the arithmetic on staff, turnover and balance sheet across linked enterprises is exactly the kind of detail that surfaces awkwardly during an HMRC check rather than before it. How does ERIS compare with the merged scheme? | ERIS | Merged scheme Who claims | Loss-making, R&D-intensive SMEs | All other companies, any size Mechanics | 86% additional deduction, then a 14.5% payable credit on the surrendered loss | 20% taxable expenditure credit Is the credit taxable? | No | Yes Net benefit per £1 | Up to 26.97p, in cash | 14.7p to 16.2p On £100,000 of qualifying spend | Up to £26,970 | £14,700 to £16,200 PAYE cap | Applies: £20,000 plus 300% of relevant PAYE and NIC; the credit does not carry forward, so the claim must be sized to the cap to keep the unsurrendered loss | The same cap applies, but the restricted amount is carried forward as a credit for the next period The merged scheme’s lower figure is the 26.5% marginal rate, paid on the credit where augmented profits fall between £50,000 and £250,000. Both schemes share the same definition of qualifying R&D, the same cost categories, the same contracted-out and overseas rules, and the same compliance requirements. The difference is who claims and what it is worth. Why does ERIS exist? Because some companies are almost nothing but R&D. A biotech running preclinical programmes, a medtech taking a device through regulatory evidence, a robotics company still in prototype iterations: these businesses can spend years loss-making before first revenue, funded by equity and grants, with most of every pound going into the science. ERIS exists to give that group a higher rate than the merged scheme’s 16.2p, and the 30% intensity test is how it draws the boundary. For those companies the credit is non-dilutive cash arriving during the deepest part of the loss-making curve, which makes the claim a planning matter, not an afterthought. The credit sits alongside equity rather than against it: claiming it does not affect EIS or SEIS status. We look at the intensity arithmetic for a typical pre-revenue burn profile in ERIS for pre-revenue biotech and medtech. How do you claim ERIS? Through the corporation tax return, with the same compliance steps as every current-scheme claim. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must submit a claim notification within six months of the end of the period of account; missing it invalidates the claim. Every claim needs an Additional Information Form submitted before or with the CT600. The PAYE cap applies to the payable credit, subject to the exemption for a company whose own employees create relevant intellectual property, take steps towards creating it, or perform a significant amount of management activity on IP the company holds, and whose connected-party subcontracting stays low. Where it bites, size the surrender to the cap before filing: the ERIS credit does not carry forward, so loss surrendered above the capped amount is written off for nothing. ERIS claims attract attention because the rate is generous and the qualifying conditions are testable. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and an intensity calculation that has not been evidenced is an easy target. Our page on HMRC R&D enquiries covers what a check involves; the short version is that the intensity ratio, the SME test and the loss position should all be documented at the time of the claim. Talk it through with a chartered adviser ERIS rewards exactly the companies we specialise in: R&D-intensive, often pre-revenue, where the credit is a material line in the cash forecast. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you want a considered view on your intensity position, the grace period, or a first ERIS claim, get in touch, or read on through the full R&D tax relief guide. Sources Merged scheme & ERIS guidance — the ERIS 186% deduction and 14.5% credit, the 30% intensity test and the PAYE cap. CIRD123000: ERIS intensity condition — the 30% intensity ratio, connected companies and the one-year grace period. CIRD140000: PAYE cap — the £20,000 plus 300% cap applied to the payable credit. CIRD91900 — the R&D SME thresholds: fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less. --- # R&D tax credit accounting treatment: RDEC under FRS 102 URL: https://www.limestonegrey.com/rd-tax-relief/accounting-treatment/ Description: Where the merged R&D expenditure credit goes in FRS 102 accounts, when to recognise it, what hits the tax charge, and where practice legitimately differs. R&D tax relief •10 min read Accounting for the merged R&D expenditure credit under FRS 102 MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The merged R&D expenditure credit goes above the line: it is recognised as income in the profit and loss account, usually within other operating income, and it is then taxed. That much is settled. When to book it, what to do with a loss-maker’s notional tax, and how it interacts with capitalised development costs each have more than one defensible answer, because no accounting standard names the credit. This page gives the mainstream treatment and flags where practice genuinely differs, so the judgement calls get settled with your auditor before the audit rather than during it. It covers where the credit goes in the accounts, not how it is calculated. The calculation — a taxable credit of 20% of qualifying expenditure, worth between 14.7p and 16.2p per £1 once tax is accounted for — is in our guide to the merged R&D scheme, and everything here takes those figures as read. Why is the credit “above the line”? Because it was designed to be. The expenditure credit was created so that R&D support would be visible in operating profit, where boards, lenders and investors look, instead of disappearing into the tax line the way the old SME relief did. The tax rules make the credit itself taxable income, but they say nothing about which line of the accounts it sits on — and the accounting standards never caught up: FRS 102 does not mention the credit anywhere. The treatment everyone uses is reached by analogy with grant accounting, and it has been settled practice since the credit began: income above the line, tax on it in the tax charge. That silence in the standards is worth knowing about, because it is why competent people can reach different answers on the finer points below. Where exactly does it go? Other operating income, in most sets of accounts. The statutory accounts formats supply the caption; showing the credit there keeps it visible and keeps the R&D costs at their full amount. Can the credit be netted against R&D costs? Not under FRS 102, in our view — and this is where published guidance most often goes wrong. The idea that you can deduct the credit from the R&D expense comes from international standards: IAS 20 gives IFRS reporters an explicit choice between showing a grant as income and netting it against the related cost. FRS 102 offers no such choice, its general rule is that income and expenses are not offset, and company law says the same. There is a residual argument that the credit reduces the cost of the R&D rather than being income, so nothing is being offset. It is arguable — but it is the position that has to be defended. If your auditor prefers netting, ask for the reasoning in writing and record the policy in the accounts. If you report under IFRS, FRS 101 or FRS 105, the answer differs — see R&D tax credits under FRS 105, IFRS and FRS 101. When should the credit be recognised? In the year the R&D happened, not the year the claim was filed. Once the company can be reasonably assured the claim will be made and paid, both recognition routes FRS 102 allows land the credit in the period the qualifying spend was incurred. Waiting for the CT600 puts it in the wrong year. Two practical checks before you accrue. First, entitlement can already have been lost: a first-time claimant, or a company that has not claimed in the three years ending with the notification deadline, must file a claim notification within six months of the end of the period of account, and if that was missed there is nothing to accrue. Second, the number moves: the contracted-out rules, the overseas cost restriction and the PAYE cap can each shift the figure materially between a year-end estimate and the filed claim, so accrue an estimate you can stand behind. What if we capitalise development costs? The claim is unaffected. Tax relief on qualifying R&D is given when the money is spent, even where the accounts carry the spend as an intangible asset, and nothing further arises as the asset is amortised. The accounting is a genuine choice: take the credit to income in the year of the spend, following the entitlement, or spread it over the asset’s life to match the amortisation it funds. The two give materially different operating profits. Settle it with the auditor and hold the policy consistently. What lands in the tax charge? The tax on the credit — and, for a loss-maker, the notional tax withheld from the payable amount. On £100,000 of qualifying expenditure: | Profitable, 25% main rate | Loss-making Operating income, above the line | £20,000 | £20,000 In the tax charge | £5,000 | £3,800 notional Net benefit | £15,000 of tax saved | £16,200 in cash The judgement sits on that £3,800. It is not tax the company has paid: it can be surrendered to a group company, and whatever is left must be used against the company’s own corporation tax in a later period — but it is never paid out in cash. So is it simply part of this year’s tax charge, or an asset? Most loss-makers charge it and recognise nothing, because recognising a deferred tax asset means showing that future taxable profits are probable, and a company with unrelieved losses usually cannot. The same question arises on any amount held back by the PAYE cap and carried forward. The same taxable credit also raises the corporation tax paid on account, since instalments are worked out gross of it. Where does it sit on the balance sheet? As a debtor for the amount coming in cash, and as a reduction of the corporation tax creditor for the amount that discharges tax. The debtor is often captioned corporation tax recoverable, sometimes other debtors; either can be supported. Keep the cash-versus-tax split visible — it is the number auditors ask for most and get least. How is ERIS different? ERIS sits below the line. Its extra deduction has no accounting entry at all — it lives in the tax computation, enlarging the loss the credit is then computed on — and the payable credit, which is not itself taxed, is presented within the tax line, as the old SME credit was. The practical consequence: which scheme a loss-making SME falls into changes where the benefit appears in its accounts. Under the merged scheme the credit sits in operating income, so it lifts operating profit and EBITDA; under ERIS the whole benefit sits in the tax line, so it lifts neither. A company that drops below the 30% intensity threshold, or climbs above it, can therefore show a very different operating profit from one year to the next without the underlying business changing. If a lending covenant, an earn-out or a management bonus is measured on operating profit or EBITDA, work out which side of the line the benefit will land before the year end, not after. What should you give your accountant or auditor? A schedule that supports the accounting entry, not just the tax return. What the auditor then does with it, assertion by assertion, is set out in auditing the R&D tax credit. For every claim we prepare, the client receives qualifying expenditure by category and by project, the credit calculation with the payment steps worked through, the notional tax applied and why, any PAYE cap restriction and carry-forward, and the split between cash expected and tax discharged. The entitlement points that decide whether an accrual is supportable sit on the same schedule. Questions finance directors ask Can we recognise the credit before we have filed? Yes — in the year the R&D was done, provided the claim will be made and the amount can be estimated reliably. Confirm the claim notification position first, because that is the one condition that may already have failed. Our auditor wants the credit netted against R&D costs. Are they right? Under FRS 102 we would push back: the netting option they have in mind belongs to international standards, and UK GAAP’s own rules point the other way. If they hold the view, ask for it in writing and record the policy. Does the accounting treatment affect what we can claim? No. The claim follows the tax rules and the qualifying spend. The accounts only decide how the same amount is presented and when — which moves operating profit, covenant headroom and the tax charge, but never entitlement. Talk it through with a chartered adviser The accounting for the merged credit is where R&D advice and financial reporting meet, and the questions above are best answered by the specialist adviser and the auditor together rather than in sequence. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you want the credit computed and documented so it can be booked with confidence, get in touch, or start with the full R&D tax relief guide. Sources CTA 2009 s1042H — “Expenditure credit to count as taxable receipt”: the claimed credit is brought into account as a receipt in calculating trade profits for corporation tax. CTA 2009 s1042K — the notional tax deduction at step 2, computed at the main rate or, in any other case, the standard small profits rate. CTA 2009 s1042L — subsection (2), surrender of the deducted amount within a group; subsection (3), the balance applied in discharging corporation tax for a subsequent period. No provision for payment in cash. CTA 2009 s1042J — the amount restricted by the PAYE cap added to the credit for the next accounting period. FRS 102 (September 2024 edition), FRC — paragraphs 5.5 and 5.7, requiring one of the statutory profit and loss formats; 2.96, the general prohibition on offsetting income against expenses; 24.3, the scope exclusion for assistance given as reliefs and deductions or determined or limited on the basis of income tax liability; 24.3A, reasonable assurance; 24.4, the performance and accrual model policy choice; 24.5B(a), 24.5C, 24.5E and 24.5F, recognition under each model; 24.5G, the prohibition on netting an asset grant against the asset; 29.7, deferred tax assets recognised only to the extent recovery is probable. The standard contains no reference to the R&D expenditure credit. Amendments to FRS 102 and other FRSs — Periodic Review 2024 (FRC) — the amendment to paragraph 24.3, and Basis for Conclusions paragraph B24.6 recording that the description of government assistance delivered through the corporation tax system excluded from Section 24 was refined. SI 2008/410, Schedule 1 — paragraph 8, the prohibition on setting income off against expenditure; “Other operating income” as item 6 of Format 1 and item 4 of Format 2. IAS 20 Accounting for Government Grants and Disclosure of Government Assistance (IFRS Foundation, 2021 issued standards) — paragraph 2(b), the scope exclusion for benefits determined or limited on the basis of income tax liability, with investment tax credits as an example; paragraph 7, recognition on reasonable assurance; paragraph 29, presentation either as income or deducted from the related expense; paragraph 31, both methods acceptable. ‘Above the Line’ credit for R&D: summary of responses (HM Treasury, December 2012) — Annex A: IAS 12 and IAS 20 identified as the standards to consider; most respondents treating the credit as an investment tax credit outside both; the majority view that the gross credit is recognised above the line with a corresponding entry in the tax line; the government’s conclusion that the fully payable credit can be accounted for above the line under both UK GAAP and IFRS. Research and development tax credits reform: Above the Line (HMRC tax information and impact note) — the policy objective of “a more visible, more certain, and more effective form of R&D relief”. CIRD81450 — CTA 2009 s1308: expenditure recognised as an intangible asset is still deducted when incurred, and relief is not given again on amortisation. Merged scheme & ERIS guidance — the merged credit “liable to Corporation Tax as it is classed as trading income”; the ERIS payable credit “not liable to tax” and worth up to 14.5% of the surrenderable loss; the 186% total deduction. CIRD89705 — RDEC introduced as “a stand-alone credit to be brought into account as a receipt in calculating the profits” of large companies, the architecture the merged scheme carried over. --- # R&D tax credits under FRS 105, IFRS and FRS 101 URL: https://www.limestonegrey.com/rd-tax-relief/accounting-treatment-frs-105-and-ifrs/ Description: What changes when the reporter is a micro-entity, an IFRS group or an FRS 101 subsidiary: the caption, the netting option, and the deferred tax answer. R&D tax relief •13 min read R&D tax credits under FRS 105, IFRS and FRS 101: where the treatment differs from FRS 102 MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The answer is the same in outline under every UK framework: the merged R&D expenditure credit is income above the line, ERIS sits in the tax line, and no accounting standard names either of them. Three things change. A micro-entity using FRS 105 books the credit to a caption called Other income and cannot recognise deferred tax at all. An IFRS reporter has an option UK GAAP does not offer: it may deduct the credit from the R&D expense rather than show it as income. And an FRS 101 subsidiary applies IFRS recognition and measurement but, in our view, cannot use that netting option, because its accounts are Companies Act accounts. Everything the frameworks share — why the credit is above the line, when to recognise it, what lands in the tax charge — is on our guide to accounting for the merged credit under FRS 102. This page states only what differs. Which framework changes what? Framework | Merged credit presented as | Netting against R&D costs | Deferred tax on the notional tax FRS 105 (micro-entities) | Other income | Not available | Prohibited outright FRS 102 Section 1A (small) | Other operating income | Not available, in our view | Probable-recovery test FRS 102 (full) | Other operating income | Not available, in our view | Probable-recovery test FRS 101 (IFRS subsidiaries) | Other operating income, or the IAS 1 equivalent | Not available, in our view | Probable-recovery test, IAS 12 wording Adopted IFRS | Other income, or netted | Permitted | Probable-recovery test, plus disclosure How does FRS 105 change the answer for a micro-entity? In five ways, and one of them closes an argument the other frameworks leave open. The caption is different. The micro-entity profit and loss account has eight lines: turnover, other income, cost of raw materials and consumables, staff costs, depreciation and other amounts written off assets, other charges, tax, profit or loss. There is no “other operating income” heading, so the credit goes to Other income. The balance sheet says less. The micro format shows current assets as a single figure, with no debtors caption, so the amount recoverable from HMRC is recognised but never shown on its own line. Keep the split between cash expected and corporation tax discharged on your own working papers. Development costs cannot be capitalised. FRS 105 prohibits recognising an internally generated intangible asset and requires research and development spend to be written off as incurred. That removes the choice FRS 102 reporters have to settle — credit to income in the year of the spend, or spread over the life of the asset it funds. With no asset, there is nothing to spread. Grant accounting applies more directly. FRS 102 puts assistance delivered through the tax system outside its grant section altogether, so the treatment there is reached by analogy. FRS 105 has no such exclusion, and no choice of grant model either. The destination is the same — income in the year of the spend — but a micro-entity has less to argue about how it got there. And deferred tax is prohibited outright — the standard says so in one sentence. So the question that occupies loss-makers under every other framework, whether the notional tax withheld from a payable credit is an asset or just part of this year’s charge, does not arise. It is part of the charge. The micro-entity minimum accounting items are presumed by the Companies Act to give a true and fair view, so nothing obliges the company to say where the credit went. That saves work, at the cost of visibility: a lender or a buyer reading the filed accounts sees a figure for Other income and no way to tell how much of it is the credit. Where the figures drive someone else’s decision, give them a schedule. More claimants sit inside the regime since the thresholds rose. A company now qualifies if it meets two of three conditions — turnover not more than £1 million, a balance sheet total not more than £500,000, and not more than 10 employees. The first two figures were £632,000 and £316,000, and the new ones apply to financial years beginning on or after 6 April 2025. After a company’s first financial year, meeting the conditions or ceasing to meet them changes its status only if it happens two years running. Size is not the only gate: a company whose accounts are consolidated into group accounts cannot use the micro-entity provisions at all, and there are other exclusions besides. Do small companies under FRS 102 Section 1A do anything different? Not on recognition or measurement. Section 1A governs presentation and disclosure only; every other requirement of FRS 102 still applies, so the credit is recognised at the same time, for the same amount, in the same place. Disclosure is what falls away: a small entity is not specifically required to give the disclosures in the rest of FRS 102, and Section 1A’s own minimum list does not reinstate them. That includes the government grant disclosures, which the credit only ever borrowed by analogy in any case. The accounts must still give a true and fair view, and the standard says a small entity may need one of those disclosures anyway where the item is material. So where the credit moves operating profit, an accounting policy note earns its place. IAS 12 or IAS 20 — which applies to an IFRS reporter? Neither, directly. IAS 20 excludes government assistance available in determining taxable profit or determined or limited by reference to income tax liability, and gives investment tax credits as an example. IAS 12 says outright that it does not deal with the methods of accounting for investment tax credits. The credit falls into the gap between them, and IAS 8 then requires management to develop a policy by judgement, referring first to standards dealing with similar and related issues. That gap was mapped before the credit existed. HM Treasury’s 2012 response to the “above the line” consultation names both standards, records a majority of respondents treating the credit as an investment tax credit outside both, and concludes that a fully payable credit could still be presented above the line under UK GAAP and IFRS alike. No accounting standard has named the credit since, in UK GAAP or IFRS. Can an IFRS reporter net the credit against R&D costs? Yes, and it is the one place where IFRS and UK GAAP genuinely part on the face of the profit and loss account. IAS 20 lets a grant related to income be shown as income, separately or under a general heading such as Other income, or deducted in reporting the related expense; both methods are acceptable. Apply IAS 20 by analogy and the netting option comes with it. FRS 102 offers no equivalent choice, in our view, and our FRS 102 guide sets out the residual argument the other way. Two companies with identical claims can therefore report different operating profits and different R&D costs. Netting suppresses the gross R&D expense, which matters wherever that figure is itself reported — a segment note, an R&D-spend ratio quoted to investors, a covenant. Choose deliberately, disclose the choice, and hold it. Why does an FRS 101 subsidiary lose that option? Because FRS 101 accounts are Companies Act accounts, not IAS accounts. FRS 101 applies IFRS recognition, measurement and disclosure with a set of exemptions, but statements prepared under it must comply with the Companies Act and the Large and Medium-sized Companies and Groups Regulations, and must follow the company law formats. Those regulations prohibit setting income off against expenditure, and supply “other operating income” as the caption. A subsidiary may adapt the formats and present under IAS 1 instead, but the prohibition on offsetting survives the adaptation, so the netting option does not come back with it. So a group can net the credit in its consolidated IFRS accounts while its UK trading subsidiary shows the same credit gross in its FRS 101 accounts. Same recognition, same measurement, different face of the profit and loss account. That is our reading rather than a published rule, so settle it when the group reporting pack is designed, not at the subsidiary audit, and record the policy in both sets of accounts. What happens to the notional tax under IAS 12 versus FRS 102? Under FRS 105, nothing: there is no deferred tax, so the notional deduction is part of the tax charge. Under FRS 102 and IAS 12 the recognition threshold is the same in substance: a deferred tax asset is recognised only to the extent that recovery is probable, and both standards warn that unrelieved losses, or a history of recent ones, are evidence that the profits may not arrive. Disclosure is where they part company. IAS 12 requires disclosure of the amount of the asset and the evidence supporting it, but only where two things are both true: the company has made a loss in the current or preceding period, and using the asset depends on future taxable profits beyond those that reversing taxable temporary differences will already produce. One without the other does not trigger it. FRS 102 has no equivalent requirement, so the IFRS or FRS 101 reporter that recognises an asset on that basis has to show its working. One older argument is worth naming. HM Treasury’s 2012 response records the point that where part of a credit can only be turned into money by a company with a corporation tax liability, that part might belong in the tax line under IAS 12 rather than above it. On our reading the notional tax withheld from a loss-maker’s payable credit is that kind of amount: it can be surrendered to a group company or set against the company’s own corporation tax later, but it is never paid out. An amount held back by the PAYE cap is different — it is added to the next accounting period’s credit and can still be paid in cash. The mainstream treatment puts the notional tax in the tax charge anyway, which is part of why it has held. Does ERIS sit anywhere different? Not in UK GAAP. ERIS sits below the line under FRS 105, FRS 102 and Section 1A alike: the extra deduction never reaches the accounts, and the payable credit, which is not taxed, goes in the tax line — labelled simply Tax in the micro-entity format. An IFRS or FRS 101 reporter has more to think about. ERIS is computed on a surrendered loss rather than on taxable profit, which leaves it in the same gap between IAS 12 and IAS 20 as the merged credit. The tax line there is settled practice rather than a rule, so record the reasoning if the amount is material. Whichever framework applies, the swing in operating profit when a loss-making SME moves between the merged scheme and ERIS is the same, and hardest to explain in micro-entity accounts, where the format offers no note in which to do it. Talk it through with a chartered adviser Framework questions surface late, usually when an auditor asks where a number came from, by which time the presentation is set. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you want the merged scheme credit computed and documented so it can be booked under whichever framework you report in, get in touch. Sources FRS 105 (September 2024 edition), FRC — paragraph 5.3, the micro-entity profit and loss account format, with “Other income” and “Tax”; 4.3, the balance sheet formats showing current assets as a single item; 13.4 and 13.5(a), internally generated intangibles not recognised and research and development expenditure recognised as an expense; 19.2, the only scope exclusions, which do not extend to assistance given through the tax system; 19.3 to 19.10, the accrual model as the only grant model, with no performance-model choice; 24.7, “A micro-entity shall not recognise deferred tax”; 2.43, the prohibition on offsetting income against expenses; 6.2, the limited notes. The standard contains no reference to the R&D expenditure credit. SI 2008/409, Schedule 1, Part 1, Section C — the required formats for the accounts of micro-entities, inserted by SI 2013/3008: profit and loss account items A to H, and balance sheet Format 1 item C, “Current assets”. Companies Act 2006 s384A — the micro-entity qualifying conditions: turnover not more than £1 million, balance sheet total not more than £500,000, not more than 10 employees, two of which must be met; and subsection (3), under which meeting or ceasing to meet the conditions after the first financial year changes a company’s status only if it happens in two consecutive years. Companies Act 2006 s384B — subsection (2)(b), a company whose accounts are included in consolidated group accounts excluded from the micro-entity provisions, and subsection (1), the other exclusions. SI 2024/1303 — regulations 2(2) and 9(3), raising the micro-entity turnover and balance sheet figures from £632,000 and £316,000 for financial years beginning on or after 6 April 2025. Companies Act 2006 s396 — subsection (2A), the micro-entity minimum accounting items presumed to give a true and fair view; and s395, the distinction between Companies Act individual accounts and IAS individual accounts. FRS 102 (September 2024 edition), FRC — paragraph 1A.1, all requirements including recognition and measurement applying to a small entity; 1A.12 and 1A.14, the Small Companies Regulations formats; 1A.17, the disclosure requirements of Sections 8 to 35 not specifically required, subject to any that are relevant to material transactions and needed for a true and fair view; 24.3, assistance given as reliefs and deductions available in determining taxable profit, or determined or limited by income tax liability, placed outside Section 24; 24.4, the performance and accrual model choice FRS 105 does not offer; 29.6 and 29.7, timing differences and the probable-recovery test for deferred tax assets. FRS 101 (September 2024 edition), FRC — paragraph 4A, financial statements prepared under FRS 101 are Companies Act accounts and not IAS accounts under section 395(1), which must comply with the Act and SI 2008/410; 5(b), the recognition, measurement and disclosure requirements of adopted IFRS amended where necessary to comply with the Act; A2.9 and Application Guidance AG1, compliance with the company law format requirements; A2.9A, the option to adapt those formats under paragraphs 1A(1) and 1A(2) of Schedule 1 to the Regulations and apply the presentation requirements of IAS 1 instead. SI 2008/410, Schedule 1, Part 1 — paragraph 8, income may not be set off against expenditure; paragraph 1A(1) and (2), the directors’ power to adapt the formats, and paragraph 1A(3), under which the general rules in Section A of that Part continue to apply so far as is practicable notwithstanding any such adaptation; “Other operating income” as item 6 of profit and loss account Format 1 and item 4 of Format 2. IAS 20 Accounting for Government Grants and Disclosure of Government Assistance (IFRS Foundation, 2021 issued standards) — paragraph 2(b), the scope exclusion for benefits available in determining taxable profit or determined or limited by income tax liability, naming investment tax credits; paragraph 29, presentation as income under a heading such as “Other income” or deducted in reporting the related expense; paragraph 31, both methods acceptable. IAS 12 Income Taxes (IFRS Foundation, 2021 issued standards) — paragraph 4, the standard does not deal with the methods of accounting for investment tax credits; paragraph 34, deferred tax assets for unused tax losses and unused tax credits recognised only to the extent probable; paragraph 35, a history of recent losses as evidence against recognition; paragraph 82, disclosure of the amount and the supporting evidence where both conditions are met — utilisation depends on future taxable profits in excess of those arising from the reversal of existing taxable temporary differences, and the entity has suffered a loss in the current or preceding period. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IFRS Foundation, 2021 issued standards) — paragraphs 10 to 12, developing a policy by judgement where no IFRS applies, referring first to standards dealing with similar and related issues. ‘Above the Line’ credit for R&D: summary of responses (HM Treasury, December 2012) — Annex A, paragraphs A.2 to A.7: IAS 12 and IAS 20 identified as the standards to consider; the majority view that the credit was an investment tax credit out of scope of both; the consensus that a fully payable credit could be presented above the line with a corresponding entry in the tax line; A.5, that an element monetisable only against a corporation tax liability could fall back within IAS 12 — a point made about the reduced payable credit model consulted on, not the fully payable design adopted; A.7, the conclusion that the credit could be accounted for above the line under both UK GAAP and IFRS. CTA 2009 s1042L — subsection (2), surrender of the notional tax deduction to another group member; subsection (3), the balance applied in discharging corporation tax for a subsequent period, with no route to cash; and s1042J — subsection (2), the amount restricted by the PAYE cap added to the R&D expenditure credit for the next accounting period. Merged scheme & ERIS guidance — the merged credit “liable to Corporation Tax as it is classed as trading income”; the ERIS payable credit “not liable to tax”. --- # Auditing the R&D tax credit: evidence and assertions URL: https://www.limestonegrey.com/rd-tax-relief/auditing-the-rd-tax-credit/ Description: What evidence supports an R&D tax credit in the accounts — entitlement, measurement, cut-off, recoverability and going concern, assertion by assertion. R&D tax relief •13 min read Auditing the R&D tax credit: what auditors ask and what a well-prepared claim answers MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards An R&D tax credit in a set of accounts is an estimate that depends on a third party, and it is audited as one. The auditor needs to see that a valid claim exists, that the amount was computed correctly, that it belongs in the period being audited, and that the company will actually receive it. All four answers sit in documents the company should already hold. Audits stall when the claim was prepared as a tax filing and never assembled as an evidence file. Where the credit sits in the accounts, and when it is recognised, is covered in accounting for the merged R&D expenditure credit under FRS 102, with the differences for micro-entities and IFRS reporters in R&D tax credits under FRS 105, IFRS and FRS 101; everything here takes that treatment as read. What is the auditor actually testing? Existence, measurement, cut-off and recoverability, to use working names rather than the standard’s own, with going concern and subsequent events alongside them where the amounts are material. ISA (UK) 500 sets the general requirement of sufficient appropriate evidence, and for an R&D credit that evidence is almost entirely documentary, because HMRC does not confirm claims: it processes them, pays most of them, and checks afterwards. Cash received can be confirmed from the bank and the company’s HMRC account; entitlement cannot be confirmed by anyone outside the company, so the strength of its own file decides how much comfort the balance can carry. Is there a valid claim at all? Four gates decide it, and a claim can pass every technical test and still fall at one of them. The claim notification. A first-time claimant, or a company that has not claimed in the three years ending with the notification deadline, must have told HMRC within six months of the end of the period of account. Miss it and there is no claim for the year, whatever the technical merits. The requirement runs from accounting periods beginning on or after 1 April 2023; earlier periods had none. The evidence is HMRC’s submission reference and a copy of what was notified. The Additional Information Form. Mandatory with every claim, and it has to reach HMRC before or on the same day as the return, with the form sent first where both go the same day. Where the return arrives ahead of it, HMRC writes to say it is removing the claim. The evidence is the form as submitted, not a draft. Entitlement. The company must be within the charge to corporation tax and carrying on a trade the R&D relates to. The accounting period fixes which regime is open; within the current one, which scheme applies turns on the company’s own position, and the scheme decides where the benefit lands. Merged RDEC is above the line; ERIS sits within the tax charge. Going concern, in its statutory sense. A separate tax condition gates the cash under the merged scheme and the claim itself under ERIS, and it is not the test the auditor is applying. The conditions are on who can claim R&D tax relief; how it interacts with the audit is dealt with further down. Behind those gates sits the substance: a named competent professional who can explain the advance sought and the uncertainties resolved. A claim with nobody identified would struggle under a compliance check, which feeds straight into recoverability. Is the amount right? The figure in the accounts is rarely the gross credit, and the gap is where most measurement queries begin. A merged-scheme credit of 20% of qualifying expenditure passes through seven steps in a fixed order before any of it becomes cash. It discharges the period’s own corporation tax first, then absorbs the notional tax deduction, then loses anything above the PAYE cap. Only after that does it reach corporation tax for other periods, any surrender the company elects to make to a group member, and the company’s other debts to HMRC. What survives all seven is paid. Two companies with identical qualifying spend can end up carrying very different debtors. Three points repay attention. The rate for the period. Rates never follow the filing date. The April 2023 changes follow the date the expenditure was incurred, so an old-scheme period straddling that date uses two sets of figures; the merged scheme and ERIS follow the date the accounting period began. A company amending an older return is using that year’s figures. R&D tax relief rates by year has the series. The PAYE cap. £20,000 plus three times the company’s relevant PAYE and national insurance liabilities, with the £20,000 reduced proportionately where the accounting period is shorter than twelve months. Establish first whether the cap applies at all: a company that creates or manages its own intellectual property through its own employees, and spends little with connected parties, is outside it altogether. Where it does, check the short-period reduction was made. Short periods are where cap errors cluster. The notional tax. For a loss-maker this is withheld from the payable amount, so the cash figure and the accounting figure part company. Whether it is charged in the year or carried as an asset is the judgement our FRS 102 guide sets out, and the audit needs the working rather than the answer. One computation should answer all three points, and where that reconciliation does not exist the audit is being asked to build it. Is it in the right period? Cut-off here is a question about the underlying expenditure rather than about the claim. The credit belongs to the year the R&D was done, and the recognition question is dealt with on the FRS 102 page. What the audit needs is evidence that the spend falls inside the period: payroll records for the staff claimed, purchase ledger entries for consumables and subcontractors, and apportionments with a stated basis rather than a round percentage. The recurring trap is a claim built months later from a project timeline rather than from the ledger. Work spanning the year end then contributes costs from both sides of it, and the claim summary hides the error because it is organised by project. Will the company actually receive it? This assertion carries the most judgement, and it is ISA (UK) 540 territory, because the estimation uncertainty here comes from outside the company entirely. Three things bear on it. First, enquiry risk: HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. Second, payment is not approval — HMRC can enquire after paying, within the statutory time limit, so cash received before the audit report settles recoverability but not the risk of later clawback. Third, the cash can fall short of the credit itself. That last point has two separate causes. HMRC need not pay at all while the return is under enquiry, though an officer may still pay a provisional amount, and need not pay while the company’s own PAYE or national insurance for the period is unpaid. Separately, and before payment is reached, the credit is applied against the company’s other debts to HMRC, VAT included, so arrears anywhere on the tax account reduce what arrives. Testing recoverability means looking at the whole tax account, not just the claim. Whether any of that warrants a provision turns on the specific claim rather than on the base rate, and the claim file is what makes that judgement possible. Where a compliance check is already open the position is no longer general risk but a live dispute, which our guide to HMRC R&D enquiries describes. What if the cash forecast depends on the credit? Then two separate going-concern questions are in play, and they are easily confused. The first is the auditor’s own, under ISA (UK) 570. That evaluation covers the same period management used for its own assessment, and where that runs to less than twelve months from the date the accounts are approved, the auditor has to ask management to extend it. The second is the tax condition gating payment, which looks at whether the latest published accounts were prepared on a going concern basis, and whether they say that basis holds only because of an entitlement or expected entitlement to the relief. That test has a hard edge the accounts cannot soften: a company in administration or liquidation is not a going concern for this purpose at all. Read those together and the circularity appears. A forecast whose only route to solvency is the R&D credit is close to the case the tax rule is aimed at, and accounts saying so in terms can put the payable amount at risk under the merged scheme, and the claim itself under ERIS. Settle it before signing rather than after. Timing compounds it. HMRC’s published aim is to pay 85% of payable tax credits within 40 days, or to contact the company within that time — and a letter asking questions meets the aim as fully as a payment does. A forecast assuming receipt on a particular date is assuming something neither the company nor its advisers control; how long an R&D tax credit takes to arrive covers what else can slow it. What happens between the year end and the audit report? For an R&D credit the list is short: the claim being filed, an agreed figure that differs from the accrual, receipt of the money, an enquiry letter, or a change in the company’s going-concern position. All of those fall inside ISA (UK) 560, which covers events between the date of the financial statements and the date of the auditor’s report, and facts that come to light after it. The last of them matters twice, because it bears on the accounts and on entitlement to the payment. What can management representations do here? Less than they are sometimes asked to. Written representations are audit evidence, but ISA (UK) 580 is explicit that they do not provide sufficient appropriate audit evidence on their own about any of the matters they deal with. A representation that the directors consider the claim valid does not stand in for the notification, the AIF or the competent professional’s account. They do useful work on matters only management can attest: that the claim will be made, that all HMRC correspondence has been disclosed, and that the staff apportionment basis has been described completely. What should the claim pack hand the auditor? The claim pack’s schedule is described on our FRS 102 page. What matters for the audit is whether each figure can be tested and each gate evidenced: Qualifying expenditure analysed by cost category and by project, every figure reachable from payroll and the purchase ledger, with the staff apportionment basis stated precisely enough to re-perform. The notional tax and any PAYE cap restriction set out as workings rather than results, so the amount withheld and the amount carried forward can each be agreed. Evidence the procedural gates were cleared: the claim notification reference where one was required, and the AIF as submitted. The competent professionals, named, with the technical account of the advance sought and the uncertainties resolved. HMRC correspondence to date, including anything that might be a subsequent event. None of that is prepared for the audit; it is what a defensible claim holds anyway. Where it exists the credit clears quickly. Where it does not, the queries tend to surface entitlement problems that cost far more than an audit delay. Talk it through with a chartered adviser Audit queries on an R&D credit are best answered from the file the claim was built on, not from a reconstruction assembled once the questions arrive. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you are preparing for an audit and want the claim documented so it answers these questions on sight, get in touch, or start with our R&D tax relief guide. Sources ISA (UK) 500 (Updated September 2025), Audit Evidence (FRC) — paragraph 1: the standard “explains what constitutes audit evidence in an audit of financial statements, and deals with the auditor’s responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence”. ISA (UK) 540 (Revised December 2018) (Updated September 2025), Auditing Accounting Estimates and Related Disclosures (FRC) — the auditor’s responsibilities for accounting estimates, and estimation uncertainty as the concept that scales the work required. ISA (UK) 560 (Updated September 2025), Subsequent Events (FRC) — subsequent events defined as events occurring between the date of the financial statements and the date of the auditor’s report, and facts that become known to the auditor after that date. ISA (UK) 570 (Revised September 2019) (Updated September 2025), Going Concern (FRC) — the auditor’s responsibilities relating to going concern; paragraph 13-1(a), requiring the auditor’s procedures to cover the same period as management used for its own assessment, and paragraph 14-1, requiring the auditor to ask management to extend an assessment that covers less than twelve months from the date of approval of the financial statements to at least twelve months from that date. A further revision, ISA (UK) 570 (Revised March 2026), applies to audits of financial statements for periods beginning on or after 15 December 2026. ISA (UK) 580 (Updated September 2025), Written Representations (FRC) — paragraph 4: written representations “do not provide sufficient appropriate audit evidence on their own about any of the matters with which they deal”. Merged scheme & ERIS guidance — “The rate of R&D expenditure credit under the merged RDEC scheme is 20%”, and the PAYE cap stated as £20,000 plus 300% of the company’s relevant PAYE and National Insurance contributions liabilities. CIRD112100: merged scheme payment steps — the seven steps from discharge of the period’s corporation tax through notional tax, the PAYE cap, other periods, group surrender and other liabilities to the amount payable, and the conditions on payment. CIRD80525: practice note for ISBC and WMBC — “Our aim is to pay 85% of payable tax credits within 40 days or contact you regarding the claim within 40 days”; the exclusions from that aim; and the statement that a decision to pay does not prevent an enquiry within the statutory time limit. CTA 2009 s1042I — the seven steps in their statutory order: corporation tax for the accounting period, the notional tax deduction, the excess over the PAYE cap, corporation tax for any other accounting period, group surrender, any other liability of the company to pay a sum to HMRC, and the amount paid to the company. CTA 2009 s1112B — the PAYE and NIC cap: £20,000 plus three times the company’s relevant PAYE and NIC liabilities, with the £20,000 proportionately reduced for an accounting period of less than 12 months, and the signpost on the face of the section to the cases where there is no cap. CTA 2009 s1112E — no cap at all where the company is creating or managing intellectual property the greater part of which, by value, it creates, with that activity wholly or mainly carried out by its own employees, and its connected-party externally provided worker and contractor expenditure does not exceed 15% of its qualifying expenditure. CTA 2009 s1112H — where the return is under enquiry the amount “does not have to be paid to the company”, but an officer “may make a payment on a provisional basis”; outstanding PAYE or NIC liabilities for the period likewise remove the obligation to pay, with no provisional payment provided for in that case. VAT is not among the conditions in this section; other HMRC debts are dealt with earlier, at step 6 of the calculation in s1042I. CTA 2009 s1112F and s1112G — the going concern condition on the payable amount, and the definition: latest published accounts prepared on a going concern basis, with nothing in them indicating that basis was adopted only because of an entitlement or expected entitlement to the relief. Section 1112G(2) adds that a company in administration or liquidation is not a going concern. CIRD191000: going concern — HMRC’s guidance on the condition and its effect under each scheme. FA 1998 Schedule 18, paragraph 24 — the enquiry window: twelve months from delivery of the return where it was filed on time. Where the return was filed late, or where the company amends it, the window instead runs to the next 31 January, 30 April, 31 July or 31 October following the first anniversary of that delivery or amendment. For a company in a group other than a small group the twelve months run from the filing date. Tell HMRC that you’re planning to claim R&D tax relief — the notification deadline of six months after the end of the period of account, the three-year test that exempts recent claimants, and the application to accounting periods beginning on or after 1 April 2023. Additional information you must submit before you claim R&D tax relief — the form must reach HMRC before or on the same day as the Company Tax Return, must be sent first where both go on the same day, and the claim is rejected and removed from the return where the return arrives ahead of it. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 17% of claims checked in 2023-24, and HMRC’s description of the trade-off in post-payment checks. --- # Which R&D scheme applies? Merged RDEC, ERIS or old rules URL: https://www.limestonegrey.com/rd-tax-relief/which-scheme-applies/ Description: Which R&D scheme applies depends on when your accounting period began, then your profit and R&D intensity. A clear decision guide with current rates. R&D tax relief •7 min read Which R&D scheme applies to your company? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The R&D scheme that applies to your company depends first on when your accounting period began. Periods beginning on or after 1 April 2024 fall under the current system: the merged scheme for most companies, or Enhanced R&D Intensive Support (ERIS) for loss-making, R&D-intensive SMEs. Periods that began before 1 April 2024 remain under the old SME and RDEC schemes, and many can still be claimed by amendment until the last standard deadlines in late March 2027. Which scheme applies Position depends on when the accounting period begins, tax position and R&D intensity. The 30% ratio includes connected companies. Start with the accounting period, not the calendar The test is the date your accounting period began. A 12-month period that began on 1 March 2024 sits entirely under the old schemes, even though eleven of its twelve months fall after the changeover date. Two common year ends show how this plays out. A company with a 31 March year end moved to the current schemes with its year beginning 1 April 2024. A company with a 31 December year end stayed on the old schemes for the whole of 2024, and its first current-scheme period was the year beginning 1 January 2025. The decision in three questions 1. Did the accounting period begin on or after 1 April 2024? If no, the old SME and RDEC schemes apply to that period. Skip to the section below and see our guide to backdated R&D claims. If yes, continue. 2. Is the company profitable or loss-making for the period? If profitable, the merged scheme applies: a 20% taxable credit worth 15p per £1 at the 25% main corporation tax rate, 16.2p where the 19% rate applies, and as low as 14.7p where marginal relief applies. If loss-making, continue. 3. Is the company an SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure? An SME here means fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less, with connected and partner enterprises aggregated. The 30% intensity ratio compares relevant R&D expenditure with total relevant expenditure, broadly the trading costs in the accounts for the period, not just the R&D ones. Connected companies count on both sides of the calculation. If yes to both parts, ERIS applies: a payable credit worth up to 26.97p per £1 of qualifying spend. If no to either, the merged scheme applies, and as a loss-maker you receive 16.2p per £1 in cash. The same outcome in one table: Accounting period began | Position | Scheme | Worth per £1 of qualifying spend On or after 1 April 2024 | Profitable | Merged scheme | 15p at the 25% rate; 16.2p at the 19% rate; as low as 14.7p in the marginal relief band On or after 1 April 2024 | Loss-making, not R&D-intensive or not an SME | Merged scheme | 16.2p, paid in cash On or after 1 April 2024 | Loss-making SME, relevant R&D at 30% or more of total relevant expenditure | ERIS | Up to 26.97p, paid in cash Before 1 April 2024 | Any | Old SME scheme or old RDEC | Historical rates, table below To put numbers on your own position, use the claim value calculator; to test the 30% threshold properly, including connected companies, use the ERIS intensity calculator. What are the current schemes worth on £100,000 of spend? On the standard worked example of £100,000 of qualifying expenditure: the merged scheme pays a £20,000 gross credit, worth £15,000 net at the 25% corporation tax rate and £16,200 at the 19% rate or for loss-makers, and as little as £14,700 where marginal relief applies. ERIS pays £100,000 x 186% x 14.5% = £26,970 in cash, assuming sufficient losses. The gap between £16,200 and £26,970 is why the intensity test deserves attention before year end, not after it. What if your period began before 1 April 2024? The old schemes apply, and they can generally still be claimed by amending the tax return for two years from the end of the period of account. The last standard deadlines for old-scheme periods fall in late March 2027. After that, the old schemes are history. The historical rates, for reference only: Scheme | Expenditure incurred | Historical mechanics Old SME scheme | Before 1 April 2023 | 130% additional deduction; losses surrenderable for a 14.5% credit Old SME scheme | From 1 April 2023 | 86% additional deduction; 10% surrender rate, or 14.5% if R&D-intensive Old RDEC | Before 1 April 2023 | 13% taxable credit Old RDEC | From 1 April 2023 | 20% taxable credit Do not rely on these rates for current periods; a surprising amount of online content still presents them as live. The old SME scheme also restricted claims where a project was grant-funded or otherwise subsidised, a rule the current schemes have abolished. If a grant is in your history, read grant funding and R&D tax relief before assuming anything. Whether a backdated claim is worth making, and how the mechanics work, is covered in backdated R&D claims and the March 2027 deadline. The claim notification trap One requirement cuts across every scheme and silently kills claims. For accounting periods beginning on or after 1 April 2023, a company claiming for the first time, or one that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. Miss the window and the claim is invalid, even where the amendment deadline is still open. There is a wrinkle that matters for backdated claims: a claim that reaches a return only by an amendment made on or after 1 April 2023, for a period that began before that date, does not count as a prior claim for this test, so a company that thinks of itself as an existing claimant may still need to notify. The full detail is in the R&D claim notification requirement. Can a company move between ERIS and the merged scheme? Yes, and many will. The scheme is determined period by period: profitability and the 30% intensity ratio are retested each year, so a company can claim ERIS one year and the merged scheme the next as its finances change. A one-year grace period can protect a company that dips below 30%, but it has to have been earned. The company must have met the intensity condition in its most recent prior twelve-month period and obtained relief for it; eligibility without a claim banks nothing. Two limits on that relief catch people out: a merged scheme claim does not bank the grace period, and where the prior period began before 1 April 2024 it counts only if it ended on or after 1 April 2023, against a threshold of 40% rather than 30%. The intensity condition in detail sets out both. Beyond that, the movement is automatic. For companies near the boundary, this is a forecasting question. The difference is £10,770 of cash on every £100,000 of qualifying spend (£26,970 against £16,200), so decisions that shift the intensity ratio, such as scaling a commercial team, have a tax cost worth knowing about in advance. Get the scheme right before anything else Every downstream judgement, from rates to grant interactions to the treatment of subcontractors, depends on which scheme and which period you are in. It is also one of the first things HMRC looks at: around one in six R&D claims was checked in 2023-24, HMRC’s latest published figure, and a claim built on the wrong scheme fails at the first hurdle. Our guide to HMRC R&D enquiries explains what a check involves and how defensible preparation differs. Not sure the work qualifies at all? The eligibility checker runs the four tests in about a minute, and says so plainly when the answer is no. If you would rather settle the question in one conversation, talk it through with a chartered adviser. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser. Get in touch, or start from the full R&D tax relief guide. Sources Merged scheme & ERIS guidance — the current schemes: the 20% merged credit and ERIS. CIRD91900 — the R&D SME thresholds: fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less. R&D relief for SMEs — the old SME rates of 86% / 10% / 14.5%, for accounting periods beginning before 1 April 2024. Work out your R&D tax relief — the historical RDEC rates of 13% then 20%, and SME rates. Merged scheme RDEC reform (policy paper) — the merged scheme applying from 1 April 2024. --- # R&D tax relief in groups and connected companies URL: https://www.limestonegrey.com/rd-tax-relief/groups-and-connected-companies/ Description: Each group company claims in its own return. How connected-party costs are capped, who claims intra-group work, and where the credit can be surrendered. R&D tax relief •13 min read R&D tax relief in groups: connected companies, surrender and who claims MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Every company in a group makes its own R&D claim, in its own corporation tax return. There is no group claim. What group structure changes is everything around that claim: whether the company qualifies for the more generous of the two schemes, how much of what it pays a sister company counts, who owns the claim when one group member does the work for another, and where the credit or the loss lands. Get one of those wrong and the cost is rarely a smaller claim. It is usually the whole claim, in one company. These rules apply to accounting periods beginning on or after 1 April 2024. Does a group make one R&D claim or several? Several: one for each claiming company. The claim sits in that company’s own return for its own accounting period, supported by its own Additional Information Form. The claim notification rule works the same way, and this is where groups lose claims. A company claiming for the first time, or one that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of its period of account. That history belongs to the company, not the group: a sister with a decade of claims behind it counts for nothing when a newly incorporated development subsidiary comes to claim, and a notification filed in the parent’s name does not cover the subsidiary. How does group structure change who can claim? In two places. The size test comes first — the SME definition, run on the group rather than the company. A linked enterprise’s staff, turnover and balance sheet are added in full and a partner enterprise’s in proportion, as set out in how linked and partner enterprises affect an R&D claim and what happens when a company outgrows the definition. Under the merged scheme the answer changes nothing, because the rate is the same at every size. The size test decides one thing: access to ERIS, and with it the difference between 26.97p and 16.2p per £1 of qualifying spend. Intensity is the second test, and it aggregates differently. A company connected with any other company runs the 30% intensity ratio on the combined figures of itself and every company connected with it, on both sides of the fraction. Payments and other transfers of value between them come out of the total, so an intra-group recharge is not counted twice — but qualifying R&D expenditure still counts on the R&D side even where it takes that form, so the exclusion moves the ratio one way only: up. Our ERIS intensity calculator runs the sum. Three features catch groups out. Connected companies count wherever they are based, so an overseas trading company with heavy non-R&D costs dilutes a UK development company’s ratio. Connection on a single day counts for the whole period, so a subsidiary bought or sold mid-year stays in the numbers. And where a connected company’s accounting period does not line up with the claimant’s, its expenditure has to be attributed to the claimant’s period on a reasonable basis, applied consistently. One relief softens the year of a deal: a company that met the condition and claimed for its most recent prior twelve-month period keeps ERIS for the period after, whatever the aggregation now shows. Restructuring in order to pass is not a plan. A transaction attributable to arrangements whose main purpose is to obtain relief the company would not otherwise get, or more of it, is ignored. Which company claims when one group company does the R&D for another? The contract decides, exactly as it does between unrelated parties. Where a group company commissions work and, when the contract was made, intended or contemplated that R&D of that sort would be undertaken, that company holds the claim; where it did not, the company doing the work claims in its own right. The test is the one set out in contracted-out R&D: who claims?, and an intercompany agreement gets no easier treatment than a third-party one. Groups have one option unrelated parties do not. Two companies in the same group can jointly elect that, for R&D one of them contracts out to the other, the company contracting it out is treated as ineligible — which moves the claim to the company doing the work. It stays eligible for everything else it does. A second limb matters for shared-service groups: where work done under the contract is R&D seen from the customer’s side but would not be R&D in the contractor’s own hands, it is treated as the contractor’s R&D. The election is made by written notice to HMRC, which expects it before or with any claim that depends on it. Either company can revoke it, and it ends once they are no longer in the same group. There is no limit on the number, and “same group” means the group relief group — the 75% relationship already tested for loss surrenders. The alternative is consolidation upwards: where the parent commissioned the work and contemplated the R&D, the claims gather there instead. The failure case is leaving it open, so that two companies each assume the claim is theirs. How much of a payment to a connected group company qualifies? Not 65%. Where the parties are connected, the flat percentage gives way to a cost test, which can land above or below it. The qualifying amount is the lower of what was paid and the contractor’s own relevant expenditure on the work — broadly its staffing, software, data licence, cloud and consumables costs, and only where the work is done in the UK or meets the overseas conditions. The margin on an intercompany recharge is stripped out. Pricing the recharge at arm’s length does not rescue it: HMRC’s manual says plainly that transfer pricing rules do not displace the limits on subcontracted R&D between connected persons. Externally provided workers follow the same shape, where you, the provider and the business that actually employs the workers are all connected: the claim is capped at that business’s staffing cost of supplying them. Which costs qualify sets out both tests in full. The Patent Box treats the same intra-group payment differently again: it enters the nexus fraction as connected-party R&D and dilutes the relief on the patent profits — see how R&D tax relief affects the Patent Box nexus fraction. A timing condition sits alongside the limit, and mixed year ends are where it fails. The supplying company must have brought the whole payment and all of its relevant expenditure into account under generally accepted accounting practice for a period ending no more than twelve months after the claimant’s period of account. Where a subsidiary’s accounts run well behind, that window can close before the figures exist — and a payment that fails does not fall back to 65%; it drops out altogether. The rule runs the other way too. Two unconnected parties can jointly elect to be treated as connected, replacing the flat 65% with the lower of the payment and the contractor’s relevant expenditure — worth having wherever that cost base exceeds 65% of the price. The election covers all payments under the same contract, and must reach HMRC in writing within two years of the end of the accounting period in which the contract was entered into. It is irrevocable, and the deadline cannot be extended. Can the credit be moved to another group company? Under the merged scheme, yes, in two ways. The credit runs through a fixed sequence. It first discharges the claimant’s own corporation tax for the period. Then the notional tax deduction comes off, the PAYE cap is applied, and what survives clears corporation tax for the company’s other periods. Whatever is left at that point can be surrendered to any other member of the group. The notional tax withheld earlier in the sequence can be surrendered as well. Both surrenders behave the same way in the recipient’s hands. They discharge that company’s corporation tax and nothing more — they never become cash there. Anything the recipient cannot use comes back to the claimant: the credit continues down the remaining steps, and the notional tax is carried forward against the claimant’s own corporation tax in a later period. Where the two companies’ accounting periods do not coincide, the amount is apportioned across the overlap. The surrender does not affect either company’s profits or losses, and is not a distribution. Since 26 November 2025, where the two companies have agreed the surrender and the payment does not exceed the credit surrendered, that payment sits outside the corporation tax computation on both sides. A group can therefore settle a surrender in cash without a tax consequence, provided it pays no more than the credit it received. The ERIS credit is different. It is paid to the company that claimed it or set against that company’s own corporation tax, and there is no route to surrender it to a group member. Group relief or the ERIS credit? A loss can do one job or the other, and a loss-making R&D-intensive subsidiary inside a profitable group has a real decision to make. The loss available to surrender for the ERIS credit is what remains after other relief. It is reduced by any loss already surrendered as group relief, and by relief the company obtained or could have obtained against its own other profits of the same period — so intercompany interest income quietly shrinks it whether or not a claim is made. The arithmetic is worth setting out. Take £100,000 of qualifying R&D spend in a company with no other income, and assume it is a loss-making SME that passes the intensity test, that the PAYE cap does not bite, and that a sister company has profits taxed at the 25% main rate. The 86% additional deduction produces a trading loss of £186,000. Surrendered as group relief to that sister, the loss saves £46,500 of tax there. Surrendered instead for the ERIS credit, it produces £26,970 of cash, free of tax, in the company that did the work. Group relief is the larger number, but only if the recipient genuinely pays at the main rate, the group pays the loss-maker for the surrender, and the loss-maker can wait. For a pre-revenue subsidiary funded round by round, cash in its own account on a known date can be worth more than a bigger saving elsewhere. The loss can also be split, part group-relieved and part surrendered for the credit. Model it before the returns are filed, because filing the returns is what fixes the choice. How does the PAYE cap work across a group? The PAYE cap of £20,000 plus 300% of relevant PAYE and National Insurance cannot be read off one company’s payroll. Where a connected company supplies externally provided workers or performs contracted-out R&D, its PAYE and NIC attributable to that work is added to the claimant’s figure, and the supplier deducts the same amount from its own. The payroll counts once, in the claiming company. Two further adjustments move the figure. The £20,000 is reduced proportionately where the accounting period is shorter than twelve months. And where a company claims under both current schemes for the same period, the cap on its merged-scheme credit is reduced by any ERIS credit it obtained. The exemption from the cap has a group-shaped trap. Its second condition limits connected-party subcontractor and externally provided worker spend to 15% of the claimant’s qualifying expenditure, and a holding company claiming for R&D performed by a group service company that employs all the staff fails that limb comfortably, whatever its intellectual property position. Is money from a parent company a grant? No. The subsidised expenditure rules were abolished for accounting periods beginning on or after 1 April 2024, so neither a grant nor intragroup funding reduces a claim; grant funding and R&D tax relief covers what replaced them. The live question is who claims. Money from a parent is either funding, and the subsidiary claims for its own work, or payment under a contract for R&D, and the contracted-out rules apply. The paperwork behind the transfer settles which. Talk it through with a chartered adviser Group claims fail on structure as readily as on science: a missed notification for one subsidiary, a recharge claimed at 65% when the connected-party limit applied, a surrender nobody made. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If more than one company in your group incurs R&D spend, get in touch before the next year end. Sources CTA 2009 s1045ZA — the intensity ratio taken across the company and every company connected with it; subsection (6)(a) excludes a payment or other transfer of value to a connected company from total relevant expenditure, while subsection (7)(a) keeps it in relevant R&D expenditure; connection on any day in the period. CTA 2009 s1044 — the ERIS conditions, including the one-year grace for a company that obtained relief for its most recent prior twelve-month accounting period having met the intensity condition in that period. CIRD123000: ERIS intensity condition — connected companies counted “whether based in the UK or elsewhere”, and attributing a connected company’s expenditure to the claimant’s period where the periods differ. CTA 2009 s1112I — transactions attributable to arrangements with a main purpose of obtaining or increasing relief are disregarded. CTA 2009 s1142(5)–(6) — the group election treating the company contracting R&D out as ineligible, and deeming the contractor’s activity to be R&D; written notice, revocable, ending once the companies are no longer in the same group. CIRD164000: the group election — HMRC’s guidance that the election is made before or with the claim that depends on it, with no limit on the number made, and that consolidating claims in the customer is the alternative. CTA 2009 s1140A — “same group” for R&D means the same group as for group relief under Part 5 of CTA 2010. CTA 2009 s1134 — the connected contractor limit of the lower of the payment and the contractor’s relevant expenditure, the cost categories that expenditure covers, its restriction to R&D undertaken in the UK or qualifying overseas R&D, and the twelve-month accounts condition. CTA 2009 s1135 — the joint election to be treated as connected: made for all payments under the same contract, by written notice within two years of the end of the accounting period in which the contract was entered into, and irrevocable. CTA 2009 s1129 and s1130 — the externally provided worker limit, which applies only where the company, the staff provider and each staff controller are all connected, capping the claim at the aggregate relevant expenditure of each staff controller; and the equivalent election. CIRD138000: contractor payments — 65% for unconnected contractors, the connected-party limit, and the two-year election deadline with no provision for extension. CIRD192000: connected persons — connection takes its meaning from CTA 2010 s1122, and transfer pricing rules do not displace the limits on expenditure for subcontracted R&D between connected persons. CTA 2009 s1042I — the seven steps: the notional tax deduction at step 2, the PAYE and NIC cap at step 3, and group surrender of the remaining credit at step 5. CTA 2009 s1042L — surrender of the notional tax deduction to a group member, and carry-forward against the company’s own corporation tax where it is not surrendered. CTA 2009 s1042N — apportionment across overlapping accounting periods, any remainder treated as not surrendered so that it returns to the steps in s1042I or to the carry-forward in s1042L(3), and the surrender affecting neither company’s profits or losses and not being a distribution. Finance Act 2026 s31 — a payment made under an agreement about the surrender, not exceeding the credit surrendered, is neither taken into account in either company’s profits nor treated as a distribution; the amendment applies to payments made on or after 26 November 2025. CTA 2009 s1055 and s1056 — the ERIS surrenderable loss reduced by losses surrendered as group relief and by same-period relief obtained or obtainable against the company’s own profits. CTA 2009 s1054, s1060 and s1061 — the ERIS credit is paid to the claimant company or applied against that company’s own corporation tax, and is not income of the company for tax purposes; Chapter 2 provides no group surrender. CTA 2009 s1112B — the cap itself: £20,000 plus three times relevant PAYE and NIC liabilities for payment periods ending in the accounting period; subsection (3), the proportionate reduction of the £20,000 for a short period; subsection (4), the cap reduced by any Chapter 2 credit where both reliefs are claimed for the period. CTA 2009 s1112C — connected companies’ PAYE and NIC added to the claimant’s cap figure and deducted from the supplier’s. CTA 2009 s1112E — the 15% limit on connected-party subcontractor and externally provided worker spend in the cap exemption. CTA 2009 s1142D — payment of the credit to the company rather than a nominee, with an exception for a connected person. CTA 2009 s1042C and s1142A — the claim notification requirement, the three-year claim history ending with the last day of the notification period, and the notification period ending six months after the end of the period of account. FA 1998 Sch 18 para 83B — an R&D claim is made by being included in the claimant company’s own company tax return. --- # Qualifying R&D: the four-part test HMRC applies URL: https://www.limestonegrey.com/rd-tax-relief/qualifying-rd/ Description: A project, an advance, a scientific or technological uncertainty, the competent professional test — what each limb requires and where claims fail. R&D tax relief •8 min read What counts as qualifying R&D? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Your work qualifies for R&D tax relief if it is part of a project that seeks an advance in a field of science or technology through the resolution of scientific or technological uncertainty, where a competent professional in that field could not readily resolve the uncertainty. That is the definition in the DSIT Guidelines, and HMRC applies it strictly. HMRC has published its own account of how it reads that definition, and what HMRC’s Guidelines for Compliance expect from an R&D claim sets out where it goes further than the Guidelines themselves. The advance must extend the knowledge or capability of the field itself, not just your company. The project boundary The advance must be in the field's knowledge or capability, not just the company's, and the uncertainty must be one a competent professional could not readily resolve. The definition is narrower than “innovation” and broader than “laboratory research”. Plenty of commercially unremarkable engineering qualifies; plenty of impressive product work does not. This page sets out each element of the test, what falls outside it, and what HMRC expects you to be able to evidence. The four elements of qualifying R&D Every claim must show four things: A project. A defined piece of work with an objective, a start and an end. R&D relief is claimed project by project, not on innovation in general. An advance in science or technology. The project must aim to create new knowledge or capability in the field, or appreciably improve what already exists. Scientific or technological uncertainty. At the outset, it must not have been known whether the aim was achievable, or how to achieve it in practice. The competent professional test. The uncertainty must be one that a professional with relevant expertise could not readily resolve using existing knowledge. The same definition applies whichever scheme you claim under. Which scheme applies to your company depends on your accounting period, size and tax position. Whether your work qualifies does not. What counts as an advance in science or technology? An advance means extending the overall knowledge or capability of a field, not just your own company’s. This is the point most weak claims get wrong. If a solution already exists in the field and was simply new to your business, adopting it is not R&D, however much effort the adoption took. An advance can take several forms: creating a new product, process, material, device or service through scientific or technological change making an appreciable improvement to an existing one, meaning a genuine technical improvement rather than a cosmetic or stylistic change duplicating an existing product or process in a new or appreciably improved way, or where the method behind the original is not publicly known (a competitor’s trade secret, for example) Two further points matter. Commercial novelty is not technological novelty: a product can be first to its market and involve no qualifying R&D at all, because it assembles established technology in a routine way. And failure does not disqualify a project. If the advance was never achieved, the work of attempting it still qualifies; an unresolved uncertainty is often the clearest evidence that the uncertainty was real. What is scientific or technological uncertainty? Uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or readily deducible by a competent professional. If the answer sat in published literature, supplier documentation or standard industry practice, there was no uncertainty, whatever it cost you to find it. Three distinctions keep claims honest: Uncertainty is not the same as difficulty. Work can be complicated, slow and expensive while remaining entirely predictable to an expert. Routine complexity does not qualify. Commercial risk alone does not count. Not knowing whether customers will buy the product, whether the budget will hold or whether a competitor will move first is business uncertainty, not technological uncertainty. System uncertainty can qualify. Combining components that are each well understood can still involve genuine uncertainty, where the field cannot predict whether or how they will work together as a whole. Routine integration, by contrast, does not qualify. Who is the competent professional? The competent professional is someone with the qualifications, knowledge and experience to represent the current state of the art in the specific field of the project. The test runs through their eyes: could such a person readily work out the solution from existing knowledge? If yes, the work is not R&D, however new it felt to the team doing it. In practice, HMRC expects a claim to be anchored in the judgement of a named individual, usually your own senior technical lead. The Additional Information Form requires the senior internal R&D contact to be named on every claim. When we prepare a claim, we interview the competent professional directly, and their account forms the spine of the technical narrative. A claim reverse-engineered from a cost ledger reads that way to an inspector. Where does an R&D project start and end? The R&D project is usually narrower than the commercial project that contains it. It begins when work to resolve the identified uncertainty starts, and it ends when the uncertainty is resolved or the attempt is abandoned. Everything else in the commercial venture sits outside the boundary. That boundary discipline matters in both directions. Work before the uncertainty is engaged (market research, commercial scoping) and work after it is resolved (marketing, user training, routine maintenance and bug fixing) does not qualify. Activities that directly contribute to resolving the uncertainty, such as designing experiments, building test rigs and analysing results, sit inside it. So do qualifying indirect activities, the supporting work that forms part of the project without itself resolving the uncertainty, which the Guidelines treat as R&D in a defined list. Drawing boundaries generously inflates a claim and invites an enquiry. Drawing them precisely is what “defensibly prepared” means. What does not qualify? Work is not R&D just because it was new to your business, hard, or expensive. The recurring non-qualifiers: routine development, configuration and integration using established methods cosmetic and aesthetic changes, however commercially valuable projects whose only uncertainty was commercial: pricing, demand, funding challenges in marketing, management, HR or finance rather than in science or technology work in the arts, humanities or social sciences (the definition covers fields of science and technology only) straightforward adoption of existing technology, including standard implementation of off-the-shelf software None of this makes such work worthless. It simply means the relief was not designed for it, and claims built on it are the ones HMRC’s compliance teams take apart. A worked version of that answer, with the numbers, is example 5 in our R&D tax relief worked examples. What does qualifying R&D look like in practice? Three concept-level sketches, deliberately without client names. Life sciences. A company developing a purification process for a novel biologic finds that published methods do not predict how the molecule behaves at production scale. Yield collapses, and no literature explains why. The structured experimental work to establish process conditions that preserve yield and stability addresses a textbook uncertainty: the field’s knowledge, not just the company’s, has run out. There is more on how this plays out in our life sciences sector guide. Software and AI. A team needs a machine learning system to hit accuracy and latency targets that published architectures cannot meet on the data available. Systematic experimentation with model design, training regimes and data handling can qualify. Fine-tuning a well documented model on a new dataset by following the vendor’s playbook does not. We cover the dividing line in when machine learning development qualifies as R&D, and the wider picture on our software development page. Engineering. A component must meet load, temperature and weight targets in an operating environment for which established materials data does not exist. Standard calculation methods give contradictory predictions, so the team designs a prototype and test programme to establish real behaviour. The iterations, including the failed ones, are the R&D. Our engineering sector guide sets out where these claims stand up. What documentation does HMRC expect? HMRC expects evidence that the uncertainty, the baseline in the field and the systematic work to resolve it were real, ideally recorded while the project ran. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and has more than 500 staff working on R&D compliance, so assume yours will be read critically. The records that carry weight are the ordinary artefacts of real R&D: design documents, experiment logs, test results, version histories, and notes recording why an approach was abandoned. Every claim must also be accompanied by the Additional Information Form, which includes project descriptions covering the advance, the uncertainties and the work done. HMRC also offers a non-binding online qualification checker (launched September 2025), which can help a first-time claimant orient themselves, though it does not bind HMRC and is no substitute for a proper eligibility assessment. If HMRC does open a check into your claim, the quality of this evidence largely decides how it goes. See what to expect from an HMRC R&D enquiry. Where to go next If your projects pass this test, the next question is what expenditure you can include: see which costs qualify for R&D tax relief. For the wider picture, all of our R&D tax relief guides are indexed in one place. Shorter questions are answered in the R&D tax relief FAQ, and the vocabulary is defined term by term in the glossary. If you would rather answer a few questions than read, the eligibility checker applies the same tests in about a minute. Eligibility is rarely a yes or no for a whole company. It is a set of project-by-project judgements, and the honest answer to “do we qualify?” is sometimes “partly”. If you would like a straight answer on your own projects, talk it through with a chartered adviser. A short conversation is usually enough to tell whether a claim is worth pursuing. Sources DSIT Guidelines: meaning of R&D for tax purposes — the advance, uncertainty, competent professional and field-scope tests. CIRD81910: legal status of the Guidelines — the Guidelines apply to periods beginning after 31 March 2023. Check if a project qualifies as R&D — HMRC’s non-binding online qualification checker. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 17% of claims checked in 2023-24 and more than 500 staff on R&D compliance. --- # R&D qualifying costs: staff, subcontractors and software URL: https://www.limestonegrey.com/rd-tax-relief/qualifying-costs/ Description: The six cost categories that qualify for R&D tax relief, the restriction attached to each, and the costs companies most often get wrong. R&D tax relief •9 min read Which costs qualify for R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Six categories of expenditure can be included in an R&D tax relief claim: staff costs, externally provided workers, subcontracted R&D, consumables, software with data and cloud computing, and payments to clinical trial volunteers. Capital expenditure, rent and patent costs do not qualify for R&D tax relief, though capital spending on R&D can instead attract R&D allowances. The categories are fixed by legislation, so the real work of a claim is matching your actual spending to them, and evidencing the apportionments, in a way that withstands an HMRC check. The qualifying cost categories at a glance Category | What it covers | Points to watch Staff costs | Gross salaries, employer secondary Class 1 NIC, employer pension contributions, reimbursed expenses | Apportion by time spent on qualifying R&D Externally provided workers | Agency and staff-provider workers under your direction | 65% of payments to unconnected providers; earnings qualify so far as UK PAYE and Class 1 NIC are accounted for on any part of them Subcontracted R&D | R&D activity you contract out to a third party | 65% for unconnected subcontractors; UK work only by default; who claims depends on the contract Consumables | Materials used up or transformed in the R&D, plus the water, fuel and power it consumes | Apportion utilities where they serve the whole site Software, data and cloud | Software licences, data licences and cloud computing used for R&D | Apportion mixed-use licences and platforms Clinical trial volunteers | Payments to volunteers taking part in clinical trials | Mainly life sciences and pharmaceutical claims Staff costs Staff costs are usually the largest category in a claim. For employees and directors who work on qualifying R&D you can include gross salaries, employer secondary Class 1 National Insurance contributions, employer pension contributions and reimbursed business expenses. Almost nobody spends 100% of their time on R&D, so apportionment is where this category is won or lost. Each person’s costs enter the claim at the proportion of their time spent on qualifying activity, and that proportion needs a recorded, explainable basis: timesheets where they exist, a structured and documented estimate where they do not. A technical director who spent a quarter of the year resolving technological uncertainty and the rest running the business belongs in the claim at a quarter. The apportionment basis is one of the first things HMRC tests in an enquiry. Staff costs for qualifying indirect activities, the supporting work the Guidelines treat as R&D, can be included on the same apportioned basis where the time is specific to the project. Externally provided workers (EPWs) EPWs are workers supplied by a third party, typically an agency, who work under your direction and supervision but are paid by their provider. Where you, the provider and the business that contracts directly with the worker are not all connected, 65% of what you pay qualifies, limited to the part relating to qualifying earnings. Where all three are connected, the 65% does not apply. You claim the lower of what you paid and the staffing cost that contracting business incurred in supplying them, again counting qualifying earnings only. That strips out the provider’s margin, so it beats 65% where the provider charges close to cost and falls short of it where the mark-up is heavy. One condition catches connected groups out. The payment has to appear in the provider’s accounts, and the cost in the accounts of whoever contracts the worker, in a period ending within twelve months of your own year end. Companies with the same year end clear this without thinking about it. Where the dates do not line up, or the cost was never booked, the whole payment drops out — not down to 65%, out. For accounting periods beginning on or after 1 April 2024 there is a further condition: EPW costs qualify only so far as they relate to the worker’s qualifying earnings. Earnings are qualifying earnings where either the staff controller or the company is required to account to HMRC for both income tax under PAYE and Class 1 National Insurance in respect of any part of them. “Any part” is doing real work there. A worker with some UK-payrolled earnings has all their earnings treated as qualifying, so do not strip out a partly UK-payrolled worker who in fact qualifies in full. Overseas contract staff wholly outside UK payroll are excluded, subject to the narrow exception covered below. Subcontracted R&D Subcontractor costs raise two separate questions: how much qualifies, and who is entitled to claim at all. On the first, payments to unconnected subcontractors qualify at 65%. On the second, the current rules turn on what was agreed when the contract was made: the customer claims where it intended or contemplated at that point that R&D of that sort would be done; otherwise the contractor can claim in its own right. Getting this wrong means claiming relief that belongs to someone else. The full analysis, with contract scenarios, is in contracted-out R&D: who claims? Consumables Materials that are used, consumed or transformed in the R&D process qualify: raw materials, lab reagents, prototype components, test batches — the trial runs and scrapped materials that make up much of a manufacturing R&D claim. So do the water, fuel and power consumed by the R&D itself. Utilities usually serve the whole site, so claim a sensible, recorded proportion rather than the full bill. One exclusion matters in practice: materials that end up in something you sell in the ordinary course of business — a prototype sold to a customer, a trial batch that reaches the market — have been outside the consumables claim since 1 April 2015. Output that is scrapped, kept for testing or sold only as waste is unaffected. Trial-scale agriculture shows that split most clearly: R&D tax relief for agritech companies works through seed, nutrient and crop protection apportionment. Where the article was built against a customer order rather than for the R&D, more than the materials is at stake: can I claim R&D tax relief on a prototype that is later sold? works through where the boundary falls. Software, data licences and cloud computing Software used for R&D qualifies, and data licences and cloud computing costs are claimable for accounting periods starting on or after 1 April 2023, which covers every current-scheme claim. Compute for model training, hosted development environments and licensed datasets all belong here. Where a licence or platform serves both R&D and routine operations, include the R&D proportion and record how you arrived at it. Clinical trial volunteer payments Payments to volunteers taking part in clinical trials are a qualifying category in their own right. They arise mainly in pharmaceutical, biotech and medtech claims, where trials are a standard part of development. Trials also raise their own boundary and location questions, particularly when run overseas, which we cover under the overseas restriction below. Which costs fall outside a claim? Some costs never enter an R&D tax relief claim, however central they feel to the work: capital expenditure, including equipment and buildings rent and rates on your premises patent and trademark costs, including the professional fees around them Capital expenditure is worth a second look, because it is excluded from R&D tax relief rather than from tax relief altogether. Capital spending on R&D can attract R&D allowances instead, a 100% capital allowance under the capital allowances rules. The cost of the land itself is excluded, but a building is not: buy a site with a laboratory on it and the price is apportioned between the two; build a new R&D facility and the construction cost qualifies in full. Rent and rates have no such route: they are ordinary trading deductions. One thing looks capital but is not. Revenue R&D spending you capitalise as an intangible asset in your accounts still counts as revenue for these purposes, so development costs sitting on the balance sheet are not shut out of a claim. The claim sits in the period the spending was incurred, though, not in the later years the asset is written down over. The activity boundary matters as much as the category. Spending in a qualifying category still falls out of the claim if the activity itself was not qualifying R&D, for instance production work after the technological uncertainty was resolved. If you are unsure where your project’s boundaries sit, start with what counts as qualifying R&D. The overseas restriction For accounting periods beginning on or after 1 April 2024, subcontracted R&D qualifies only where the work is undertaken in the UK, and EPW costs only so far as they relate to earnings on any part of which UK PAYE and Class 1 NIC are accounted for. There is one exception: qualifying overseas expenditure. It applies where conditions necessary for the R&D (geographical, environmental, social or regulatory, such as a clinical trial population or a regulator’s requirements) are not present in the UK and would be wholly unreasonable to replicate here. Cost savings and workforce availability are expressly excluded as justifications, so cheaper development abroad does not get through. The detail, and what it means for planning, is in overseas R&D costs under the merged scheme. What are qualifying costs worth? Once the qualifying costs are established, the benefit depends on your scheme and tax position. Under the merged R&D scheme, which applies to companies of all sizes, the credit is 20% of qualifying expenditure. £100,000 of qualifying spend gives a £20,000 gross credit, worth £15,000 net at the 25% corporation tax rate and £16,200 where the 19% rate applies or the company is loss-making. Loss-making SMEs whose relevant R&D expenditure is at least 30% of total relevant expenditure can instead claim Enhanced R&D Intensive Support (ERIS), worth up to 26.97p per £1: on the same £100,000 of qualifying spend, £100,000 x 186% x 14.5% = £26,970 as a payable credit, given sufficient losses. If you are not sure which route fits, which R&D scheme applies to your company walks through the decision. For a worked example on real numbers, the Midtec Products case study breaks down a £40,000 claim across staff, agency and material costs. Getting cost capture right A defensible claim traces every figure back to payroll records, ledgers and invoices, with the apportionment basis written down at the time. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and cost questions (apportionment bases, subcontractor status, connected parties) feature in most of the checks we see. Our guide to HMRC R&D enquiries explains what happens when a claim is selected and how prepared claims hold up. For the rules scheme by scheme, all of our R&D tax relief guides are indexed in one place. If you want a view on which of your costs qualify, and in what proportions, talk it through with a chartered adviser. Bring your cost structure and we will tell you plainly what belongs in a claim and what does not. Sources Check what R&D costs you can claim — the qualifying cost categories and the 65% contractor rule. CIRD137000: externally provided workers — the current-regime page: 65% for unconnected providers, the lower-of basis for connected ones, and the qualifying-earnings restriction. CTA 2009 s1132A — subsection (2): earnings are qualifying earnings where the staff controller or the company is required to account to HMRC for both PAYE income tax and Class 1 NICs “in respect of any part of those earnings”. CTA 2009 s1123 — subsection (4): the staffing cost head is secondary Class 1 National Insurance contributions paid by the company. CTA 2009 s1125 — subsection (2): “consumable or transformable materials include water, fuel and power”. CIRD84000: externally provided workers — the equivalent guidance for periods beginning before 1 April 2024. CIRD138000: contractor payments — 65% of payments to unconnected subcontractors. CIRD150500: overseas restrictions, overview — the general rule and the qualifying overseas expenditure exception. CIRD151100: excluded conditions — cost and workforce availability excluded as conditions. CTA 2009 s.1138A — the statutory exception, in force for accounting periods beginning on or after 1 April 2024. R&D tax relief reform changes — data licences and cloud computing qualifying from 1 April 2023. --- # Grant funding and R&D tax relief: the current rules URL: https://www.limestonegrey.com/rd-tax-relief/grants-and-rd-tax-relief/ Description: Grant funding no longer blocks or reduces R&D tax relief. Since April 2024, an Innovate UK grant and a full R&D claim can sit together on the same project. R&D tax relief •8 min read Grant funding and R&D tax relief MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Grant funding does not block or reduce R&D tax relief. For accounting periods beginning on or after 1 April 2024, the subsidised expenditure rules have been abolished: a company can accept an Innovate UK grant, or any other grant, and still claim R&D tax relief on the full qualifying spend of the same project. The state aid planning that surrounded the old rules has largely fallen away with them. One State aid rule does survive, but it is not a grants rule: a de minimis limit on companies registered in Northern Ireland claiming ERIS, which applies whether or not the company has ever held a grant. It is covered below. Most of the contrary advice you will find online describes rules that no longer exist. Does grant funding affect my R&D tax relief claim? No, not for current periods. Under the merged R&D scheme, grant funding is simply irrelevant to the claim: the 20% expenditure credit is calculated on qualifying expenditure regardless of how the project was funded. The same is true of ERIS for loss-making, R&D-intensive SMEs. You do not need to strip grant-funded costs out of the claim, ring-fence the project, or choose between the grant and the relief. In practical terms, that removes the old machinery entirely. There is no subsidised proportion to track, no splitting of one project across two schemes, and no risk that signing a grant offer letter quietly downgrades the tax position of work you have already done. This holds whatever the funding source: Innovate UK, devolved government programmes, charitable foundations, EU schemes. Consortium awards raise a different question — who claims the R&D, not whether it can be claimed — and R&D tax relief for agritech companies works that through for publicly funded consortium projects. For current periods, the source of the money no longer changes the tax analysis. Why does so much advice still say grants restrict claims? Because for years they did, and the internet has not caught up. Under the old SME scheme, which applied to accounting periods beginning before 1 April 2024, subsidised expenditure rules pushed grant-funded costs out of SME relief and into the old RDEC scheme at a lower benefit, and a notified state aid grant (which many Innovate UK awards were) could take an entire project out of SME relief altogether. Those rules generated a decade of articles, adviser checklists and received wisdom, much of which still ranks well in search results and gets repeated by AI tools. If your accountant, your board or an investor believes a grant restricts your claim, they are almost certainly working from the old rulebook. A simple test when reading anything on this subject: if the article does not say which accounting periods it covers, assume it describes the pre-April 2024 position. We look at the practical side, including the errors advisers carry over from the old rules, in Innovate UK grants and R&D tax relief together. Worked example: an Innovate UK grant and a merged scheme claim A company spends £100,000 on qualifying R&D in an accounting period beginning on or after 1 April 2024. An Innovate UK grant covers £60,000 of the project’s costs. Under the merged scheme the grant changes nothing. The full £100,000 of qualifying spend generates a £20,000 gross credit, worth £15,000 net at the 25% corporation tax rate, or £16,200 where the 19% rate applies or the company is loss-making. The company keeps the grant and receives the credit. You can estimate the benefit with our claim value calculator on your own figures. Under the old SME rules, the same facts produced a very different answer, with the subsidised spend relegated to old RDEC and the balance needing careful separation. For current periods that analysis is history. It only still matters for older periods, covered below. Does a grant affect an ERIS claim? No. Enhanced R&D Intensive Support (ERIS) is available to a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure, and grant funding does not affect entitlement. A separate rule applies where a company’s registered office is in Northern Ireland, and it is not a grants rule: it reaches every NI-registered ERIS claimant whether or not the company has ever held a grant, because the extra benefit ERIS gives over the merged scheme is itself the aid being counted. The provisions were substituted by section 29 of the Finance Act 2025 and have effect for claims made on or after 30 October 2024, not on the accounting-period clock the rest of the current rules run on. An NI-registered SME claiming ERIS escapes the overseas restrictions on subcontracted R&D and externally provided workers, but in return that extra benefit is subject to a de minimis State aid limit over a rolling three-year period. Relief above the ceiling is not lost: expenditure the company cannot claim ERIS for can generally be claimed under the merged scheme instead, and a company with no trade in goods and no electricity activities can opt out and claim standard ERIS. The ceilings, the counting period and the opt-out are set out in is R&D tax relief State aid?. Companies registered in Great Britain are unaffected, wherever in the UK they trade — there is no cumulation to manage. For this purpose an SME means a company with fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less, with connected and partner enterprises aggregated. Connected companies also count on both sides of the 30% intensity ratio. A one-year grace period can hold ERIS where intensity later dips, but it has to be earned: the company must have cleared the intensity test in its most recent prior 12-month accounting period and obtained relief for that period. The relief obtained need not have been ERIS: an old SME scheme claim counts too, though those earlier periods ran a 40% threshold and must have ended on or after 1 April 2023. A merged scheme claim does not bank it. For a qualifying company, ERIS is worth up to 26.97p per £1 of qualifying spend: on the standard example, £100,000 x 186% x 14.5% = £26,970 as a payable credit, given sufficient losses. This combination matters most to pre-revenue deep tech companies, from cleantech and energy developers to biotech, exactly the businesses whose R&D runs on grant funding. A grant-funded biotech or robotics company that was told years ago its claims were restricted should look at the position again. What about grant-funded R&D in periods before April 2024? The old rules still apply to old periods. Accounting periods beginning before 1 April 2024 remain subject to the subsidised expenditure rules, and claims for those periods can generally still be made or amended for two years from the end of the period of account, with the last standard old-scheme deadlines falling in late March 2027. If you under-claimed, or did not claim at all, because of a grant, that is worth revisiting before the runway closes: see backdated R&D claims and the March 2027 deadline. There is also a live defence point for old periods. In Collins Construction and Stage One Creative Services, the First-tier Tribunal held that a client’s payment under an ordinary commercial contract did not subsidise the contractor’s R&D, there being no clear link between the price paid and the R&D spend. Neither decision was appealed, and HMRC updated its guidance in February 2025. The old test itself is set out in what counts as subsidised expenditure. Where HMRC has argued that client-funded work was “subsidised” under the old rules, these decisions carry real weight: see HMRC R&D enquiries. Practical points for grant-funded claimants Claim notification still applies. If your company has never claimed R&D relief, or has not claimed in the three years ending with the notification deadline, you must notify HMRC within six months of the end of the period of account or the claim is invalid. Grant recipients making a first claim miss this more often than most, because they assume the grant paperwork covers it. See the R&D claim notification requirement. The grant project and the R&D project are not the same thing. The funder’s project definition follows your application; the R&D claim’s boundaries follow the technological uncertainty. Expect overlap rather than identity, and keep records that let you evidence both. Cash credits are capped by payroll. Both current schemes apply a PAYE and NIC cap of £20,000 plus 300% of the company’s relevant PAYE and NIC, with an exemption where conditions on IP creation or management and low connected-party subcontracting are met. Grant-funded companies with small UK payrolls should check the cap before relying on a projected credit. Grant paperwork helps the claim. A funding application that sets out technical objectives and risks, written before the work began, is exactly the kind of contemporaneous evidence an R&D claim benefits from. If you were told a grant ruled out your claim The rule that produced that advice was abolished for accounting periods beginning on or after 1 April 2024, and the current schemes support exactly the companies the old rules penalised. If you are unsure where you stand, which R&D scheme applies to your company walks through the decision, and the rest of our R&D tax relief guides cover each scheme in depth. For a view on your own funding mix, current periods or old ones, talk it through with a chartered adviser. We will tell you plainly whether there is a claim worth making. Sources Merged scheme RDEC reform (policy paper) — the subsidised-expenditure rules not carried into the merged scheme from 1 April 2024. Merged scheme & ERIS guidance — the current schemes and their rates. CIRD123000: ERIS intensity condition — the 30% intensity test, connected companies and the grace period. CIRD91900 — the R&D SME thresholds: fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less. Finance Act 2025, section 29 — the Northern Ireland provisions substituted into CTA 2009, with effect under section 29(9) “in relation to claims made on or after 30 October 2024”. CIRD125000: ERIS and companies registered in Northern Ireland — the de minimis limit applying to the additional benefit amount of all claims made under NI ERIS, and merged scheme RDEC as the route for expenditure above it. CIRD81650: subsidised expenditure, post-tribunal — commercial contracts are not subsidies under the old rules. --- # R&D claim notification: the six month deadline explained URL: https://www.limestonegrey.com/rd-tax-relief/claim-notification/ Description: First time R&D claimants must notify HMRC within six months of the end of the period of account or the claim is invalid. Who must notify, and by when. R&D tax relief •7 min read The R&D claim notification requirement MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards If your company is claiming R&D tax relief for the first time, or has not made an R&D claim in the three years ending with its notification deadline, you must submit a claim notification to HMRC within six months of the end of your period of account. The rule applies to accounting periods beginning on or after 1 April 2023. Miss the window and the claim is invalid, even where the deadline for amending the tax return is still open. The claim notification window Applies to accounting periods beginning on or after 1 April 2023. The deadline holds even where the tax return amendment window is still open. You may also see this called pre-notification or advance notification. Whatever the name, it is the most unforgiving rule in the R&D regime: the notification itself is a short online form, but there is no way to make it late. To check your own date now, use our claim notification deadline checker. Who must submit a claim notification? Two groups of companies, for any accounting period beginning on or after 1 April 2023: those claiming R&D tax relief for the first time, and those that have not made an R&D claim in the three years ending with the notification deadline. The requirement follows the accounting period, not the scheme. It applies to claims under the current schemes and to backdated claims for periods within its scope alike. If you are unsure which scheme your period falls under, start with which R&D scheme applies to your company. Watch where the three years are measured to: the deadline, not the year end and not today. Because the deadline sits six months after the period of account ends, a past claim ages out of the test sooner than “the last three years” suggests. A company with a 31 December 2026 year end has a notification deadline of 30 June 2027, so only claims made on or after 1 July 2024 exempt it: a claim filed in March 2024 does not, however recent it feels. The shift helps at the other end — a claim made after the year end, during the notification window itself, counts. Companies that have made a claim within that window are outside the requirement. There is one significant exception, covered below: a past claim made by amendment may not count. When is the claim notification deadline? Six months from the end of the period of account. Not six months from the start of the period, and not from the date you file the return. The window itself opens on the first day of the period of account, so a company that knows it will claim can notify well before the year end. Six months after the period ends is the deadline, not the point at which the window opens. The period of account is the period for which you draw up accounts. For most companies it is identical to the corporation tax accounting period, but the two can diverge, for example where accounts cover more than twelve months. The six months always run from the end of the period of account, so where your dates diverge, confirm the correct end date before relying on a diary entry. Changing your year end moves that end date, and shortening it moves the deadline earlier — sometimes to a date that has already passed. What happens to an R&D claim if you change your accounting date works through the long and short periods a change creates. Here is how the deadline falls for common year ends, and where each stood at the time of writing in August 2026. Year end | Notification deadline | Position in August 2026 30 September 2025 | 31 March 2026 | Closed 31 December 2025 | 30 June 2026 | Closed 31 March 2026 | 30 September 2026 | Open 30 June 2026 | 31 December 2026 | Open A company with a 31 December 2025 year end had until 30 June 2026 to notify. If it was in scope and did not notify, no R&D claim can be made for that year, however strong the underlying work. Watch the exact day. The six months are counted from the day after the period of account ends, and the deadline is the last day of that six-month period. A 30 June year end therefore gives 31 December (the six months run 1 July to 31 December), while a 31 December year end gives 30 June. A diary entry that only records the month is how these get missed. What happens if you miss the window? The claim for that period is invalid, entirely. The amendment deadline for the tax return does not rescue it: a company can be comfortably within the two-year amendment window and still have no claim, because a valid notification is a precondition of claiming and cannot be filed late. HMRC has no discretion to accept a late notification and there is no appeal route: where a notification was required and is missing, HMRC removes the R&D claim from the return as an error. The rule bites hardest on start-ups. The earliest development years usually carry the heaviest qualifying spend and the deepest technical uncertainty, and they are precisely the years founders spend building rather than reading tax legislation. By the time R&D relief reaches the top of the list, the window on the most valuable period is often already shut. We set out how companies fall into the notification trap, and how to avoid it. One consolation: the test is applied period by period. Missing the window for one accounting period does not poison later ones, so a company that has lost a year can still protect the next. The same rule also operates silently on backdated claims, where it has already extinguished claims for periods people assume are still open. There is one narrow, closed exception. HMRC published guidance in autumn 2024 that it later corrected, and it operates an administrative easement for the companies caught in the interim: where the claim notification period ended between 8 September and 30 November 2024, and the company had made a valid claim for a pre-April 2023 period in an amendment submitted between 1 April 2023 and 30 November 2024, HMRC will allow the R&D claim despite the missing notification. If your deadline fell in that window, have the position checked before writing the period off — our deadline checker flags affected dates automatically. Why might a past claim not protect you? Because a claim that reaches a return only by an amendment made on or after 1 April 2023, for a period that began before that date, does not count as a prior claim for this test. A company whose only recent claim went in as, say, a 2024 amendment adding relief for its 2022 year end is treated as if it had not claimed at all, and must notify for new periods. This wrinkle catches companies that consider themselves established claimants. If any of your recent claims went in by amendment rather than in an original return, check the position before assuming you are exempt. What should you do now? Act on whichever of these applies: Year end approaching or recently passed. Confirm whether you are in scope and diary the deadline immediately. The deadline checker gives you the date in seconds. Undecided about claiming. Our approach is to notify wherever a claim is realistically in prospect. Losing the option costs far more than the notification. Deadline already missed. Take advice before writing everything off. Other periods may still be open, and the next window can be protected. Notification is the first of three procedural steps in every claim: the notification where required, the Additional Information Form with every claim, and the CT600 itself. Every other date in a claim — the filing date, the two-year claim window, the enquiry window and the discovery long-stops — is derived in R&D tax relief deadlines. Getting the procedure right matters because around one in six R&D claims was checked in 2023-24, HMRC’s latest published figure; our guide to HMRC R&D enquiries explains what that involves and how to respond. Talk it through with a chartered adviser Deadlines in this area do not move, and there is no late route once one has passed. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Settling the notification question is part of how every engagement starts, so the option to claim is protected before anything else is discussed. If your year end has passed, or is coming, and the notification question is unresolved, get in touch and we will settle it quickly. For the wider picture, start with our R&D tax relief guide. Sources Tell HMRC you plan to claim — the six-month notification window and the three-year test. SI 2023/813: claim notification & AIF regulations — the statutory content requirements for notification. CIRD183000 — the three-year test’s reference point, the amendment rule, and the autumn 2024 administrative easement. --- # R&D tax relief deadlines: every date explained URL: https://www.limestonegrey.com/rd-tax-relief/rd-tax-relief-deadlines/ Description: Every R&D claim deadline derived from the statute: notification, filing, the two-year claim window, enquiry and discovery, with three worked examples. R&D tax relief •11 min read R&D tax relief deadlines: every date, from the legislation MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Every deadline in an R&D claim is set by statute, and almost none of them run from the same date. The notification runs from the end of your period of account. The tax return runs from the end of the accounting period. The claim itself runs from the end of the period of account again, but over two years rather than six months. HMRC’s enquiry window runs from the day the return arrives, and discovery from the end of the accounting period. Three different anchors, which is why these dates get rebuilt wrongly from memory. The short version, for a company with an ordinary twelve-month year: notify within six months of the year end; file the Additional Information Form before or with the claim; deliver the return twelve months after the year end; make or amend the claim within two years of the year end. HMRC’s enquiry window then closes twelve months after the return arrives, and the period can still be reopened by discovery for four years after it ends, on limited grounds — longer if anything went wrong carelessly or deliberately. The rest of this page takes each date from the legislation and works three sets of accounts through it. Which date does each deadline run from? Two dates do the work. The period of account is the period your accounts cover. The accounting period is the period your company tax return covers, and it can never run longer than twelve months. For most companies the two are identical. Draw up accounts for longer than twelve months and they part company at once: one set of accounts, two accounting periods, two returns, two claims. Notification and the claim window are fixed by the period of account. The tax payment date and discovery run from the accounting period. The filing date runs from the accounting period but is pushed out where the accounts end later. So a change of year end moves some of these dates and not others, and shortening a set of accounts can move the notification deadline into the past. What happens to an R&D claim if you change your accounting date works through what a long or short period does to a claim. When must you tell HMRC you intend to claim? Within six months of the end of the period of account. The window opens on the first day of the period of account and closes on the last day of the six months following the accounts, so a 30 June year end gives 31 December and a 31 December year end gives 30 June. Getting the exact day right matters: there is no late notification. The requirement applies to accounting periods beginning on or after 1 April 2023, and catches two groups: companies claiming for the first time, and companies that have not made an R&D claim in the three years ending with the notification deadline. Those three years are measured to the deadline, not to the year end. Our guide to claim notification sets out who is in scope and the narrow exceptions; the notification checker returns your date. Where the accounts run longer than twelve months, one deadline covers every accounting period inside them. HMRC’s own worked example takes accounts for 1 January 2024 to 30 June 2025, with accounting periods ending 31 December 2024 and 30 June 2025, and gives one notification period running from 1 January 2024 to 31 December 2025. A single form protects both periods. Miss it and the claim is invalid, however much of the amendment window is left, and there is no appeal. When is the company tax return due? Twelve months after the end of the accounting period, in the ordinary case. The legislation takes the latest of several dates, and for a company with straightforward twelve-month accounts that first date — twelve months after the accounting period ends — wins every time. Two others matter where the accounts and the accounting period diverge: Accounts of no more than eighteen months. Where the accounts end after the accounting period does, the filing date becomes twelve months from the end of the accounts. A long set of accounts therefore pushes the first return’s filing date out to meet the second’s, and both returns fall due on the same day. A late notice to deliver. Three months from the date HMRC served the notice requiring the return, where that beats every other date. This one reaches dormant and newly registered companies brought into the system late. Corporation tax falls due before the return: usually nine months and one day after the end of the accounting period, or by quarterly instalments for larger companies, which take no deduction for the credit and rise by the tax on it. For a long set of accounts that puts the first period’s tax bill months ahead of the return reporting it. Filing late does not by itself invalidate an R&D claim, but it moves the enquiry window, and not in the company’s favour. How long do you have to make or amend the claim? Two years from the end of the period of account. That is a different clock from the filing date, and it usually runs a year beyond it. Because an R&D claim is made in the company tax return, this is in practice the window for adding relief to a return already filed. How far back you can claim states the rule; backdated claims works through which periods are still open. Accounts drawn up for more than eighteen months run on different rules for both the filing date and the claim window, and need their dates worked out individually. The Additional Information Form must reach HMRC no later than the claim, and that applies to an amendment as fully as to an original return. Order matters where both go on the same day: the form first, then the return. Where the return arrives first, HMRC removes the claim from it. One form per accounting period, so a long set of accounts needs two. The notification is shared; the forms are not. HMRC has a discretion to accept a late claim, exercised only in line with a long-standing published statement of practice. Do not plan around it. What do the dates look like in practice? Three sets of accounts, worked through. The middle column is HMRC’s own long-period example; the right-hand column is a company that shortened its year end from 31 December to 30 September. Each Additional Information Form goes in no later than its claim, one per accounting period; the enquiry row assumes each return is delivered on its filing date, and the discovery row assumes nothing careless or deliberate. Milestone | 12 months to 31 Dec 2024 | 18 months to 30 Jun 2025 | 9 months to 30 Sep 2025 Accounting periods | 1 Jan – 31 Dec 2024 | 1 Jan – 31 Dec 2024, then 1 Jan – 30 Jun 2025 | 1 Jan – 30 Sep 2025 Claim notification window | 1 Jan 2024 to 30 Jun 2025 | 1 Jan 2024 to 31 Dec 2025 | 1 Jan 2025 to 31 Mar 2026 Additional Information Form | One | Two | One Corporation tax due | 1 Oct 2025 | 1 Oct 2025, then 1 Apr 2026 | 1 Jul 2026 Filing date for the return | 31 Dec 2025 | 30 Jun 2026 | 30 Sep 2026 Claim made or amended by | 31 Dec 2026 | 30 Jun 2027 | 30 Sep 2027 Enquiry window closes | 31 Dec 2026 | 30 Jun 2027 | 30 Sep 2027 Discovery long-stop | 31 Dec 2028 | 31 Dec 2028, then 30 Jun 2029 | 30 Sep 2029 Each column carries a trap. In the first, the claim window and the enquiry window close on the same day, so a company that files on its filing date and then amends on that last day hands HMRC a fresh enquiry period running to 31 January 2028. In the second, one notification covers both accounting periods and nothing else is shared: two returns, two Additional Information Forms, two claims, and a tax bill on the first period due nine months before the return reporting it. In the third, shortening the year moved the notification deadline from 30 June 2026 to 31 March 2026 — three months earlier, with no change to the underlying work. How long can HMRC look at the claim? Twelve months from the day the return is delivered, where the return was delivered on time. Being paid does not shorten it — HMRC paying a claim is not approval of it. Three variants change the date: Return delivered late. The window runs to whichever of 31 January, 30 April, 31 July or 31 October first follows the first anniversary of delivery. Filing a day late can hand HMRC up to three extra months. Return amended. The same quarter-day rule applies from the first anniversary of the amendment. A claim added by amendment near the end of the two-year window therefore stays open to enquiry well past it — though an enquiry opened on that footing reaches only the amendment and what it affects, which in practice means the claim. A company in a group that is not a small group. The twelve months run from the filing date rather than the day the return arrived, so filing early buys no protection. Once that window closes, HMRC needs a discovery assessment, and it cannot make one at will. It has to establish either that the loss of tax was brought about carelessly or deliberately by the company or someone acting for it, or that an officer could not reasonably have been expected, on the information made available before the window closed, to be aware of the problem. That second limb is the practical argument for disclosing a claim in full: a complete Additional Information Form, computations that tie to the return, and project narratives matching the work actually done make it far harder for HMRC to say afterwards that it could not have known. The outer limits are four years from the end of the accounting period, six where the error was careless, and twenty where it was deliberate. Where something has gone wrong and the return can no longer be amended, voluntary disclosure is the route back; HMRC R&D enquiries covers what happens inside the window. Which dates are closing now? The old schemes are on a runway. The merged scheme and ERIS apply to accounting periods beginning on or after 1 April 2024, so every earlier period sits under the old SME scheme or old RDEC, and the last standard old-scheme deadlines fall in late March 2027. Each company’s date is set by its own year end, and for most it falls well before that. The notification deadlines close more quietly. Where a period ended more than six months ago its notification window has already gone, and if the company was in scope and did not notify, the state of the amendment window is beside the point. A period that ended within the last six months may still be open: count the six months from the day after the accounts end. Settle notification status for each open period before spending time on anything else. Our deadlines calculator takes your accounting dates and returns every date above; the notification checker covers the one date with no second chance. Talk it through with a chartered adviser Deadlines are the part of an R&D claim with no remedy: nothing here can be argued after the date. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you want your own dates confirmed against your accounting periods and filing history, get in touch. For the wider picture, start with our R&D tax relief guide. Sources FA 1998 Sch 18 para 14 — the filing date for a company tax return: the latest of twelve months from the end of the accounting period, twelve months from the end of the period of account in which that accounting period ends, and three months from the notice to deliver. FA 1998 Sch 18 para 83E — the period within which an R&D claim may be made, amended or withdrawn, and HMRC’s discretion to allow a late claim. CIRD81800 — HMRC’s statement of the claim time limit, that claims are made in the return or an amendment to it, and that the late-claim discretion is exercised only under Statement of Practice 5 (2001). FA 1998 Sch 18 para 83EA — a claim is invalid unless the additional information has been provided no later than the date the claim is made or amended. Additional information you must submit before you claim — one form per accounting period, two where the accounts cover more than twelve months, submitted before or on the same day as the return. CTA 2009 s1142A — the claim notification period: from the first day of the period of account to the last day of the six months following it. CTA 2009 s1042C and s1045A — the notification requirement for the merged scheme and for ERIS, the three-year prior-claim exemption measured to the last day of the notification period, and the rule that a claim or notification for one accounting period covers another in the same period of account. Tell HMRC you want to claim R&D tax relief — HMRC’s worked examples, including the accounts running 1 January 2024 to 30 June 2025 with a notification period ending 31 December 2025. SI 2023/813 — the regulations, in force from 8 August 2023, setting what a claim notification and the additional information must contain. FA 1998 Sch 18 para 24 — the enquiry window: twelve months from delivery for an on-time return, the quarter-day rule for late returns and for amendments, and the filing-date start for a company in a group other than a small group. FA 1998 Sch 18 paras 41 to 46 — the discovery gateway (careless or deliberate conduct, or information not made available to the officer) and the four, six and twenty-year assessment limits. Company Tax Returns — the corporation tax payment date, usually nine months and one day after the end of the accounting period. --- # The R&D Additional Information Form: what it asks and how to file URL: https://www.limestonegrey.com/rd-tax-relief/additional-information-form/ Description: Mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. What the AIF asks field by field, and why no template exists. R&D tax relief •9 min read The R&D Additional Information Form (AIF) MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The Additional Information Form (AIF) is a mandatory online form that carries the substance of your R&D claim to HMRC: the projects, the costs, the responsible people and the agents involved. It has been required, whatever the scheme, for claims made on or after 1 August 2023 — in practice 8 August 2023 — and it must reach HMRC before or with the company tax return (CT600). A claim filed without it is not a valid claim. What is the Additional Information Form? It is HMRC’s standard template for the detail behind an R&D claim. Before August 2023, supporting reports arrived in whatever format the claimant or agent chose, and some claims arrived with no supporting detail at all. The AIF ended that: every claim now presents its projects and costs in the same structure, and everyone who worked on the claim is named. Treat it as the claim itself rather than an administrative wrapper. When HMRC looks at your claim, the AIF is normally the first document read, and the impression it creates shapes everything that follows. What information does the AIF require? Four things. Project descriptions. Each described project must show how the work meets the statutory definition of R&D: an advance in a field of science or technology, sought through the resolution of scientific or technological uncertainty that a competent professional in the field could not readily resolve. The advance must belong to the field, not merely to your company. Our guide to what counts as qualifying R&D sets the definition out in full. Qualifying costs. The expenditure behind the claim, broken down by category: staffing, externally provided workers, subcontractors, consumables, software, data and cloud computing, and payments to clinical trial volunteers. The figures need to reconcile with the claim in the return; the categories themselves are covered in which costs qualify for R&D tax relief. The senior internal R&D contact. A named senior person at the claimant company who is connected to the R&D. This should be someone who can genuinely speak to the work, because HMRC’s questions will be directed here. Every agent. Each agent involved in the claim must be named. Anonymous advisers are no longer possible, which was part of the point: some unregulated agents built businesses on never appearing in the paperwork. HMRC registration for tax advisers who interact with HMRC is required as well, phased in from 18 August 2026, so the naming requirement has real teeth. It also gives claimants a simple due diligence question: ask any prospective adviser whether they are registered with HMRC and whether their name will appear on your form. The AIF service asks for company details (Unique Taxpayer Reference, employer PAYE reference number, VAT registration number, business type or SIC code); contact details, meaning the main senior internal R&D contact responsible for the claim and every agent involved, defined widely enough to catch anyone who advised, analysed costs or helped prepare the technical assessment; the accounting period start and end date, which must match the dates shown in the Company Tax Return; R&D intensity and connected companies where those apply; qualifying R&D expenditure, including the PAYE cap questions and the costs incurred on qualifying indirect activities; then project details, and describing each project — six substantive fields, plus an optional further-information field, repeated for each project described. When must the AIF be submitted? Before or with the CT600, never after. Sequencing is the simplest thing to get wrong: if the return goes in first and the AIF has not been submitted, the claim is defective. Where one adviser prepares the claim and another files the return, someone has to own the sequence. In our engagements that is us: we are registered with HMRC as tax agents and submit both the AIF and the return ourselves, so the sequence does not depend on a handover between advisers. The form has no deadline of its own; it takes the claim’s, which R&D tax relief deadlines derives alongside every other date in the claim. The requirement applies to every claim, including claims added to earlier returns by amendment. A backdated claim submitted today needs an AIF just as a current-year claim does, and the same sequencing rule applies to the amended return. Companies revisiting older periods should settle the notification position at the same time: the two requirements operate independently, and failing either one is fatal to the claim. Is there an AIF template or PDF to download? No. HMRC publishes no downloadable form, no PDF and no specimen. The AIF is an online service reached through the Government Gateway or an agent services account, it cannot be reopened once submitted, and HMRC’s guidance tells you to save a copy of your answers before you send them. In practice that means drafting the project fields and the cost breakdown somewhere they can be edited and reviewed, then transcribing. Anything offered elsewhere as an “AIF template” is a private working document rather than an HMRC form, and a draft built from one still has to answer HMRC’s own six questions. What a completed AIF looks like: a worked example What follows is a worked illustration, not a real claim: Example Coatings Ltd and everyone in it are invented, and the figures are round numbers chosen to hang together. The company claims for two projects, so under the one-to-three rule both are described. This is the larger. The main field of science or technology. Polymer chemistry, specifically the formulation and curing of water-based barrier coatings for flexible food packaging film. The baseline level of science or technology that the company planned to advance. Published water-based barrier dispersions reach useful oxygen barrier only above roughly 4 g/m², and lose most of it once the film is creased: the barrier layer microfractures at the fold. Solvent-based systems hold barrier through creasing at a third of that coat weight. Our own prior formulations sat at the same limit as the published work, which is why they are recorded — as evidence of where the field stops, not where we started. The advance in scientific or technological knowledge that the company aims to achieve. A water-based coating chemistry that retains oxygen barrier after repeated flexing at solvent-system coat weights — an appreciable improvement in what the field can do with water-based dispersions, not merely a formulation new to this company. The scientific or technological uncertainties that the company faced. Two, both open to the industry rather than to us alone. First, whether the crosslink density needed for oxygen barrier can coexist with the chain mobility needed to survive creasing, or whether the two are inherently opposed in a waterborne dispersion: no published work resolves it and no model predicts it from formulation. Second, whether a barrier surviving flexing at laboratory scale survives the shear and drying profile of a production coater. Our Head of Formulation, Dr H. Prosser — doctorate in polymer science, eighteen years in barrier coatings — could answer neither from existing knowledge. The commercial constraints, target price and running on the customer’s existing converting line, are real and are not uncertainties. They appear nowhere in this field. How your project seeks to overcome these uncertainties. Four crosslinker chemistries were tested against a structured matrix of loading and cure temperature, each formulation measured for oxygen transmission rate before and after standardised flex testing. Two were eliminated in the first round; a third passed at laboratory scale and failed at pilot-line shear, which itself narrowed the second uncertainty. The fourth went into three pilot trials at progressively lower coat weights. At the period end the first uncertainty is partly resolved and the second is not, so the project continues. Of the project’s qualifying costs, £9,000 relates to qualifying indirect activities — recorded here, against this field, per HMRC’s instruction. The tax relief you’re claiming and the amount. Merged R&D expenditure credit. Qualifying expenditure attributable to this project, £256,000: staffing £180,000, externally provided workers £42,000, consumable items £28,000, software, data licences and cloud computing £6,000. The second project accounts for the remaining £54,000 of the £310,000 claimed for the period. Read that against the four elements of qualifying R&D and the pattern is plain: the advance measured against the field’s frontier rather than the company’s, the uncertainty put as a technical question with a reason it could not simply be looked up, the commercial pressures named and then set aside, the work reporting what failed as readily as what worked. The form gives the competent professional no field of her own — HMRC invites those details into the optional separate R&D report. None of that is length. The six answers run to about 430 words. Where do AIFs go wrong? Five patterns account for most of the failures we see: The CT600 is filed before the AIF, so the claim fails on sequence alone. Project descriptions read as marketing: they describe a product and its commercial promise rather than the advance in the field and the uncertainties resolved. Project boundaries are drawn around whole development programmes, sweeping routine work into the claim alongside the genuine R&D. The cost figures do not reconcile to the return, or apportionments have no visible basis. The named contact cannot speak to the technical detail when HMRC follows up. Each of these is avoidable, and each is the sort of signal that invites a full HMRC enquiry — HMRC checked around one in six claims in 2023-24, its latest published figure. We collect the wider set in the common mistakes we see in R&D claims. How do we prepare the AIF? From the technical work upwards. That means interviews with your competent professionals, project descriptions written against the statutory definition rather than adapted from marketing copy, and cost workings reconciled line by line before anything is submitted. That order is the one HMRC sets out itself, in the fourteen steps behind its Guidelines for Compliance. The same discipline runs through how we prepare a claim. The named senior contact reviews the full draft before it goes to HMRC: follow-up questions land with that person, and the worst time to read your own project descriptions for the first time is during an enquiry. Every claim is prepared by our specialist team and signed off by a chartered adviser, and every AIF we file names us as agent, as the rules require and as we would want anyway: we stand behind our work, and enquiry support is included in every engagement as standard. The AIF is one of three procedural steps that decide whether a claim exists at all. The others are the claim notification requirement for first-time claimants and the CT600 and CT600L themselves, where the boxes have to agree with everything the form says. Which rules apply to your period depends on your accounting dates, covered in which R&D scheme applies to your company. Talk it through with a chartered adviser If you want your next AIF prepared by a regulated chartered firm, or a second pair of eyes on one already drafted, get in touch. For the wider claim process, start with our R&D tax relief guide. Sources Additional information form guidance — the AIF must reach HMRC before or with the CT600, and a claim submitted without it is not accepted. SI 2023/813: claim notification & AIF regulations — the Additional Information Form regulations, in force 8 August 2023, and the statutory content requirements for the form. --- # HMRC R&D enquiries: what to expect and how to respond URL: https://www.limestonegrey.com/rd-tax-relief/hmrc-enquiries/ Description: An HMRC compliance check asks you to evidence the projects, uncertainties and costs. What an enquiry involves, what HMRC asks for, and why claims fail. R&D tax relief •9 min read HMRC R&D enquiries: what to expect and how to respond MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, with a compliance workforce it put at more than 500 staff dedicated to the relief. An enquiry is a formal compliance check into your claim: HMRC asks for evidence that the projects meet the statutory definition of R&D and that the costs behind the claim are right. Enquiries run for months rather than weeks, and outcomes range from acceptance in full to repayment with interest and penalties. This page sets out the process honestly: what arrives, what HMRC asks, how long it takes and how it ends. It also explains what we do about it. Every LimestoneGrey engagement includes enquiry support as standard: if HMRC opens a compliance check into a claim we prepared, we handle the response as part of the engagement. If a case escalates to a formal review, alternative dispute resolution or beyond, we scope and agree that work with you separately, so the cost of any further work is agreed before it starts, not discovered after it. Our work is concentrated on the correspondence stage; if a case looks like heading to the tribunal we will tell you early and set out the options, including working alongside specialist litigators. We also take over enquiries on claims that other advisers prepared. That work is set out in full on HMRC enquiry defence. How likely is an HMRC enquiry? Far more likely than it used to be. Around one in six claims was checked in 2023-24, and that scrutiny is the deliberate result of a compliance campaign that HMRC’s own figures show working: its estimate of error and fraud in the R&D reliefs fell from 17.6% in 2021-22 to 6.4% in 2023-24 on random-enquiry evidence, with illustrative estimates of 5.3% for the two years since (July 2026 annual report). Over the same period the claimant population changed shape. HMRC’s statistics show claim numbers fell 26% to 46,950 in 2023-24, while the average claim value rose by about a third and total relief fell 2% to £7.56bn. The full series, and what the September 2025 release showed, is in our guide to HMRC’s R&D tax credit statistics. Read those numbers together and the message is plain. Casual claims are leaving the system, the claims that remain are larger and more closely examined, and the checking rate is not a temporary blitz. A claim should now be prepared on the assumption that a compliance officer will read it. What does an R&D enquiry look like, step by step? Five stages, in practice: The opening letter. A compliance check notice, usually with a first list of questions and a deadline for response. Nothing about it is informal, and the early answers frame the whole enquiry. A standard letter that quotes no legislation and demands nothing is a different thing entirely — what an HMRC nudge letter about R&D is, and what to do. Information and documents. HMRC asks for project evidence, cost workings and contracts. Requests can be broad; part of a good defence is agreeing a sensible scope. Testing the technical case. Written questions probing the claimed advance and uncertainties, sometimes followed by a call or meeting with your competent professionals. HMRC’s view. Acceptance, a proposed adjustment, or rejection of the claim, with reasons. Resolution. Agreement, or escalation: a statutory review by an officer not previously involved, and beyond that an appeal to the First-tier Tribunal. How do I appeal an HMRC decision on an R&D claim? sets out each route and the deadline on it. How long does an R&D enquiry take? Months rather than weeks, and you should plan on that basis. There is no fixed timetable. Correspondence moves in rounds, often with weeks between letters, and contested cases can run well beyond a year. While a check is open, any payable credit for the period is unlikely to be paid, so the practical cost is cash flow and management time even when the claim survives intact. The honest conclusion from that: nothing shortens an enquiry as reliably as a claim that was prepared properly in the first place. What does HMRC ask for? The questions track the statutory definition and the cost rules: What advance in a field of science or technology was sought, and why it is an advance for the field rather than only for your company. This is the heart of what counts as qualifying R&D. What the scientific or technological uncertainties were, and why a competent professional in the field could not readily resolve them. Who your competent professionals are, and how they reached their view. How the costs were built up: staffing apportionments, subcontractor contracts, consumables, and the treatment of externally provided workers. Whether the procedure was followed: the claim notification where required, and the Additional Information Form with every claim. How do enquiries end? Three ways. The claim is accepted in full; it is adjusted, with part of the relief disallowed; or it is rejected. Where relief has already been paid and is then disallowed, HMRC claws it back with interest. Penalties are a separate question, and they depend on behaviour. A company that took reasonable care faces repayment but no penalty. Careless preparation attracts penalties on top, and deliberate overclaiming attracts substantially higher ones. The quality and timing of disclosure also matters: coming forward early and cooperating fully reduces the amount. This is one reason to take advice the day the letter arrives rather than after positions have hardened. Why do R&D claims fail under enquiry? The same defects recur: The claimed advance is framed at company level (“new to us”) rather than field level, which fails the statutory definition. Project boundaries take in whole development programmes, so routine work contaminates the qualifying core. No competent professional stands behind the technical narrative, or the named contact cannot answer technical questions. Costs do not reconcile to the accounts, or apportionments have no evidential basis. The procedure failed: a missed notification window or a missing AIF invalidates a claim regardless of technical merit. None of these is bad luck. Each one is a preparation failure, which is also why each one is avoidable. We list the ones we see most often in the common pitfalls in an R&D claim. How does defensible preparation differ? It starts from the definition rather than the spend. Projects are selected because they meet the statutory test; competent professionals are interviewed and their reasoning recorded; the uncertainty is documented as it was experienced, failed approaches included; costs are reconciled to the accounts; and the AIF is written to answer HMRC’s questions before they are asked. The result is a claim we are content to defend, which is the only standard worth preparing to. We say defensible rather than guaranteed, because no honest adviser can promise you an outcome with HMRC. For SMEs that want certainty earlier in the process, two optional HMRC routes exist. First-time claimants can apply for HMRC’s long-standing advance assurance, which covers the whole of a first claim and, where agreed, the company’s first three accounting periods. Since spring 2026 a voluntary Targeted Advance Assurance pilot, announced at the Autumn Budget in November 2025, has run alongside it, giving HMRC’s view on up to two named areas of a claim (mandatory clearances were floated in the consultation but not taken forward, and not ruled out either). We can help you weigh whether either fits your circumstances. HMRC has also offered a non-binding online R&D qualification checker since September 2025: useful as a first sense-check, but it binds no one, and it is not a substitute for a competent professional’s assessment. What if the claim under enquiry was prepared by someone else? We take those on as a standalone engagement: defending enquiries into claims filed by other advisers is an explicit part of our service, and it matters because some of the firms that filed aggressive claims are no longer around to answer for them. The work starts with an honest assessment of the claim as filed: which parts are defensible, which are weak, and which should be conceded. Where a claim is wrong, correcting it early is usually the cheapest available path, because disclosure reduces penalties. As a firm regulated by ICAEW and bound by Professional Conduct in Relation to Taxation, we will tell you the truth about a weak claim rather than charge you to defend the indefensible. We explain the standards a regulated adviser is held to separately. What about old-scheme enquiries? For accounting periods that began before 1 April 2024, under the old SME and RDEC schemes, two First-tier Tribunal decisions shape enquiry defence: Collins Construction and Stage One Creative Services. The tribunals held that commercial contract payments are not, in themselves, subsidies, and that contracted-out R&D under the old SME scheme has no single definitive test. Neither decision was appealed, and HMRC updated its guidance in February 2025. Both have an entry in our register of tribunal decisions. If you are facing an old-scheme enquiry on subsidised or subcontracted expenditure grounds, those decisions matter to your position. They sit alongside the amendment windows covered in backdated R&D claims, and if you are unsure which regime your period falls under, start with which R&D scheme applies to your company. If the letter has arrived, act now An enquiry is winnable, and the opening weeks matter disproportionately: the first response sets the scope, the tone and often the outcome. If you have received a compliance check letter about an R&D claim, whoever prepared it, get in touch and we will give you a straight assessment of where you stand. If you are preparing a claim and want it built to withstand this environment from the start, begin with our R&D tax relief guide. And if no enquiry has arrived but you would like to know how your existing claims would hold up, our free claim review is a confidential second opinion before HMRC ever asks. Either way, enquiry support at LimestoneGrey is included as standard: we handle the response to a compliance check as part of the engagement, and if a case escalates to review, ADR or beyond, we agree that further work with you transparently before it begins. Sources HMRC’s approach to R&D tax reliefs 2023–24 — 17% of claims checked, 500+ compliance staff, and error and fraud figures. R&D tax credits statistics, September 2025 — claim numbers and total support. HMRC annual report and accounts 2025–26 — error and fraud measured at 6.4% for 2023-24, with an illustrative 5.3% for the two years since. Finance Act 2007, Schedule 24 — the careless and deliberate penalty structure for errors. Check if you can apply for advance assurance for your R&D tax relief claim — HMRC’s full-claim advance assurance for first-time claimants. Apply for targeted advance assurance — the 2026 advance assurance pilot. Advance clearances: summary of responses — the consultation outcome behind the pilot. Check if a project qualifies as R&D — HMRC’s online qualification checker. CIRD84250: subcontracted R&D, post-tribunal — the case-by-case factors after the First-tier Tribunal decisions. CIRD81650: subsidised expenditure, post-tribunal — commercial contracts are not subsidies. --- # R&D voluntary disclosure: telling HMRC a claim was too high URL: https://www.limestonegrey.com/rd-tax-relief/voluntary-disclosure/ Description: HMRC runs a disclosure service for overclaimed R&D tax relief. What it involves, what it costs, and why coming forward first costs less than waiting. R&D tax relief •9 min read R&D voluntary disclosure: what to do if a past claim was wrong MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Voluntary disclosure means telling HMRC yourself that a past R&D claim was too high, before HMRC asks. HMRC runs a service built for exactly this. The penalty turns almost entirely on who spoke first. Where a claim was prepared carelessly and the company reports it before HMRC has any reason to suspect anything, the penalty can come down to nothing. Two caveats. Suspecting a claim was wrong is not the same as knowing it was; read properly against the legislation, a shaky-looking claim can prove defensible. And an error is not automatically a penalty: where a claim was prepared with reasonable care, the relief goes back but no penalty arises. That is HMRC’s published position. Should we disclose, or is there a simpler route? Three common situations, and only one is a disclosure. The return can still be amended. An R&D claim lives in the company tax return, so while that return is open to amendment, the correction goes there. The window usually runs for two years from the end of the period of account — the same window set out in backdated claims. HMRC’s guidance says specifically not to use the disclosure service while it is open. It is the cheapest route, so check the date before assuming it has gone. The amendment window has closed. This is what the disclosure service is for: the return can no longer be amended, and there is corporation tax to pay or an R&D tax credit to pay back. HMRC has already opened a compliance check. Then the correction is made through the enquiry itself. Cooperating fully still reduces any penalty, but the disclosure now counts as prompted, which lifts the bottom of the range. Our guide to HMRC R&D enquiries covers that process. Two less common cases sit outside all three. Where the only consequence is an overstated loss — no tax to pay, no credit to repay — email HMRC’s R&D incentives team instead. Where the error is not an R&D overclaim, HMRC’s general disclosure route applies. What does HMRC’s disclosure service involve? An online form, calculations prepared beforehand, and a formal offer of the amount owed. You do not have to warn HMRC of your intentions; the disclosure is the first contact. HMRC asks for the company’s details, the periods involved, the reasons for the inaccuracy, and your calculations of what is owed. Revised computations go with it — the full corporation tax computation for each year, not just the R&D part, and group relief unwinds with it. How many years the disclosure covers depends on the behaviour behind the error: four years from the end of the relevant period where reasonable care was taken, six years where the claim was careless. The form ends with a letter of offer, part of a contract settlement, authorised by a director or anyone else with authority to contract for the company. HMRC then sends a payment reference number, usually within 15 calendar days. Within 30 calendar days it will accept the offer, ask for more information, or refuse it. If the company cannot pay in full, ask for time on the form; HMRC normally wants the full amount within 12 months. One thing to know before you begin. Using the service to disclose that a penalty is due gives up the right to silence under Article 6 of the European Convention on Human Rights, and HMRC can use what you write when it works out penalties. Article 6 also gives you the right to take professional advice first — the sensible order to do these things in. What does it cost? Four things, and they stack. The relief itself. The overclaimed amount goes back — corporation tax not paid, or SME credit or RDEC repaid. One trap catches companies out. Where an adviser took its fee out of the money before passing on the balance, HMRC requires the offer to be the full amount overclaimed. A company that used a percentage-fee adviser repays the money it received and the adviser’s fee on top, whether or not the adviser is still contactable. Interest. Corporation tax carries interest daily from the due date until it is paid, at HMRC’s published late-payment rate. Overpaid credits split at 1 April 2023. For periods beginning on or after that date, interest runs from the day HMRC paid the credit to the day it is repaid. For earlier periods, HMRC charges no interest while it can still open an enquiry. The penalty. This turns on behaviour, and on who spoke first. The percentage applies to the money at stake — the corporation tax underpaid, or the credit overpaid — not to the size of the claim it came out of. The published ranges are: Reasonable care. No penalty, whether the disclosure is prompted or not. Careless, unprompted. 0% to 30% of the overclaim. The only band where a penalty is in principle due but can still come down to nothing. Careless, prompted. 15% to 30%. Deliberate, unprompted. 20% to 70%. Deliberate, prompted. 35% to 70%. Deliberate and concealed. 30% to 100% unprompted, 50% to 100% prompted. A disclosure is unprompted when you tell HMRC before you have reason to believe it has found the error, or is about to. Anything else is prompted. Where a standard HMRC letter has arrived but no enquiry has been opened, the position is arguable rather than settled: what an HMRC nudge letter about R&D is, and what to do sets out the argument and its limits. Where you land inside a range depends on what HMRC calls the quality of disclosure: telling, helping and giving access, scored out of 30, 40 and 30. Those scores do not come off the penalty. They decide how far down the range it falls, and the range still has a floor. HMRC’s own example: a careless error, disclosed after HMRC asked, scoring 70% for cooperation, sits at 19.5% — not at the 15% bottom of the band, and nowhere near nil. Answering fully and quickly moves the number by several points. It does not erase it. Delay costs part of that reduction. Where a company takes three years or more from the date of the inaccuracy to come forward, HMRC usually restricts the reduction to ten percentage points above the bottom of the range. It applies that restriction sooner where the disclosure spans a long stretch of years. For a careless error disclosed unprompted, the restriction turns a possible nil penalty into one of at least 10%. Your own costs. Advisers, and the management time that goes into reconstructing years-old records, which is usually the larger of the two. Correcting an SME claim that should have been RDEC One route can cut the bill substantially, and it is easy to miss. Where a claim was made under the SME scheme when it should not have been, HMRC’s guidance sets out a two-step path: disclose the incorrect SME claim through the service, then submit the RDEC claim for the same period separately to HMRC’s late claims mailbox for consideration. HMRC weighs that claim on its merits and grants nothing automatically, but the difference to the net figure can be large. What if the overclaim was deliberate? Then this service is not the route, and you should take advice first. The service covers errors made carelessly or despite reasonable care. Where the company knew the figures were wrong when the claim was made and chose not to say, the route is the Contractual Disclosure Facility, which operates under Code of Practice 9. It can only be used to admit tax fraud, and where a company is involved HMRC offers it to the individuals responsible. A person admits that deliberate behaviour brought about a loss of tax; in exchange HMRC agrees not to criminally investigate that behaviour with a view to prosecution. The protection holds only for behaviour fully and accurately disclosed. An incomplete admission buys nothing, and the signed letter is admissible in court. Nothing should go in writing to HMRC about a deliberate overclaim before an adviser has read the file. The two labels are narrower than they sound. Careless describes how a claim was put together, not dishonesty. Deliberate means the company knew. Which applies is a question of evidence, and the gap between the bands is wide enough to be worth arguing. Talk it through with a chartered adviser The first conversation costs nothing and commits you to nothing, and our free claim review will tell you whether there is a problem at all. Where there is, quantifying it and preparing the disclosure is a separate engagement from claim preparation, at a fee agreed before that work starts. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Those obligations cut both ways here: we will not defend a claim that cannot be defended, and we will not help you disclose more than you owe. Is coming forward really better than waiting? Yes, and on HMRC’s published structure the gap is wide. Every band above reasonable care has a lower floor when the company speaks first, waiting erodes the reduction for disclosure quality, and interest runs daily throughout. HMRC publishes no figures on how disclosures turn out, so nobody can tell you how a particular case will end. What is documented is the penalty structure, and it rewards going first. Where to start Find out whether there is a problem before HMRC asks. Nothing is admitted by reading your own file: the claim as filed, the projects against the statutory definition, the costs against the records behind them. It takes less time than the worrying does, and it tells you whether you are facing a disclosure, an amendment, or nothing at all. Call 0330 223 4 223 or get in touch. Nothing goes to HMRC on your behalf without your instruction. Sources Tell HMRC if you’ve claimed too much Research and Development (R&D) tax relief — HMRC’s R&D disclosure service: who can use it, when not to, the information and computations required, the 4-year and 6-year period limits, the letter of offer, the 15-day payment reference and 30-day HMRC response, time to pay within 12 months, the gross-not-net rule where an agent deducted fees, the interest treatment by period, Article 6 rights, and the SME-to-RDEC route via the late claims mailbox. CC/FS7a: penalties for inaccuracies in returns or documents — the six penalty ranges by behaviour and disclosure type; no penalty where reasonable care was taken; the telling (30%), helping (40%) and giving access (30%) reductions applied to the span between the minimum and maximum of the range; the restriction to ten percentage points above the minimum where disclosure takes three years or more. CH82470: penalty ranges — the same ranges in HMRC’s Compliance Handbook: careless 30% maximum with a nil minimum unprompted and 15% prompted; deliberate 70% with 20% and 35%; deliberate and concealed 100% with 30% and 50%. Finance Act 2007, Schedule 24 — the statutory penalty structure for inaccuracies, the behaviour categories, and potential lost revenue as the base the percentages apply to. Admit tax fraud to HMRC using the Contractual Disclosure Facility — the route for deliberate behaviour; usable only to admit tax fraud; offered to the responsible individuals where a company is involved; HMRC agrees not to criminally investigate the disclosed behaviour with a view to prosecution, where the disclosure is full and accurate. FA 1998 Sch 18 para 83E and CIRD81800 — the R&D claim time limit of two years from the end of the period of account, and R&D claims being made, amended or withdrawn in the company tax return. Make a voluntary disclosure to HMRC — the general disclosure route for matters other than overclaimed R&D relief. HMRC interest rates for late and early payments — the late-payment rate applied to overdue corporation tax. --- # Backdated R&D claims: how far back and the 2027 deadline URL: https://www.limestonegrey.com/rd-tax-relief/backdated-claims/ Description: Add an R&D claim to a filed return for two years from the end of the period of account. The last standard old-scheme deadlines fall in late March 2027. R&D tax relief •6 min read Backdated R&D claims and the March 2027 deadline MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards You can usually add an R&D claim to a company tax return that has already been filed, by amending the return within two years of the end of the period of account. For accounting periods that began before 1 April 2024, which sit under the old SME and RDEC schemes, the last standard deadlines fall in late March 2027. Whether a backdated claim is still possible depends on more than the amendment window, though: the claim notification rule has already closed the door for many first-time claimants, quietly and permanently. This page covers the windows, the trap, the historical rates, and how to judge whether a backdated claim is worth making. The two-year amendment window Two years from the end of the period of account. An R&D claim is made in the company tax return, so backdating means amending a return already filed, and the standard window runs to the second anniversary of the period end. At the time of writing in August 2026, that means for standard twelve-month periods: Year end 30 September 2024. Amendable until 30 September 2026, so the runway is short. Year end 31 December 2024. Amendable until 31 December 2026. Year end 31 March 2025. Claimable until late March 2027, but check the regime: a period that began on or after 1 April 2024 falls under the current schemes, not the old ones. Exact dates depend on your own accounting dates and filing history, so confirm the deadline for each period rather than working from the pattern. If you are unsure which regime a period falls under, which R&D scheme applies to your company settles it by date. Why does March 2027 matter? Because it is when the old schemes finally close. The merged scheme and ERIS apply to accounting periods beginning on or after 1 April 2024; every earlier period sits under the old SME scheme or old RDEC. The last periods to begin under the old rules ended, for standard twelve-month periods, in late March 2025. Add the two-year claim window and the last standard deadlines fall in late March 2027. After that, no new old-scheme claim can be made through the standard amendment route. Each company’s own deadline is set by its own year end, and for most companies it falls well before March 2027. Treat the March date as the end of the runway, not the date to aim for. How does the claim notification rule kill backdated claims? Silently, and before the merits are ever considered. For accounting periods beginning on or after 1 April 2023, a company claiming R&D relief for the first time, or that has not claimed in the three years ending with the notification deadline, must have submitted a claim notification within six months of the end of the period of account. There is no late route and no appeal. The arithmetic is unforgiving. By mid 2026, every standard twelve-month period still inside the amendment window began on or after 1 April 2023, so the notification regime touches all of them. And because any period worth backdating ended more than six months ago, its notification window has already closed. A first-time claimant with a 31 December 2024 year end had until 30 June 2025 to notify; without that notification there is no claim for the year, even though the return itself can be amended until the end of 2026. The practical consequence is that the runway to March 2027 mainly serves companies with a claim history. There is a wrinkle even for them: a claim that appears in a return only because of an amendment made on or after 1 April 2023, for a period that began before that date, does not count as a prior claim for the three-year test — so making a backdated claim does not by itself remove the need to notify for later periods. What were the old scheme rates? The table below is historical reference only. These rates apply to accounting periods beginning before 1 April 2024 and matter now only for backdated claims and open enquiries. Current claims use the merged scheme or ERIS rates. For the year-by-year detail, including what each rate was worth per £1 of qualifying spend, see R&D tax relief rates by year. Old scheme | Expenditure before 1 April 2023 | Expenditure from 1 April 2023 SME scheme: additional deduction | 130% | 86% SME scheme: payable credit (surrender) rate | 14.5% | 10%, with 14.5% retained for R&D-intensive loss-makers RDEC | 13% | 20% Two features of the old SME scheme deserve particular care in backdated claims. Grant funding and other subsidies could restrict old SME relief, a rule the current schemes have abolished; the contrast is set out in grant funding and R&D tax relief. And the old subsidy and subcontracting rules were contested territory, now shaped by two First-tier Tribunal decisions. Neither decision was appealed, and HMRC updated its guidance in February 2025; they are covered in our guide to HMRC R&D enquiries. When is a backdated claim worth making? When the qualifying spend is material, the evidence survives, and the procedural gates are open. We test four things before recommending one: The gates. Notification status for the period, and the Additional Information Form, which has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023, amendments included. The definition. The work must meet the same statutory test as a current claim: an advance in a field of science or technology, sought through resolving uncertainty a competent professional in the field could not readily resolve. The evidence. Backdating means reconstructing project narratives and cost workings for work finished a year or more ago. If the competent professionals have moved on or the records are thin, defensibility suffers, and HMRC checked around one in six R&D claims in 2023-24, its latest published figure. The economics. The value depends on your tax position and the historical rates above. A claim that clears the first three tests is usually worth making; one that scrapes past them sometimes is not, and we will say so. A backdated claim faces exactly the scrutiny a current one does. Preparing one thinly because the work is old is how enquiries, clawbacks and penalties happen. What should you do before March 2027? Three steps, in order: Map the open periods. List each year end still inside the amendment window and note its deadline. Settle the notification question for each period before investing in anything else, because it decides whether a claim can exist at all. Leave time to prepare properly. A defensible claim needs competent professional interviews, cost reconciliation and a carefully prepared AIF. None of that compresses well into the final weeks before a deadline. Talk it through with a chartered adviser Backdated claims reward early, honest assessment: some are clearly worth making, some are already impossible, and an early view stops you spending time on the ones that cannot succeed. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard, which matters more than usual when a claim revisits an old period. If you think a past year holds a claim, get in touch before the window shortens further. For the wider picture, start with our R&D tax relief guide. Sources CIRD81800: SME claim time limits — the roughly two-year amendment window. Tell HMRC you plan to claim — the six-month notification window that can close a backdated claim. SI 2023/813: claim notification & AIF regulations — the statutory content requirements. Additional information form guidance — the AIF, mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023 — amendments included. R&D relief for SMEs — the old SME rates of 86% / 10% / 14.5%. CIRD89710: RDEC rate — the RDEC rate rising from 13% to 20%. --- # Contracted-out R&D: who claims the relief? URL: https://www.limestonegrey.com/rd-tax-relief/contracted-out-rd/ Description: The customer claims contracted-out R&D only where it intended or contemplated R&D of that sort when contracting. Otherwise it is the contractor's claim. R&D tax relief •7 min read Contracted-out R&D: who claims? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards When one company pays another to carry out R&D, only one of them can claim tax relief on that work, and under the merged scheme the contract decides which. The customer claims where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Where it did not, the contractor claims in its own right. A contractor whose customer carries on no trade within the charge to UK tax — an overseas customer with no UK trade, say — can also claim in its own right; a UK sole-trader customer is within the charge to income tax, so that route does not apply there. Contracted-out R&D: who claims? Contractors serving overseas or untaxed customers can claim in their own right. Contract wording decides real money here. These rules apply to accounting periods beginning on or after 1 April 2024. They replaced an old-scheme position so unsettled that it ended up at tribunal, which still matters for earlier periods and is covered at the end of this page. One regime did not follow them. The Patent Box still applies the pre-April 2024 contracted-out and overseas rules, so a company with patents runs two analyses of the same contracts — how R&D tax relief affects the Patent Box nexus fraction sets out the difference. Why does it matter who claims? The same R&D cannot be claimed twice. If the customer holds the right to claim, the contractor does not, and the reverse. A company that claims relief belonging to the other side of its contract has made an incorrect claim, with the repayment and penalty exposure that follows if HMRC opens an enquiry. The value at stake differs too. A customer claiming contracted-out R&D includes 65% of what it pays an unconnected contractor. A contractor claiming in its own right includes its own qualifying costs (staff, consumables, software and the rest) under the normal category rules. The same project can produce quite different claim values depending on where the right to claim sits. What does “intended or contemplated” mean? The test looks at what the customer had in mind at the moment the contract was made, and it concerns whether R&D of that sort was intended or contemplated, not innovation in some general sense. A customer that commissioned a defined programme of experimental development plainly intended it. A customer that ordered a finished product, priced and specified as a product, with no reference to technical unknowns, generally contemplated no R&D at all. Evidence decides these questions: the contract itself, technical schedules, tender documents, specifications and the correspondence around them. There is not yet a body of tribunal decisions interpreting the new wording, so the strongest position is the documented one. Parties who record at the outset what R&D is expected, and who is to claim it, rarely have to argue about it later. Who claims in practice? Three scenarios The customer commissions the R&D. A medtech company engages a specialist engineering firm to resolve a defined technical problem in its device, with the work described in the contract. When the contract was made the customer intended that R&D of that sort would be undertaken, so the customer claims, including 65% of its payments to the firm. The engineering firm cannot claim relief on that commission. The contractor discovers the R&D. A manufacturer agrees to supply a component against a customer’s performance specification. The customer wanted a part, not a research programme, and nothing in the contract or the negotiations contemplated R&D. Meeting the specification turns out to require the manufacturer to resolve genuine technological uncertainty. The customer neither intended nor contemplated that R&D, so the manufacturer claims in its own right, on its own costs. The customer is outside UK tax. A UK contract research organisation runs a development programme for a US sponsor. The sponsor carries on no trade within the charge to UK tax, so the UK contractor can claim in its own right on the work. This preserves relief for UK companies doing R&D for overseas customers, and it matters enormously for CROs, which we cover in who owns the claim under a CRO contract. The same exception decides who claims when the customer is the company’s own overseas parent, worked through in can a UK subsidiary doing cost-plus R&D for an overseas parent claim? The same route opens where the customer is a body that cannot claim R&D relief at all — a charity, a university or other institution of higher education, a scientific research organisation or a health service body — so a contractor doing R&D for one of them claims in its own right. Publicly funded consortium research raises this most often, and R&D tax relief for agritech companies works through a consortium example. Scenario | Who claims | On what Customer intended or contemplated R&D of that sort at contract | The customer | 65% of payments to an unconnected contractor Customer did not intend or contemplate R&D of that sort | The contractor | Its own qualifying costs under the normal rules Customer not trading within the charge to UK tax | The contractor | Its own qualifying costs under the normal rules How much of a subcontractor payment qualifies? Payments to unconnected subcontractors enter the customer’s claim at 65%. Pay an unconnected contractor £100,000 for qualifying R&D and £65,000 enters the claim, which generates a £13,000 gross credit at the merged scheme’s 20% rate. The credit is taxable, so across a claim the net benefit works out at 15p per £1 of qualifying spend at the 25% corporation tax rate and 16.2p where the 19% rate applies or the company is loss-making. Two caveats. Connected-party subcontracting follows different rules, so do not assume the 65% figure where the parties are connected. Groups and connected companies covers those rules, and the election that lets a group choose which company claims. And for current-scheme periods the work itself must be undertaken in the UK, subject to a narrow exception explained in overseas R&D costs under the merged scheme. What should your contracts say? If you are the customer and you expect to claim, the contract should show that the R&D was in your contemplation when you signed: describe the technical work, reference your development plan or specification, and keep the tender and negotiation papers. If you are the contractor and you expect to claim in your own right, the same documents should support the opposite picture, a commission for an outcome rather than for research. The cleanest arrangements state expressly which party intends to claim R&D relief. Wording does not override reality, and HMRC can test the facts behind any recital, but a contract that matches the facts settles most disputes before they start. What you cannot safely do is leave the question open and let both finance teams assume the claim is theirs. How were the old rules different? For accounting periods beginning before 1 April 2024, the old SME scheme had no single definitive test for contracted-out R&D. That was confirmed by the First-tier Tribunal in Collins Construction and Stage One Creative Services, decisions that were not appealed, and HMRC updated its guidance in February 2025 to reflect them. The updated guidance weighs factors case by case: the contract wording, whether the customer was aware R&D was needed, the contractor’s autonomy over the work, who bore the financial risk, and who kept the intellectual property. The tribunals also confirmed that payments under an ordinary commercial contract are not, in themselves, subsidies, which had been a separate ground HMRC used to restrict old SME claims. This is now enquiry-defence knowledge rather than planning law, but it is live in two situations: HMRC checks into old-scheme claims, and backdated claims for periods still within the claim window, which finally closes in late March 2027. Where does this leave your claim? The question is sharpest in sectors built on layered contracts: in aerospace and defence, the analysis runs prime by prime down the supply chain. Work out which side of the contract you sit on before you count a single cost, because everything else in the claim flows from it. If you are unsure which rules even apply to your accounting period, start with which R&D scheme applies to your company, and our R&D tax relief guides cover the rest of the framework. If you have a contract in front of you and you are not certain who owns the claim, talk it through with a chartered adviser. We will read the contract, give you a straight answer, and put the evidence in place before anything is filed. Sources CIRD163000: ineligible companies — the bodies that cannot claim R&D relief (charities, institutions of higher education, scientific research organisations, health service bodies), so a contractor doing R&D for one of them claims in its own right. CIRD161000: contracted-out R&D — the intended-or-contemplated test and clients outside UK corporation tax. CIRD84250: subcontracted R&D, post-tribunal — the case-by-case factors under the old scheme after the First-tier Tribunal decisions. CIRD81650: subsidised expenditure, post-tribunal — commercial contract payments are not subsidies. Check what R&D costs you can claim — the 65% rule for unconnected contractor payments. --- # Overseas R&D costs: when you can still claim them URL: https://www.limestonegrey.com/rd-tax-relief/overseas-rd/ Description: The restriction on overseas subcontractors and externally provided workers, the narrow exception that survives it, and how to evidence a claim under it. R&D tax relief •6 min read Overseas R&D costs under the merged scheme MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards For accounting periods beginning on or after 1 April 2024, R&D tax relief is restricted to work done in the UK. Subcontractor payments qualify only where the R&D is undertaken in the UK, and externally provided workers count only where their earnings attract UK PAYE and Class 1 National Insurance. Both restrictions share a single narrow exception, qualifying overseas expenditure, and the legislation expressly rules out cost savings and workforce availability as ways through it. Which costs does the overseas restriction apply to? The restriction is written into two cost categories: subcontracted R&D and externally provided workers (EPWs). For subcontracted R&D, the test is where the work is undertaken, not where the contractor is incorporated or invoices from. A payment to a UK-registered contractor whose team does the work abroad fails the test. A payment to an overseas-headquartered group whose people do the work at a UK site passes it. Multi-site providers therefore need their fees split by where the work actually happened. For EPWs, the test is payroll status: the workers must be subject to UK PAYE and Class 1 NIC. Contract staff supplied from abroad and paid outside UK payroll are excluded, however closely they work under your direction. A developer supplied through a UK agency and paid within UK payroll can qualify; the same role filled from an overseas agency’s payroll cannot. The 65% rule for unconnected providers applies on top, as it does for unconnected subcontractors; the categories themselves are set out in which costs qualify for R&D tax relief. Cost category | Default rule | Route in for overseas work Subcontracted R&D | Qualifies only where the R&D is undertaken in the UK | Qualifying overseas expenditure Externally provided workers | Qualify only where subject to UK PAYE and Class 1 NIC | Qualifying overseas expenditure The restriction binds both current schemes. Whether a claim runs through the merged scheme or Enhanced R&D Intensive Support (ERIS), the same UK-only default and the same exception apply. What is qualifying overseas expenditure? Qualifying overseas expenditure is the exception that lets some overseas subcontracting and EPW costs into a claim. It applies where conditions necessary for the R&D are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate here — the statutory bar, and a high one. The legislation gives an open list of what counts, including geographical, environmental or social conditions, and legal or regulatory requirements as a result of which the R&D may not be undertaken in the UK (s1138A(3)(a)). Clinical trials are the flagship example. A trial that needs a patient population which does not exist in the UK, or that a regulator requires to be run in its own territory, meets conditions the UK genuinely cannot supply. Environmental and geographical conditions work the same way: R&D that must be conducted in a climate, terrain or setting the UK does not have can support the exception — an agritech field trial in a climate the UK cannot provide is the textbook case. In every case the condition must be necessary for the R&D itself, and you should expect to show why replicating it in the UK would have been wholly unreasonable. We cover the trials angle in detail in clinical trial costs in R&D claims. Device investigations turn on the same conditions, and R&D tax credits for medtech companies sets out where they fall. What does the exception refuse to accept? Cost and workforce availability. Both are expressly excluded as justifications, and unlike the list of conditions that count, that list of exclusions is closed (s1138A(3)(b)). They are exactly the reasons most companies do R&D abroad. A development team in India at a third of the UK day rate does not qualify. Neither does the argument that suitable engineers or scientists are scarce in the UK, however true it is. If the honest reason for the overseas work is price or hiring, the costs are out. The working distinction is between what the R&D needs and what the business prefers. A patient population that does not exist in the UK is a condition of the science. A site that recruits faster or charges less is a condition of the budget. Only the first can support a qualifying overseas expenditure position. Does the restriction affect older claims? No. It applies to the current schemes, for accounting periods beginning on or after 1 April 2024. Earlier periods follow the old-scheme rules, without this restriction, and many of them remain open to amendment: the last standard old-scheme deadlines fall in late March 2027, as explained in backdated R&D claims. If you are unsure which regime your period falls under, which R&D scheme applies to your company walks through the dates. What does this mean for planning R&D? Three practical consequences follow from the UK-only default. First, location now changes claim value. £100,000 of qualifying spend generates a £20,000 gross credit under the merged scheme, so moving development work from an overseas contractor to a UK one can change the economics of the arrangement, not just the tax paperwork. Run the comparison before contracts are signed, not after year end. Second, contracts and invoices need to show where work is done. Ask providers to identify delivery locations in the contract and to split invoices between UK and overseas work. A single global fee from a multi-site provider leaves you apportioning after the fact, with weaker evidence. Third, if you intend to rely on qualifying overseas expenditure, build the case before the spend. Record what condition the R&D needs, why it would be wholly unreasonable to replicate in the UK, and why the chosen location provides it. A note written at planning stage is worth far more than a justification assembled two years later, and the question of who is entitled to claim contracted-out work at all runs alongside this one: see contracted-out R&D: who claims? Where the counterparty is the company’s own overseas parent rather than a third party, can a UK subsidiary doing cost-plus R&D for an overseas parent claim? takes the same question through a group structure. How does HMRC test overseas costs? Through the enquiry process, and location evidence is an obvious target. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and a claim that includes overseas subcontractor or EPW costs should expect to evidence where the work was done, the payroll status of any workers, and the basis for any qualifying overseas expenditure position. Our guide to HMRC R&D enquiries explains the process and how prepared claims hold up. The rest of the framework is indexed in our R&D tax relief guides. If your R&D crosses borders and you want a clear view of what qualifies, talk it through with a chartered adviser. We will map your arrangements against the rules and tell you plainly what belongs in the claim. Sources Draft guidance: contracting-out & overseas restrictions — the UK-location rule and the qualifying overseas expenditure conditions. Merged scheme RDEC reform (policy paper) — the overseas restriction applying from 1 April 2024. CTA 2009 s1138A — subsection (3)(a), under which “conditions” includes — not means — geographical, environmental or social conditions and legal or regulatory requirements as a result of which the R&D may not be undertaken in the UK; and subsection (3)(b), which excludes conditions relating to the cost of the R&D and the availability of workers. CIRD150500: overseas restrictions, overview — “This list is not exhaustive” for the conditions that count, against “The list of conditions to be disregarded is exhaustive.” --- # R&D tax relief and insolvency: the going concern rules URL: https://www.limestonegrey.com/rd-tax-relief/insolvency-and-rd-tax-relief/ Description: A company in administration or liquidation is not a going concern. What that costs under the merged scheme and ERIS, and what an office-holder can claim. R&D tax relief •12 min read R&D tax relief when a company is in trouble: going concern, administration and liquidation MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards A company in administration or liquidation is not a going concern, and almost everything else follows from that. Under the merged scheme the claim still works, up to a point: the credit is set against corporation tax and other sums owed to HMRC, but no cash is paid, and payment revives only if the company is a going concern again before its claim deadline passes. Under ERIS, the route for R&D-intensive loss-making SMEs, the claim cannot be made at all — and a claim already made is treated as never made if the company loses going concern status before the money arrives. What decides all of this is the date the claim goes in, not the date the spending happened. What counts as a going concern here, and when is it tested? Three conditions, applied to the company on the day the claim is made: its latest published accounts were prepared on a going concern basis; nothing in them indicates that basis was adopted only because of an entitlement or expected entitlement to R&D relief; and it is not in administration or liquidation, here or under a corresponding foreign procedure. The definition and its statutory home sit on who can claim R&D tax relief; what matters here is what the condition costs a company in trouble. Two features do the damage. First, the accounts that count are the latest published when the claim is made, not those for the claim period. Publish a set prepared on a basis other than going concern and every claim made while those remain the latest published accounts is caught, including claims for earlier, healthier years. Publish a later set on a going concern basis and the bar lifts. Second, the condition is circular by design: if the accounts show the going concern basis was adopted only because of an expected R&D credit, the company loses the payment those accounts relied on. The statute says “only”, which matters — a note that rests on the R&D credit alongside other support is not automatically fatal. But the wording of that note is now a tax question, and it is usually written months before anyone thinks of it that way. What happens to a merged-scheme claim if the company is not a going concern? The claim itself stands. Once claimed, the credit runs through seven steps, and the first six work through it in a fixed order. It discharges corporation tax for the claim period. Two deductions then come out — notional tax, and any excess over the PAYE cap. What is left discharges corporation tax for any other accounting period, may be surrendered to a group company, and finally discharges any other sum the company owes HMRC, VAT, PAYE and contract settlements among them. Only step seven, the cash payment, depends on going concern status. So a company that is not a going concern still gets the value of the credit against what it owes. What it does not get is money. For a business heading into a formal process with corporation tax, VAT and PAYE arrears, the merged scheme claim shrinks the debt rather than producing a receipt. How that interacts with set-off once an insolvency procedure has begun is a matter of insolvency law, and one for the office-holder. The payment is reinstated if the company becomes a going concern again on or before the last day it could amend the claim — the ordinary R&D claim window described on backdated claims, not a separate insolvency timetable. A rescue that completes inside the window releases the cash; one that completes after it does not. Why is ERIS harsher than the merged scheme? Because ERIS blocks the claim rather than the payment. A company that is not a going concern may not claim the additional deduction, may not make the pre-trading election, and may not claim the payable tax credit. If it makes a valid tax credit claim and then ceases to be a going concern before payment, the claim is treated as never having been made — although any amount already paid or applied before the change stands. For a pre-revenue company this closes the only door there is. A company that has not started trading cannot use the merged scheme, which requires a trade; its single route is the ERIS pre-trading election. Lose going concern status and there is no R&D relief for the year at all. Whether it meets the 30% intensity condition stops mattering. Can HMRC keep the credit against other debts? Yes, by two routes. The steps above are the first: the credit clears what the company owes HMRC before any cash is paid. The second route catches companies that are still going concerns. HMRC does not have to pay the credit while the company’s return for the period is under enquiry, though an officer may pay a provisional amount. Nor does it have to pay while the company has outstanding PAYE or NIC liabilities for that accounting period. A business in difficulty is very often behind on PAYE, so this is the rule that catches distressed claimants who have done everything else right. Clearing the payroll arrears before HMRC comes to pay is usually the cheaper sequence. What can an administrator or liquidator claim for a period before appointment? Once a liquidator or administrator is appointed, that person becomes the proper officer of the company for tax purposes, and returns and claims for periods before the appointment fall to them. The two roles differ. In a liquidation the liquidator is the only person through whom the company can act at all; an administrator is the proper officer, but others with authority to act for the company are not shut out. What can be claimed follows the same test, applied at the date of the claim — by which time the company is not a going concern. A merged-scheme claim for a pre-appointment period can still be made, and a valid claim discharges liabilities through the first six steps, but nothing is paid at step seven. An ERIS claim cannot be made at all. Beyond that, neither the legislation nor HMRC’s manual addresses office-holders separately. One point needs care. HMRC’s guidance on the pre-April-2024 RDEC scheme contradicts itself: the same page says both that a company in administration or liquidation cannot make a claim to relief, and that the RDEC going concern rule applied only to the step seven payment. For current-scheme periods the statute is clear. For older periods still inside the amendment window, expect to have to argue the point. Filing mechanics need settling early too. Once a formal insolvency process is running — a winding-up order, administration, administrative receivership, a creditors’ voluntary liquidation or a CVA — the company is exempt from mandatory online filing, and HMRC will accept paper or informal returns from the office-holder for any period, including pre-appointment ones. A company merely in difficulty gets no such relaxation, and neither does a solvent members’ voluntary liquidation. The R&D rules are not relaxed to match: the claim must be quantified in the return, the additional information form must reach HMRC no later than the claim, and claim notification, where it was required, had its own deadline long before any appointment. HMRC’s R&D guidance also says returns carrying R&D claims go through the Corporation Tax online service, and nothing published says whether a paper return can carry one. Settle that with HMRC rather than assuming it. Can an R&D credit be assigned to a lender? No. The right to be paid an R&D expenditure credit or an R&D tax credit may not be assigned, and a purported assignment, or an agreement to assign one, is void. The ban applies to assignments made on or after 22 November 2023, with a carve-out for assignments and agreements made before that date, and for later assignments carrying out such an agreement. Nomination is restricted separately. For claims made on or after 1 April 2024 HMRC will generally pay only the claimant company. The exceptions are narrow: a connected nominee, or exceptional circumstances making payment to the company impracticable or inconvenient. For a lender this changes the shape of the asset. A funding structure that works by taking an assignment of the credit, or an agreement to assign one, is void as to that assignment. Payment will not usually reach a third-party funder either, because neither nomination exception is built for one: a funder at arm’s length is not a connected party, and HMRC does not generally treat an ordinary commercial agreement with a nominee as an exceptional circumstance. Whether some other form of security reaches the credit is a question for the lender’s solicitors rather than a tax question. Arrangements written before these rules took effect are worth reading again against them. Does moving the trade to another group company break the condition? There is a carve-out, and it is narrow. Move the trade and the R&D to another company in the same group, and the accounts for the period in which the move happened can still be treated as going concern accounts — but only if the transfer is the sole reason they were not prepared on that basis. Every part of that has to hold. The trade and the R&D must both move, the transferee must be in the same group, and only the accounts for the period in which the transfer happened are protected. HMRC’s examples on that last point sit twelve days apart: a company with a 31 December year end that transfers on 24 December is covered for that year; the same transfer on 5 January is not. A reorganisation that slips past a year end can cost a claim. Who the transferee is matters as much as when. A sale outside the group is not covered. Neither, on the face of it, is the common pre-pack, where the trade goes to a company the transferor is not in a group with at the moment of transfer — and HMRC’s guidance does not say where the group boundary sits for this purpose. Where a transfer is in prospect and an R&D claim depends on it, settle the point before the accounts are signed. What order should a company in trouble do things in? Settle the going concern position first. It decides whether the claim produces cash, a reduction in HMRC debt, or nothing — and it is tested at the date of claim, so file a ready claim before any step that changes the company’s status. Read the draft accounts as a tax document. The going concern note and the basis of preparation are conditions of payment now, not just disclosure. Treat the credit as cash only when it lands. A claim is not a receivable a board can spend, and payment timing is outside the company’s control — more so if the return is enquired into. Check the procedural gates early. Notification and the additional information form can permanently close a claim that would otherwise succeed. Talk it through with a chartered adviser Distress shortens the time available and raises the cost of getting the order wrong, so the R&D position is worth settling before a formal step. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If your company, or a company you are advising, is facing this decision, get in touch. Sources Section 1112F, Corporation Tax Act 2009 — no amount payable at step 7 where a merged-scheme claim is made while the company is not a going concern; reinstatement if it becomes one by the claim amendment deadline; the bar on ERIS claims and the pre-trading election; and the rule treating a tax credit claim as never made, except so far as an amount was already paid or applied. Section 1112G, Corporation Tax Act 2009 — the meaning of going concern, the administration and liquidation rule including corresponding foreign procedures, and the intra-group transfer of trade exception. CIRD191000: going concern — HMRC’s statement of the condition under both current schemes, and the two worked examples showing that the transfer must fall inside the period covered by the accounts. Section 1042I, Corporation Tax Act 2009 — the seven steps, including discharge of corporation tax for the period and for any other period, group surrender, and the application of the balance against any other sum owed to HMRC, with only step 7 subject to sections 1112F and 1112H. CIRD112100: new RDEC payment steps — HMRC’s walk-through of the same steps, confirming that step 6 covers VAT, PAYE and contract settlements. Section 1112H, Corporation Tax Act 2009 — HMRC need not pay while the return is under enquiry, with discretion to pay provisionally, and need not pay where PAYE or NIC liabilities for the period are outstanding. Section 1142C, Corporation Tax Act 2009 — the right to be paid an R&D expenditure credit or R&D tax credit may not be assigned, and a purported assignment or agreement to assign is void. Finance Act 2024, Schedule 1, Part 3 — the assignment ban does not apply to an assignment made before 22 November 2023, an agreement made before that date, or an assignment made afterwards to carry out such an agreement; the nomination restriction applies to claims made on or after 1 April 2024. Section 1142D, Corporation Tax Act 2009 — payment only to the claimant company, subject to the connected-party and exceptional-circumstances exceptions. CIRD81805: nominations and assignments — HMRC’s operational guidance on both restrictions, including what it does where a void assignment has been notified. Section 108, Taxes Management Act 1970 — where a liquidator or administrator has been appointed, that person is the proper officer of the company; and where a liquidator has been appointed, no other person with authority may act for the company. COM130050: online filing and the end of a company’s life — the liquidator as the only person through whom a company in liquidation can act, and the exemption from mandatory online filing where a winding-up order, administration, administrative receivership, creditors’ voluntary liquidation or CVA is in effect, for any period including periods before the appointment; the exemption does not extend to a solvent members’ voluntary liquidation. CIRD181000: reformed reliefs claims process — claims must be quantified in the return, and returns and amendments containing R&D claims are to be made through the Corporation Tax online service. Paragraph 83EA, Schedule 18, Finance Act 1998 — a claim is invalid unless the additional information has been provided no later than the date the claim is made or amended. CIRD81130: company a going concern — the pre-April-2024 position, where the same page states both that a company in administration or liquidation cannot make a claim to relief and that the RDEC going concern rules apply only to payments at step 7. CIRD89820: RDEC payment restrictions repeats the first of those on a page otherwise dealing with the payable credit. --- # R&D tax relief in M&A due diligence: what buyers check URL: https://www.limestonegrey.com/rd-tax-relief/due-diligence/ Description: A paid R&D claim is not a settled one. What a buyer's tax due diligence should test, and how the deal itself moves the target's SME status. R&D tax relief •11 min read R&D tax relief in due diligence: what buyers check and sellers should prepare MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards A target’s R&D claims are an asset and an exposure at once, and both sit in accounting periods that are still open when the deal completes. A run of paid claims tells a buyer nothing about whether they were right: HMRC pays first and asks its questions afterwards. Where relief was overclaimed it is repayable with interest and, depending on behaviour, a penalty — by the company the buyer now owns. Against that, relief nobody claimed in a period still open to amendment is value nobody has priced. A competent review prices both, period by period. Two things then move with the deal itself: the target’s size status, and its intensity ratio. Why does a paid R&D claim still carry risk? Because payment is processing rather than agreement. HMRC says it aims to identify the need for a check before payment where it can, and that it also opens some checks after payment. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. The money arriving proves only that the return was processed. How long the exposure runs depends on the return: twelve months from delivery for a return filed on time, longer where it was late, longer again for a company in a group that is not a small group, and a fresh window of its own on any amendment. What matters in diligence is the consequence: a claim added to an old return shortly before exchange does not tidy that period up. It opens a fresh enquiry window on the amendment itself — which is to say, on the claim. Once that window has closed, HMRC can still assess by discovery, but discovery is not automatic: it needs careless or deliberate behaviour, or a claim disclosed so thinly that the officer could not reasonably have been expected to be aware of the problem from what was filed. The outer limits then run four, six and twenty years from the end of the accounting period according to behaviour, and can HMRC make me pay back an R&D tax credit? covers what recovery involves. R&D tax relief deadlines: every date, from the legislation derives each of those windows and what starts the clock. What should the R&D file in the data room contain? One folder per claimed period: The claim computation, reconciled to the CT600 and to the statutory accounts. Figures that tie to neither are the first thing an enquiry finds. The Additional Information Form as submitted, with its date. Mandatory for claims made on or after 1 August 2023, in practice 8 August 2023, amendments included; a claim filed without one is invalid, whatever the work behind it was worth. Notification evidence for every period that needed it. The claim notification is a hard gate with no late route and no appeal, and it closes periods that otherwise look claimable. The technical narratives and the named competent professionals behind them — field, experience, and evidence they shaped the claim rather than being interviewed once at the end. Cost workings that trace to payroll and the ledger, with each apportionment basis recorded at the time. Cost categories and payments to connected parties are the two headings an enquiry tests hardest. The PAYE and NIC cap working, with any restricted amount carried forward. The subsidy and contracting positions for periods beginning before 1 April 2024. Those periods sit under the old schemes, where grant funding could restrict SME relief and contracted-out work was contested. Two 2024 tribunal decisions in our case-law register bear on this: commercial contract payments are not, in themselves, subsidies. Neither decision was appealed, and HMRC updated its guidance in February 2025. Who prepared each claim, and whether that adviser belongs to a professional body and is registered with HMRC. Every agent is named on the AIF, so the preparer is already attached to the company’s file. All correspondence with HMRC on any R&D claim, including checks closed without adjustment. What is missing tells you as much as what is there. A target that cannot produce contemporaneous cost workings has already told you how the claim was made. Does the acquisition itself change the target’s SME status? It can, and the answer turns on the buyer’s own size rather than the combined figures. Company size for R&D purposes normally changes only after the thresholds are crossed in two consecutive years. That grace disappears where the enterprise whose figures are brought in is itself over the line — a partner or linked enterprise that, on its own figures, already exceeds the headcount limit or both financial limits. Where that is so, SME status ends for the period in which the acquisition happens, with no grace year. Where the buyer is not itself that large, the two-year rule survives and the change is absorbed, even though the combined figures breach. The opposite case has its own relief: a target outside the definition solely because of a large related enterprise is treated as an SME for the period in which an acquirer that is itself an SME takes control. The mechanism, and the point that a minority stake by a large corporate can be enough, is in what happens if my company outgrows the SME definition. For accounting periods beginning on or after 1 April 2024, less turns on that than buyers expect. The merged scheme applies at every size, so a target that loses SME status carries on claiming on the same terms. What it loses is ERIS, which only loss-making, R&D-intensive SMEs can claim; the gap between the two is set out in rates by year. The sharper trap is the intensity test ERIS turns on. Relevant R&D expenditure must be at least 30% of total relevant expenditure, and where the company is connected with another the ratio is worked out on the connected companies’ aggregate figures — connection on a single day in the period is enough to bring one in. A target that was comfortably R&D-intensive on its own numbers can therefore fail the test for the period of the deal, because the buyer’s trading subsidiaries have arrived in the denominator. Payments to a connected company come out of that denominator, and stay in the numerator where they would have qualified as R&D spend, so intra-group recharges are not counted against the company twice. That helps at the margin. It does not rescue a ratio broken by the scale of what the buyer has brought with it. One relief pulls the other way, and it is narrower than it looks. A company that met the intensity condition in its most recent prior twelve-month period, and obtained relief for that period, is excused the intensity test for the period after. The relief need not have been ERIS: an old SME scheme claim counts, on that scheme’s own terms (the period must have ended on or after 1 April 2023, against a 40% threshold). A merged scheme claim does not bank it. The company is excused nothing else: it must still be an SME, still be trading, and still be loss-making. So the grace is no help where the acquisition has taken SME status with it. Model both tests together before completion; see the 30% intensity condition. Is there unclaimed relief worth having? Often, in owner-managed targets particularly, where development work has run for years without anyone framing it as R&D. The buyer’s model should list every period still open to amendment and ask whether a claim was made; the windows and the trap are in backdated R&D claims. Two cautions before it reaches the price. Notification has already closed many periods to first-time claimants, so an unclaimed period is not automatically a claimable one; settle that before attributing value. A claim assembled in the fortnight before exchange also carries the enquiry risk of a claim assembled in a fortnight, and after completion it is the buyer who owns the company HMRC writes to. How does the credit land in completion accounts? As a debtor, and rarely at its headline value. The merged-scheme credit runs through a fixed sequence before any cash appears: corporation tax for the period, a notional tax deduction, the PAYE and NIC cap, corporation tax for other periods, an optional surrender to a group company, then any other sum owed to HMRC. Only what survives that is paid out. A model that treats the gross credit as cash overstates it, and a target with arrears on other HMRC liabilities may find it absorbed before it arrives. The credit belongs in the year the spending happened, whatever year the claim was filed in, and the balance sheet entry splits between a debtor for the cash expected and a reduction in the corporation tax creditor; accounting for the merged R&D expenditure credit sets out the entries. Whether that receivable counts as cash, debt or working capital in the completion mechanism is for the deal accountants and the sale agreement. Who carries the risk if a claim turns out to be wrong? Whoever the documents say, which is why the R&D findings must reach the lawyers in usable form. In broad terms: warranties give the buyer a remedy where a stated fact proves untrue, disclosure cuts that remedy down for anything the seller has properly disclosed, and a tax covenant or tax indemnity is the seller’s promise to meet pre-completion tax liabilities as they fall due. Drafting any of it is for the solicitors on both sides. What the R&D review contributes is the material those clauses are priced on: which periods remain open and until when, the exposure on each if HMRC takes a different view, and how much of it turns on behaviour rather than judgement. Whether a particular covenant reaches a particular clawback is a question about that document’s definitions, and one for the lawyers drafting it. What the parties can settle in advance is the number: those who never quantified the exposure end up arguing about it at the worst possible moment. What should a seller do before the process starts? Get the file straight while the people who did the work are still employed: competent professionals move on, ledgers get migrated, and a narrative reconstructed after the fact reads like one. Three things repay the effort. Assemble the file a buyer will ask for, period by period, before the data room opens. Settle the notification position on every period still open, because a period that cannot be claimed is not value worth arguing over. And take any unclaimed relief while the amendment window is still yours: claimed before exchange it is cash in the business, found by the buyer it is a line in the price adjustment. Quantified and documented, the R&D position is also what makes proper disclosure possible. Where nobody outside the process has read the claims, our free claim review is a confidential second opinion under a mutual NDA, with no obligation to take anything further. Talk it through with a chartered adviser R&D diligence is quick when the file is in order and slow when it is not. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you are buying or selling a company with R&D claims in its history, get in touch. Sources FA 1998 Sch 18 para 24 — the twelve-month enquiry window running from the day the return was delivered, the quarter-day windows for a late-delivered return and for an amendment, and the variation for a company in a group other than a small group. FA 1998 Sch 18 paras 42 and 43 — discovery for a period the company has returned is available only in the circumstances of paragraph 43 or paragraph 44, the first of which is a loss of tax brought about carelessly or deliberately by the company or a person acting for it. FA 1998 Sch 18 para 44 — the second route: the officer could not reasonably have been expected to be aware of the situation from the information made available in the return, the claim and the documents accompanying them. FA 1998 Sch 18 para 46 — the four, six and twenty-year assessment limits, by behaviour. HMRC’s approach to R&D tax reliefs 2023 to 2024 — HMRC aims to identify checks before payment where possible, and also opens some compliance checks post-payment. CTA 2009 s1120 — qualification 2: the transition period is disregarded only where the partner or linked enterprise, on its own figures, exceeds the employee limit or both of the financial limits, and the company taken alone satisfies the employee limit and at least one financial limit. CTA 2009 s1120B — a company treated as an SME for the period in which control of it is acquired by a company that is itself an SME. CIRD92000 — HMRC’s manual: the transition period requiring the position to be repeated for a second consecutive year, its disapplication where partner or linked enterprise figures that already exceeded a threshold are brought in, and the takeover example. CTA 2009 s1044 — the ERIS conditions: SME status, the intensity condition or the one-year grace for a company that obtained relief under Chapter 2 for its most recent prior twelve-month period having met the condition then (extended to pre-April-2024 periods by FA 2024 Sch 1 para 20), a trade, and a loss. CTA 2009 s1045ZA — the 30% intensity condition, the aggregation of connected companies on both sides of the ratio, the exclusion of payments to a connected company from total relevant expenditure under subsection (6)(a) and their retention in relevant R&D expenditure under subsection (7)(a), and connection on any day in the period. CTA 2009 s1042B — entitlement to the merged-scheme credit, which carries no size condition. CTA 2009 s1042I — the seven steps through which the credit is applied, with cash payment last. Submit detailed information before you claim — the Additional Information Form must reach HMRC before or with the Company Tax Return, and a claim submitted without it is not accepted. SI 2023/813 — the Additional Information Form regulations, in force 8 August 2023, and the information the form must contain. --- # R&D tax relief rates by year: SME, RDEC, merged and ERIS URL: https://www.limestonegrey.com/rd-tax-relief/rates-by-year/ Description: Every rate from 2015 to 2026 in one table — SME enhancement, payable credit and RDEC percentages, with the dates each took effect. R&D tax relief •9 min read R&D tax relief rates by year MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The rate that applies to an R&D claim is fixed by the period the claim covers, not by the year you file it. This page collects every SME and RDEC rate from 2015 onwards alongside the current merged scheme and ERIS rates, so you can check a claim already filed, value a backdated one, or work out what a particular year was worth. The old schemes close to amendment in stages, year end by year end, with the last standard deadlines in late March 2027, which makes the historical figures a live question rather than an archive. What are the R&D tax credit rates in 2026? Two rates are in force for accounting periods beginning on or after 1 April 2024, and both continue to apply in 2026. The merged R&D expenditure credit pays a taxable credit of 20% of qualifying expenditure to companies of every size: 15p per £1 net at the 25% corporation tax main rate, 16.2p at 19% or for a loss-maker taking the credit in cash. ERIS pays up to 26.97p per £1, tax free, to a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. A claim filed in 2026 for an earlier period uses that period’s rates, set out below. The rates at a glance Period | SME additional deduction | SME payable credit rate | SME loss-maker cash per £1 | RDEC rate | RDEC net per £1 1 April 2015 to 31 December 2017 | 130% | 14.5% | 33.35p | 11% | 8.8p, then 8.91p from April 2017 1 January 2018 to 31 March 2020 | 130% | 14.5% | 33.35p | 12% | 9.72p 1 April 2020 to 31 March 2023 | 130% | 14.5% | 33.35p | 13% | 10.53p From 1 April 2023, old-scheme periods | 86% | 10%, or 14.5% if R&D-intensive | 18.6p, or up to 26.97p if R&D-intensive | 20% | 14.7p to 16.2p Accounting periods beginning on or after 1 April 2024 | 86%, ERIS only | 14.5%, ERIS only | Up to 26.97p under ERIS | 20% merged credit | 14.7p to 16.2p The first four rows are set by the date the expenditure was incurred, so a single accounting period can straddle two sets of rates. The last row is set by the date the accounting period began, and in that row the final two columns are the merged scheme rather than RDEC. The distinction is explained immediately below. RDEC and merged scheme figures are net of corporation tax, the 14.7p end being the 26.5% marginal rate that applies where augmented profits fall between £50,000 and £250,000; the SME and ERIS credits are not taxable. Which date decides the rate? Two different date tests run through that table, and confusing them is the most common error we see in claims for older periods. The April 2023 rate changes follow the date the expenditure was incurred. A company with a 31 December 2023 year end spent three months of that year under the 130% deduction and nine months under 86%, and the claim has to be split accordingly. The same applies to RDEC moving from 13% to 20%. The merged scheme and ERIS switch follows the date the accounting period began. There is no splitting here. A 12-month period that began on 1 March 2024 sits entirely under the old schemes, even though almost all of it falls after 1 April 2024. Our guide to which R&D scheme applies to your company works through the test by date. April 2015 to March 2020: 130% SME relief, RDEC at 11% then 12% The SME rates did not move at all in this window. Qualifying expenditure attracted an additional deduction of 130%, giving a total deduction of 230%, and a loss-making company could surrender the resulting loss for a payable credit at 14.5%: 33.35p per £1 of qualifying spend. A profitable SME saved 24.7p per £1 at the 19% corporation tax rate that applied from April 2017. RDEC moved twice. The credit was 11% of qualifying expenditure for expenditure incurred from 1 April 2015, rising to 12% from 1 January 2018. Because RDEC is taxable, the net benefit is lower than the headline suggests: 8.8p per £1 while corporation tax stood at 20%, 8.91p once the rate fell to 19% in April 2017, and 9.72p at the 12% rate. April 2020 to March 2023: RDEC rises to 13% The SME rates were unchanged again: 130% additional deduction, 14.5% surrender rate, 33.35p per £1 in cash for a loss-maker surrendering in full, 24.7p per £1 of tax saved for a profitable company at 19%. RDEC rose to 13% for expenditure incurred from 1 April 2020, worth 10.53p per £1 after corporation tax at 19%. On £100,000 of qualifying expenditure incurred in this window: Loss-making SME, surrendering in full. £100,000 x 230% = £230,000 of deduction, surrendered at 14.5%: £33,350 in cash. Profitable SME. An additional deduction of £130,000, worth £24,700 at the 19% corporation tax rate. Company claiming RDEC. A £13,000 credit, taxable at 19%, worth £10,530 net. One change in this window affected value rather than rate. For accounting periods beginning on or after 1 April 2021, the payable SME credit is capped at £20,000 plus 300% of the company’s relevant PAYE and National Insurance contributions, which bites on loss-makers with a small UK payroll and a large subcontracted R&D budget. From April 2023: SME rates fall, RDEC jumps to 20% For expenditure incurred on or after 1 April 2023, the SME additional deduction fell from 130% to 86% and the surrender rate from 14.5% to 10%. A loss-making SME surrendering in full received 18.6p per £1 instead of 33.35p, a little over half the old rate. Loss-making SMEs that were R&D-intensive kept the 14.5% rate, worth up to 26.97p per £1 alongside the 186% total deduction. The intensity threshold was relevant R&D expenditure of at least 40% of total relevant expenditure when it was introduced, and it was reduced to 30% for accounting periods beginning on or after 1 April 2024 under Enhanced R&D Intensive Support (ERIS). For profitable SMEs, corporation tax moved at the same time as the deduction. From April 2023 the main rate is 25%, the small profits rate is 19% and marginal relief applies between them, so the 86% deduction is worth up to 21.5p per £1 at the main rate and less further down. RDEC went the other way, from 13% to 20% for expenditure incurred from 1 April 2023: 15p per £1 net at the 25% main rate, 16.2p at 19%. Accounting periods beginning on or after April 2024: the merged scheme and ERIS The SME and RDEC schemes were replaced for accounting periods beginning on or after 1 April 2024. Most companies now claim the merged R&D expenditure credit: a taxable credit of 20% of qualifying expenditure, worth 15p per £1 after corporation tax at the 25% main rate and 16.2p at 19%. Loss-makers receive 16.2p in cash: with no profits chargeable at the main rate, the notional tax deducted from their credit is applied at the 19% small profits rate rather than 25%, whatever the company’s size — and the amount deducted is not lost, but carried forward against future corporation tax or available to surrender within a group. Loss-making SMEs whose relevant R&D expenditure is at least 30% of total relevant expenditure claim ERIS instead: an 86% additional deduction and a 14.5% payable credit, worth up to 26.97p per £1, and the ERIS credit is not taxable. On £100,000 of qualifying expenditure: Merged scheme, profitable at the 25% main rate. A £20,000 credit, taxed at 25%: £15,000 net. Merged scheme, loss-making. A £20,000 credit less notional tax at 19%: £16,200 in cash. ERIS. £100,000 x 186% x 14.5% = £26,970 in cash, assuming sufficient losses. Those three lines are worked through in full, on larger figures and including the marginal-rate case, in our R&D tax relief worked examples. The cap of £20,000 plus 300% of relevant PAYE and NIC applies to payable credits under both current schemes. When the rules changed Rates are only half the history. The compliance regime tightened over the same period, and for older periods the administrative dates decide whether a claim can be made at all. Accounting periods beginning on or after 1 April 2021. The SME payable credit cap arrives: £20,000 plus 300% of relevant PAYE and NIC. Accounting periods beginning on or after 1 April 2023. The claim notification requirement applies. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. There is no late route. Claims made on or after 1 August 2023, in practice 8 August 2023. The Additional Information Form is mandatory for every claim, amendments included. Accounting periods beginning on or after 1 April 2024. The merged scheme and ERIS replace the SME and RDEC schemes. Overseas subcontractor and externally provided worker costs are restricted, and new contracted-out rules decide which party claims. Late March 2027. The last standard claim deadlines for old-scheme periods with twelve-month periods of account; the window runs two years from the end of the period of account, so long periods of account can reach later into 2027, and many earlier year ends have already closed. Which rules apply to my claim? Start with the date your accounting period began, because that decides whether the period sits under the merged scheme and ERIS or the old SME and RDEC schemes. Which R&D scheme applies to your company settles it. Then look at the dates of the expenditure itself: an old-scheme period straddling 1 April 2023 uses two sets of rates in the same claim. For a working figure on your own numbers under the current schemes, use the claim value calculator. For a period already filed, the question is not only what it is worth but whether it can still be claimed: backdated R&D claims and the 2027 deadlines covers the claim windows and the notification rule, which closes more backdated claims than the deadline itself does. Talk it through with a chartered adviser Rates are the straightforward part of an R&D claim. Whether the expenditure qualifies, which scheme the period falls under and whether the claim stands up to scrutiny are the questions that decide what a company actually receives, and HMRC checked around one in six claims in 2023-24, its latest published figure. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If you want a view on what a particular year is worth, or whether an older period can still be claimed, get in touch. For the wider picture, start with our R&D tax relief guide. Sources Work out your R&D tax relief — the historical SME and RDEC rates. R&D relief for SMEs — the SME rates of 86% / 10% / 14.5% from April 2023. CIRD89710: RDEC rate — the RDEC rate rising from 13% to 20%. Merged scheme & ERIS guidance — the 20% merged credit, ERIS at 186% and 14.5%, the 30% intensity test and the PAYE cap. Corporation Tax rates and allowances — the corporation tax rates behind the net figures. Tell HMRC you plan to claim — the six-month claim notification window. Additional information form guidance — the AIF, mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. FA 1998 Sch 18 para 83E and CIRD81800 — the claim time limit (two years from the end of the period of account) behind the 2027 deadlines. --- # How to choose an R&D tax adviser: what to check first URL: https://www.limestonegrey.com/rd-tax-relief/choosing-an-rd-tax-adviser/ Description: Six things you can verify before appointing an R&D tax adviser: the professional registers, PCRT, AML supervision, insurance — and the one you cannot. R&D tax relief •7 min read How to choose an R&D tax adviser MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Anyone can sell R&D tax advice. Six things about an adviser can be checked before you appoint them, us included: professional body membership, on ICAEW’s public register of chartered accountants and CIOT’s directory of Chartered Tax Advisers; the conduct rules (PCRT) that bind members of those bodies; who supervises the firm for anti-money-laundering purposes; the firm’s age and ownership, at Companies House; professional indemnity insurance and the complaints route behind it; and registration with HMRC — the one check with no public register to search, so you can ask but you cannot confirm. The market itself is not a regulated profession: no qualification, registration with a professional body or track record is required to set up as an “R&D specialist”, and the mis-selling era that followed is why HMRC checked around one in six claims in 2023-24 and why the compliance regime tightened the way it did. When a claim goes wrong, the consequences land on your company, not on the agent who prepared it. Why does the choice carry real weight? Three facts frame it. Your directors are legally responsible for the accuracy of the company tax return, whoever prepared the claim inside it. Every agent involved in an R&D claim must now be named to HMRC on the Additional Information Form, so the adviser’s standards are attached to your company’s file. And HMRC checked around one in six claims in 2023-24, its latest published figure, with enquiries arriving months or years after payment. An adviser is not a supplier you can quietly swap if the work is poor; their judgement becomes part of your compliance history. Apply the checks below to us too: what we do as R&D tax advisers is set out in full. What can you actually verify about an adviser? Marketing copy is unverifiable by design. These six are not: Professional body membership. ICAEW maintains a public register of chartered accountants, and CIOT a public directory of Chartered Tax Advisers, so a claimed qualification can be checked in minutes against the named person, not the firm’s logo strip. If a firm’s website shows no named, qualified individual anywhere, that is itself the answer — HMRC’s own guidance on choosing a tax agent is blunt that anyone can call themselves one, with no qualifications required, and that HMRC does not regulate them. Professional conduct rules. Members of the main tax and accountancy bodies are bound by Professional Conduct in Relation to Taxation (PCRT), which requires advice to have a sustainable basis in law and prohibits letting a fee shape a filing position. An adviser outside those bodies is bound by none of it. Anti-money-laundering supervision. AML supervision is a legal requirement for tax advisers — the professional bodies note that if a firm never asks you for client due diligence at the outset, that silence is itself informative. Ask who supervises them; a regulated firm will answer in one sentence. HMRC registration, with a caveat. HMRC’s mandatory registration regime for tax advisers began rolling out in May 2026, with AML supervision a condition of registering. It became compulsory for the first group of advisers on 18 August 2026 and reaches the remaining groups by 1 April 2027, and it reaches any adviser who deals with HMRC on a client’s behalf. The caveat is that you cannot verify it: there is no public register of registered advisers to search, and the details HMRC publishes are of advisers it has penalised, banned or refused to deal with. Does my R&D adviser have to be registered with HMRC? covers the dates and the gaps. You can ask, and you can note how readily the question is answered, but the checks that produce evidence are the ones above. Age and ownership. A firm’s incorporation date and filing history are public at Companies House and take a minute to check. The mis-selling era minted R&D agents in volume from 2019 onwards, and HMRC’s compliance push has been closing them nearly as fast — so a firm that predates the boom and is still trading under the same ownership is showing you a track record no marketing copy can fake. Ours is 2017; check it while you are there. Professional indemnity insurance and a complaints route. A regulated firm carries PII and answers to its professional body if you complain. An unregulated one offers neither. What should you ask before you sign? Who will actually prepare my claim, and what are their qualifications? Not the firm’s — the person’s. Ask who reviews it and who signs it off. Who will speak to our technical people? The claim stands on a competent professional’s account of the uncertainties. A claim written without anyone talking to your engineers or scientists is a claim written backwards. What happens in an enquiry? Ask whether enquiry defence is included, what it costs if not, and whether they defend claims they prepared. An adviser who charges extra to defend its own work is telling you how much confidence it has in that work. What does the fee incentivise? Contingent fees are common and legitimate, but they reward size; ask what happens when something you hoped qualified does not. The answer you want is that the adviser will take it out of the claim and explain why, whatever it does to their fee. Our own answer, in full, is on how our fees work. Will you tell me if we do not qualify? The most useful thing an honest adviser does is say no early. Ask for an example of a claim they declined to make. Can I see the fee and scope in writing before work starts? If not, walk away. What are the red flags? These are the ones that recur in the enquiry files: Success-rate and outcome promises. “100% success rate” and its variants are unverifiable and structurally dishonest: HMRC pays most claims on a process-now, check-later basis, so a paid claim proves processing, not approval — and no adviser controls HMRC’s decisions. Speed promises. HMRC’s processing queue is not the adviser’s to promise. Preparation speed is theirs; payment timing is not. “Maximise your claim” as the core pitch. The right claim is the objective. A maximised claim and a defensible claim are different things, and only one of them survives a compliance check. Speculative approaches and “everyone qualifies”. HMRC has warned about unscrupulous agents approaching businesses in sectors where qualifying R&D is rare, offering to file speculative claims for high commission. If the pitch arrived before any question about what your company actually does, the analysis is not going to improve after you sign. “HMRC approved.” HMRC does not approve advisers or methodologies; the professional bodies’ own guidance calls such marketing spurious. Committee seats presented as credentials. Some firms cite membership of HMRC’s Research and Development Communication Forum — often under its old name, the Consultative Committee — as if it were a mark of official standing. It is a twice-yearly forum on how the relief is administered; organisations apply to the chair to join, subject to space and a waiting list. Participation is participation, not accreditation: HMRC states plainly that it does not endorse individual businesses or tax agents, and a forum seat tells you nothing about the quality of an adviser’s work in either direction. When you are choosing, set it aside entirely and weigh the things on this page that can be verified. No named professionals. A team page of job titles with no qualifications, or no team page at all. Pressure to sign before the technical conversation. The eligibility view should come first and should cost you nothing. Is a specialist always the right answer? No. Some claims sit perfectly well with a company’s own accountant, and the honest comparison — including when we would not be the right choice — is on specialist or accountant: who should prepare the claim? Whoever you appoint, check them against the list above. We publish how we are regulated so you can run those checks on us, and if you want a second opinion on an existing arrangement, our free claim review is confidential and comes with no obligation. If the adviser you choose replaces one you already have, changing your R&D tax adviser covers how the handover works, including mid-claim. Sources Finance Act 2026, section 223 — the prohibition on a tax adviser interacting with HMRC for a client while unregistered. The Finance Act 2026 (Registration of Tax Advisers) (Appointed Days and Transitional Provision) Regulations 2026, SI 2026/807 — the appointed days: 18 August 2026 for the first tranche, phased to 1 April 2027. How to choose a tax agent — HMRC’s own checklist, including that anyone can call themselves a tax agent and HMRC does not regulate them. HMRC’s approach to R&D tax reliefs 2023 to 2024 — the unscrupulous-agent warnings and the compliance coverage behind the one-in-six figure. PCRT topical guidance on R&D tax credit services — the conduct rules that bind members of the professional bodies in R&D work. Submit detailed information before you claim — every agent involved in a claim must be named on the AIF. Choosing a specialist R&D tax adviser (CIOT/ATT) — the professional bodies’ consumer guide, including the warning on “HMRC approved” marketing. The Research and Development Communication Forum — what the forum is and how organisations join; HMRC’s Standard for Agents prohibits implying HMRC endorsement. --- # R&D specialist or accountant: who prepares the claim? URL: https://www.limestonegrey.com/rd-tax-relief/specialist-or-accountant/ Description: An R&D claim is tax mechanics plus a technical case. When your accountant is the right choice, when a specialist earns the fee, and how they work together. R&D tax relief •5 min read R&D tax specialist or your accountant: who should prepare the claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Your accountant handles the tax mechanics of an R&D claim well: the computation, the CT600, the scheme rules and the rates. A specialist does the other half of the work — applying the statutory definition to your projects, drawing out a competent professional’s account of the technical uncertainties, writing the Additional Information Form, and defending that application to HMRC. Which route is right depends on the claim. A small claim on simple facts, or a steady repeat claim with an accountant who genuinely knows the relief, often sits best where it is; a first claim, an unclear technical boundary, a complicated structure or a claim material to your cash flow is where a specialist earns the fee. Anyone who answers this question without asking about your claim is selling something. We are a specialist firm, so read this knowing where we sit — but the cases below where your accountant is the right answer are real, and we say so to clients. What does preparing a claim actually involve? An R&D claim is two jobs joined in the middle. The tax mechanics — the computation, the CT600, the scheme rules, the rates — are what a general practice does every day. The technical case is the other job: identifying which projects meet the statutory definition of R&D, drawing out a competent professional’s account of the uncertainties, and writing the Additional Information Form so it stands up to a reader whose job is scepticism. Around both sit the compliance gates — claim notification for newer claimants, the AIF for everyone — and behind them the possibility of an enquiry, which HMRC opened on around one in six claims in 2023-24. The second job is where claims are won and lost, and it is a genuine specialism: not because accountants lack ability, but because applying the R&D definition across sectors, and defending that application to HMRC, is volume work that a general practice sees a few times a year and a specialist R&D tax firm sees every week. When is your accountant the right answer? The claim is small and the facts are simple. One clearly qualifying project, good records, modest value: a specialist’s fee may not be worth the increment, and an honest specialist will tell you so. Your accountant genuinely knows the relief. Some firms have real R&D capability. The test is not willingness but practice: ask how many claims they prepare a year, and how many have been through an enquiry. Continuity matters more than optimisation. Your accountant knows your numbers, your payroll and your history. For a steady, repeat claim with no changes in the rules or the business, that context has real value. When does a specialist earn the fee? First claims. The notification window, the AIF’s technical demands and the definition itself arrive all at once, and the six-month notification deadline forgives nothing. Most of the invalid claims HMRC removes were not dishonest; they were prepared by someone who did not know a rule existed. The technical boundary is genuinely unclear. Software, process development, work that shades between routine and qualifying: the cases where the definition needs applying carefully are the cases where applying it carelessly gets expensive. The structure is complicated. Contracted-out R&D, grants, connected companies, overseas elements, ERIS intensity near the threshold: each is a place where the right answer changes with the facts. The claim is material to the business. When the credit is a meaningful part of your cash flow, the cost of getting it wrong, or of under-claiming, outgrows the fee. There is an enquiry. Defence is specialist work in any profession. This is also the moment you learn what your original adviser’s work was worth. Can your accountant and a specialist work together? Yes, and that is how most of our clients work. Their accountant runs the accounts, payroll and the wider tax relationship; we prepare the R&D claim, the technical narrative and the AIF — and we prefer to submit the return containing the claim ourselves, or amend it if it has already been filed, because the firm that prepared a claim should be willing to put its own name on the submission and stand behind it with HMRC. Where a client’s accountant prefers to do the filing, we hand over reconciled figures and remain named on the claim either way: every agent involved must now be declared on the AIF, so there is no version of this arrangement in which the preparer is invisible — and be wary of any adviser who wants to be. Nobody is displaced, and each does the work they are best placed to do; the arrangement is set out on working with accountants. If you are an accountant reading this, that page is written for you. How do you decide? Ask whoever will prepare the claim, accountant or specialist, the same questions: who applies the R&D definition and what is their basis for it; who speaks to the technical staff; who writes the AIF; what happens in an enquiry and at what cost; and will they say so if part of the claim does not qualify. The answers matter more than the label on the firm. The verifiable checks — registers, conduct rules, insurance — are on how to choose an R&D tax adviser. If you want a view on your own claim, either the one you are planning or the one someone else filed, a free claim review or a first conversation costs nothing, and if the honest answer is that your accountant has it covered, that is the answer you will get. Sources Check if a project qualifies as R&D for tax purposes — the definition the technical case rests on. Submit detailed information before you claim — the AIF every claim now requires. Tell HMRC you plan to claim — the notification gate that catches first-time claimants. --- # HMRC R&D tax credit statistics: what the series shows URL: https://www.limestonegrey.com/rd-tax-relief/statistics/ Description: What HMRC's annual R&D statistics measure, the 2025 release in full, every UK region including Wales, and the whole series free to download as CSV or JSON. R&D tax relief •10 min read HMRC's R&D tax credit statistics: the series explained MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards HMRC publishes annual statistics on R&D tax relief: how many companies claim, how much they claim, and where those companies are registered. This page sets out what the most recent release shows, gives the regional numbers in full including the Wales figures almost nobody publishes, and hands you the whole series as a file you can download and use yourself. The headline numbers The most recent release is September 2025, covering the 2023-24 financial year. Measure, 2023-24 | Figure | Change on 2022-23 Claims made | 46,950 | Down 26% Total support claimed | £7.56bn | Down 2% Qualifying R&D expenditure | £46.1bn | Down 1% Average support per claim | About £161,000 | Up by about a third First-time claimants | 3,765 | Sharply down, see below Two movements run through the data, and they point in opposite directions. Participation fell sharply. Claims fell from 63,780 to 46,950, a drop of 26%. SME scheme claims fell 31% while claims under the large-company and RDEC schemes fell only 5%, so the companies that left were overwhelmingly smaller ones: the group most exposed to the new compliance load and the reduced SME rates. Underlying R&D spend did not. Qualifying expenditure was £46.1bn, down 1%, and total relief held broadly steady at £7.56bn, down 2%. A 26% fall in claims against a 1% fall in expenditure is the story of the release. The research spending stayed; a quarter of the claimants did not. Because it was the small claims that left and the money that stayed, average support per claim rose from about £121,000 to about £161,000. The first-time-claimant number carries a caveat that is easy to miss. HMRC uplifts its headline claim counts to allow for returns it has not yet received, but it does not uplift the first-time-applicant table. HMRC expects the 3,765 figure to increase as more returns arrive, so treat the fall in new claimants as an outer edge rather than a settled number. Setting it against the headline claim count compares an un-uplifted series with an uplifted one. Error and fraud fell hard. HMRC’s estimate of error and fraud in the relief fell from 17.6% in 2021-22 to 6.4% in 2023-24 on random-enquiry evidence. Its July 2026 annual report puts an illustrative 5.3% on the two years since — an estimate, not a measurement. That trajectory is the clearest evidence that the compliance campaign is doing what it was designed to do, and it is the main reason the campaign will not be relaxed. Read together: the compliance era is squeezing out weak claims while leaving genuine R&D spend intact. For a company doing real qualifying work, the numbers are reassurance, not warning. But they also describe an environment where HMRC checked around one in six claims in 2023-24, the most recent year it has published, so the cost of a poorly prepared submission has never been higher; our guide to HMRC enquiries explains what that scrutiny looks like in practice. Take the data We have tidied HMRC’s published tables into one machine-readable file, free to download and use: CSV — www.limestonegrey.com/data/rd-statistics.csv JSON — www.limestonegrey.com/data/rd-statistics.json Field descriptions and HMRC’s caveats — www.limestonegrey.com/data/README.txt It holds 12,661 rows, one per financial year, breakdown and measure. Claims, cost of support and qualifying expenditure, split by scheme, region, sub-region, industry sector, region-and-sector, claim size band and R&D intensity; the national series runs back to 2000-01 and the breakdowns cover the four years HMRC publishes them for. We model and recalculate nothing: every row is a published HMRC figure exactly as HMRC published it, and every row names the HMRC worksheet and the exact cell it came from, so any number here can be checked against the government file in one step. The source data is Crown copyright, published under the Open Government Licence v3.0. This compilation goes out under the same licence. Attribution is appreciated rather than required. What the statistics measure, and what they leave out Each release counts claims made under the R&D reliefs for a single financial year, the total relief claimed against them, and the qualifying R&D expenditure behind them. HMRC then splits those totals by scheme, by industry sector and by the region in which the claimant company is registered. The figures lag. Each release covers a year that closed well before publication: the September 2025 release covered 2023-24. A release therefore describes the rules as they stood two policy cycles ago, not the rules a company is claiming under today. HMRC also rounds every figure independently to the nearest 5 claims or £5 million, which is why the parts of a table do not always add up to its total. One number people expect to find in the statistics is not in them. HMRC’s estimates of error and fraud in the R&D reliefs are published separately, in its approach-to-R&D-reliefs papers and its annual report and accounts. Both sources are linked at the foot of this page. Where the relief goes: every UK region HMRC allocates each claim to a region using the postcode of the company’s registered office, and warns that this “might not correspond to where the R&D activity takes place”. A group registered in London running its laboratory in Swansea counts as London here. Read the table as a map of where claimant companies are registered, not of where UK research happens. Region, 2023-24 | Claims | Share of UK claims | Support | Share of UK support | Average per claim London | 11,335 | 24.1% | £2,320m | 30.7% | £204,700 South East | 6,940 | 14.8% | £1,475m | 19.5% | £212,500 East of England | 4,570 | 9.7% | £1,015m | 13.4% | £222,100 North West | 4,290 | 9.1% | £490m | 6.5% | £114,200 South West | 3,510 | 7.5% | £350m | 4.6% | £99,700 West Midlands | 3,445 | 7.3% | £565m | 7.5% | £164,000 Yorkshire and The Humber | 3,130 | 6.7% | £265m | 3.5% | £84,700 East Midlands | 2,810 | 6.0% | £315m | 4.2% | £112,100 Scotland | 2,785 | 5.9% | £360m | 4.8% | £129,300 Wales | 1,440 | 3.1% | £115m | 1.5% | £79,900 North East | 1,335 | 2.8% | £115m | 1.5% | £86,100 Northern Ireland | 1,305 | 2.8% | £140m | 1.9% | £107,300 Unknown | 60 | 0.1% | £25m | 0.3% | — United Kingdom | 46,950 | 100% | £7,555m | 100% | £160,900 Shares and averages are ours, calculated from HMRC’s published claim counts and support totals. London, the South East and the East of England between them account for just under half of all UK claims. Wales: a steady share of the claims, a shrinking share of the money The registered-office caveat matters here more than anywhere. A company doing its research in Wales but registered as part of a group elsewhere appears under that group’s region rather than under Wales, and the reverse holds too. With that stated, here is what the table shows. Welsh-registered companies made 1,440 claims in 2023-24 and were awarded £115m of support. That is 3.1% of UK claims and 1.5% of UK support. Wales has held roughly 3% of UK claims in every one of the four years HMRC publishes regionally, so its share of claimants has been stable. Its share of the money has not: it stayed close to 2.0% in each of the three years to 2022-23, then fell to 1.5% in 2023-24. Wales | 2020-21 | 2021-22 | 2022-23 | 2023-24 Claims | 2,665 | 2,440 | 1,915 | 1,440 Support | £140m | £155m | £150m | £115m Qualifying expenditure | £735m | £800m | £800m | £670m Average support per claim | £52,500 | £63,500 | £78,300 | £79,900 UK average support per claim | £78,600 | £91,300 | £120,600 | £160,900 The average Welsh claim and the average UK claim have pulled apart. In 2020-21 the average claim in Wales was worth about two-thirds of the UK average. In 2023-24 it was worth about half: roughly £80,000 against roughly £161,000. Both averages rose over the period, but the UK figure rose far faster. The regions pulling it up are visible in the table above: the East of England, the South East and London are the only three where the average claim exceeds £200,000, and between them they take almost two-thirds of all UK support. Two further cuts that HMRC publishes and almost nobody quotes. Within Wales, South East Wales accounted for 770 of the 1,440 claims and £70m of the £115m; Mid and South West Wales for 380 claims and £20m; North Wales for 290 claims and £25m. And by industry, Wales is more of a manufacturing claimant base than the UK as a whole: manufacturing accounted for 500 of the 1,440 Welsh claims, or 35%, against 26% across the UK. Information and communication, the largest claiming sector nationally at 26% of claims, accounted for 17% in Wales. If you are a Welsh company weighing up a claim, our Cardiff and Wales R&D tax page covers the practicalities. Scheme, sector and claim size 2023-24 is the first year in which RDEC exceeded the SME scheme by value: £4.41bn against £3.15bn, a 36% rise against a 29% fall. Rate changes explain much of it, alongside SMEs claiming under RDEC because of grant funding or subcontracting positions under the old rules. It is also the first year with a separate figure for R&D-intensive SMEs: 3,990 claims worth £830m. Three sectors — information and communication, manufacturing, and professional, scientific and technical — accounted for 71% of claims and 71% of support. For research-heavy fields like life sciences, the concentration is unsurprising: that is where the qualifying work is easiest to identify and evidence. Support remains heavily concentrated in a handful of very large claims. The 500 claims worth more than £2m each are 1% of all claims and 44% of all support. At the other end, claims worth under £15,000 fell from 19,675 to 12,970, a drop of 34% against the 26% fall overall. They have not disappeared: they are still 28% of all claims. But they fell faster than anything else, which is where the rise in the average claim comes from. What to watch when the Autumn 2026 release lands The 2025 release was the last one built around the SME-versus-large split. From April 2024 the merged scheme covers all companies, and future releases will instead compare R&D-intensive SMEs claiming ERIS against everyone else. The interesting dividing line stops being company size and becomes R&D intensity. Three things to look for: The first merged scheme and ERIS figures. How the claimant population divides on intensity rather than size, now that the old split has gone. Whether smaller genuine claimants return. The sharp fall in sub-£15,000 claims mixed companies that should never have claimed with companies that could have. Only a recovery in volumes without a rise in error and fraud would tell the two apart. Whether average claim value holds. The rise of about a third came from the bottom of the distribution thinning out, not from bigger claims. Whether that level persists shows if the shift is structural or a one-year effect. This series HMRC publishes these statistics once a year, in the autumn, and has scheduled its next release for Autumn 2026. Every release so far has covered the financial year that ended about eighteen months before publication, which points to 2024-25 — the first year of the merged scheme — though HMRC has not confirmed the coverage. Everything on this page, and both download files, is built from the September 2025 release. When the Autumn 2026 figures land we rebuild the CSV and JSON from HMRC’s new tables and update this page on publication day. We intend to keep the download URLs stable across releases, so a bookmark or a scheduled fetch should keep working. Last checked against the source tables on 1 September 2026. If you want to understand where your own company sits in the current system, start with which R&D scheme applies to you, check the rates for your period, or talk it through with a chartered adviser. Sources R&D tax credits statistics, September 2025 — the release, its commentary and the spreadsheets below. Main tables (ODS), tables RD1 to RD8 — claims, cost of support and qualifying expenditure by year and scheme (RD1, RD2, RD4), R&D-intensive SMEs (RD3), the regional analysis (RD5), the sector analysis (RD6), the claim size bands (RD7) and first-time applicants (RD8). Supplementary tables (ODS), tables RDS1 and RDS2 — the ITL2 sub-regional analysis behind the Welsh figures, and the region-by-sector analysis behind the Welsh sector mix. HMRC’s approach to R&D tax reliefs 2023–24 — 17% of claims checked in 2023-24 and 500-plus compliance staff. Its 17.6% error-and-fraud estimate for 2021-22 stands; its 7.8% illustrative estimate for 2023-24 was superseded by the measured 6.4% below. HMRC annual report and accounts 2025–26 — error and fraud measured at 6.4% for 2023-24, with an illustrative 5.3% for the two years since. --- # R&D tax relief example: five UK claims costed in full URL: https://www.limestonegrey.com/rd-tax-relief/worked-examples/ Description: Five worked R&D claim examples under the current UK rules: profitable and loss-making merged scheme claims, ERIS at 26.97p per £1, and one paying nothing. R&D tax relief •8 min read R&D tax relief worked examples MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The value of an R&D tax relief claim depends on two things: how much qualifying expenditure the company has, and what tax position it is in when the claim lands. This page works five examples through the arithmetic in full, using the rates in force for accounting periods beginning on or after 1 April 2024. Every company here is illustrative and the figures are deliberately round. Each is a complete R&D tax credit claim example: the qualifying spend, the credit, the tax on the credit and what the company is left with, including the one that is left with nothing. The last example is the one most worked-example pages leave out: a project that does not qualify, and therefore produces no claim at all. The examples at a glance Example | Scheme | Tax position | Qualifying spend | Net benefit | Per £1 1 | Merged scheme | Profitable, 25% main rate | £400,000 | £60,000 | 15p 2 | Merged scheme | Profitable, 26.5% marginal rate | £100,000 | £14,700 | 14.7p 3 | Merged scheme | Loss-making | £250,000 | £40,500 in cash | 16.2p 4 | ERIS | Loss-making, R&D-intensive SME | £300,000 | £80,910 in cash | 26.97p 5 | Neither | Any | Nil (£180,000 of non-qualifying spend) | Nil | Nil Example 1: a profitable company under the merged scheme An illustrative engineering company with a 31 March year end, taxable profits comfortably above £250,000 and so paying corporation tax at the 25% main rate. Its qualifying R&D expenditure for the period is £400,000. The merged R&D Expenditure Credit pays a credit of 20% of qualifying expenditure, and that credit is itself taxable income. Qualifying expenditure: £400,000 Gross credit at 20%: £80,000 Corporation tax on the credit at 25%: £20,000 Net benefit: £60,000, or 15p per £1 of qualifying spend The £80,000 is recognised in the accounts before the tax charge, so it increases pre-tax profit as well as reducing the tax bill. The tax charge on it is why 20p of headline credit is worth 15p in the hand. A company paying corporation tax at the 19% small profits rate runs the same sum with a smaller deduction: £80,000 less £15,200 of tax, leaving £64,800, or 16.2p per £1. Example 2: the marginal-rate case The 25% main rate and the 19% small profits rate are not the only two answers. Where a company’s augmented profits — broadly its taxable profits, with the £50,000 and £250,000 limits divided between associated companies — fall between £50,000 and £250,000, marginal relief applies and the effective rate on the top slice of profit is 26.5%. An illustrative software company sits in that band and has £100,000 of qualifying expenditure. Qualifying expenditure: £100,000 Gross credit at 20%: £20,000 Corporation tax on the credit at 26.5%: £5,300 Net benefit: £14,700, or 14.7p per £1 This is the lowest outcome the merged scheme produces, assuming the credit does not itself carry the company out of the band. The full range runs from 14.7p to 16.2p per £1, and where a company falls within it turns on its profit position for the period, not on its size or sector. Example 3: a loss-making company under the merged scheme An illustrative medtech company, loss-making for the period, with £250,000 of qualifying expenditure and relevant PAYE and National Insurance contributions of £120,000. It is not R&D-intensive enough for ERIS, so it claims under the merged scheme. Loss-makers receive the credit in cash rather than as a reduction in a tax bill, after HMRC applies a set of steps laid down in the legislation. The practical effect for most is a deduction of notional tax — tax calculated on the credit even though there are no profits to pay it from — at the 19% small profits rate. Qualifying expenditure: £250,000 Gross credit at 20%: £50,000 Notional tax at 19%: £9,500 Payable credit: £40,500 in cash, or 16.2p per £1 Then the cap. The cash payable is limited to £20,000 plus 300% of relevant PAYE and NIC, which here gives £380,000. The £40,500 sits well inside it, so the cap does nothing. A company with a small UK payroll and a large subcontracted R&D budget can get a different answer, and where the cap does bite under the merged scheme the restricted amount is carried forward as a credit for the next accounting period rather than lost. Note that this loss-maker does better per £1 than the profitable company in example 1. With no profits chargeable at the main rate, the notional tax comes off at 19% rather than 25%. The £9,500 is not thrown away either: it carries forward against future corporation tax, or can be surrendered to another company in the group. Example 4: a loss-making R&D-intensive SME under ERIS An illustrative biotech company, pre-revenue and loss-making, spending £800,000 in the year of which £300,000 is relevant R&D expenditure. Its intensity is £300,000 divided by £800,000, which is 37.5% — above the 30% threshold, so it claims Enhanced R&D Intensive Support rather than the merged scheme. ERIS works differently. Instead of a taxable credit, the company deducts an additional 86% of its qualifying expenditure from taxable profits on top of the normal 100%, then surrenders — hands to HMRC in exchange for cash — the resulting loss at 14.5%. Qualifying expenditure: £300,000 Total deduction at 186%: £558,000 Payable credit at 14.5% of the surrendered amount: £80,910 in cash, or 26.97p per £1 The ERIS credit is not taxable, so nothing is clawed back from that figure. The same £300,000 under the merged scheme would have produced £48,600, so passing the intensity test is worth £32,310 to this company. Three conditions sit behind the headline. The full rate assumes losses at least equal to £558,000; where the company’s losses are smaller, the surrenderable amount falls and the credit falls with it. The intensity ratio is worked across the company and its connected companies together, on both sides of the fraction; the ERIS intensity calculator models that. And the PAYE cap applies here as it does under the merged scheme, but the consequence is harsher: £20,000 plus 300% of relevant PAYE and NIC, with no carry-forward of the restricted credit, so loss surrendered above the capped amount is written off for nothing. An ERIS claim has to be sized to the cap before it is filed. Here the full £80,910 is payable only if relevant PAYE and NIC reach just over £20,300, since the cap is £20,000 plus three times that figure. A pre-revenue company running most of its programme through subcontractors can fall short of that. Example 5: the project that produces no claim An illustrative manufacturer replaces its production planning system, at a cost of £180,000 in staff time and consultants. The finance director asks what it is worth as an R&D claim. Nothing. The work was configuration and data migration: the platform, the interfaces and the scheduling logic were all used as the vendor documents them, assembled to an established pattern. However hard the work was, a competent professional in the field could have worked out how to do it from existing knowledge, so there was no scientific or technological uncertainty to resolve. Had the integration itself been the problem — had the field been unable to predict whether those systems would behave as a whole — the answer might have been different, and that is the question we ask first. There is no advance in the field’s knowledge or capability either: the company learned something new, but the field did not. Both tests come from the definition of qualifying R&D, and neither is met by difficulty, expense or commercial novelty. Total project cost: £180,000 Qualifying expenditure: nil Claim value: nil That answer is worth as much as the four above it. A claim built on this project would be found in a compliance check, and HMRC checked around one in six R&D claims in 2023-24, its latest published figure. Some of the most useful work we do on a first engagement is telling a company which of its projects to leave out. What these examples do not settle Each one starts from a figure for qualifying expenditure, which is where the real work sits. Which projects pass the qualifying test, which costs fall inside the six qualifying categories, how staff time is apportioned, and which party to a contract is entitled to claim: those questions decide the number that goes into the 20% or the 186%. The arithmetic on this page is the easy part. For an estimate on your own figures, use the claim value calculator. For periods beginning before 1 April 2024, the rates were different and are set out in rates by year. Talk it through with a chartered adviser Worked examples show how the relief is calculated. They do not tell you what your own claim is worth, because that depends on judgements about your projects and costs that no table can make for you. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim we prepare is signed off by a chartered adviser before it reaches HMRC, and enquiry support is included as standard. If you want a considered view on what your position is worth, get in touch, or start with the full R&D tax relief guide. Sources Merged scheme & ERIS guidance — the 20% merged credit, the ERIS 186% deduction and 14.5% payable credit, the 30% intensity test and the PAYE cap. Corporation Tax rates and allowances — the 25% main rate, the 19% small profits rate, and marginal relief between the £50,000 lower limit and the £250,000 upper limit. CTA 2010 s18D — subsection (3), dividing the £50,000 and £250,000 limits by one plus the number of associated companies. CIRD140000: PAYE cap — the £20,000 plus 300% cap. CTA 2009 s1042J — the amount restricted by the cap added to the credit for the next accounting period. DSIT Guidelines: meaning of R&D for tax purposes — the advance, uncertainty and competent professional tests behind example 5. --- # R&D tax relief glossary: every term defined URL: https://www.limestonegrey.com/rd-tax-relief/glossary/ Description: Definitions of the terms used in UK R&D tax relief, from the Additional Information Form to the PAYE cap, each linked to the guide that covers it in full. R&D tax relief •14 min read R&D tax relief glossary: the terms defined MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards R&D tax relief carries more vocabulary than most parts of the tax code, and a good deal of it is undefined in the places companies meet it first: a letter from HMRC, a form field, an adviser’s email. This page defines the terms in plain language and links each one to the guide that covers it properly. Definitions here are deliberately short. They tell you what a thing is; the linked page tells you how it works, what it is worth and where it goes wrong. If you are starting from nothing, start instead with the complete guide to R&D tax relief. A–B Additional deduction. An amount deducted from taxable profits on top of the money actually spent. Under ERIS a company deducts a further 86% of its qualifying R&D expenditure on top of the normal 100%, giving a total deduction of 186%. Additional Information Form (AIF). HMRC’s mandatory online form carrying the substance of a claim: the project descriptions, the qualifying costs, the senior internal R&D contact and every agent involved. It has been required for claims made on or after 1 August 2023 — in practice 8 August 2023 — and must reach HMRC before or with the CT600. Set out in full in the Additional Information Form explained. Advance assurance. HMRC’s service giving its view on a claim before it is filed. Full claim advance assurance covers an eligible first-time SME claimant’s whole claim; the separate Targeted Advance Assurance pilot, running until May 2027, gives a view on up to two areas chosen from four defined ones. Both are explained in can I get advance assurance for an R&D claim? Advance in science or technology. An extension of the overall knowledge or capability of a field, not just of your own company. Work that was new to your business but already established in the field is not an advance, however much effort it took. One of the four elements of qualifying R&D. Appreciable improvement. An improvement to an existing process, material, device, product or service through scientific or technological change, set at more than a minor or routine upgrading — something a competent professional would acknowledge as genuine and non-trivial. It is one of the forms an advance can take: see what counts as qualifying R&D and what doesn’t count as R&D. Baseline. The level of science or technology the project planned to advance on: what was publicly known and achievable in the field before the work began. The Additional Information Form asks for it directly, and it is set by the field’s frontier rather than by the company’s own starting position. C CIRD. HMRC’s Corporate Intangibles Research and Development manual, the internal guidance its officers work from. Our guides cite it alongside the legislation and gov.uk guidance so that statements of law can be verified rather than taken on trust — see how we are regulated. Claim notification. The short online form that, for accounting periods beginning on or after 1 April 2023, a first-time claimant or a company that has not claimed in the three years ending with the notification deadline must file within six months of the end of its period of account. There is no late route: miss it and the claim is invalid. Covered in the R&D claim notification requirement. Closure notice. The notice ending an HMRC enquiry, stating the officer’s conclusions and either recording that no amendment is needed or making the amendments required to give effect to them. The appeal lies against the amendment: in writing, within 30 days after it was notified to the company. Set out in what happens if my R&D claim is rejected? Competent professional. Someone with relevant qualifications or experience, or both, in the specific field of science or technology the project sits in. The whole definition of R&D runs through their eyes: the test is whether such a person could readily resolve the uncertainty from existing knowledge. Explained in who counts as a competent professional? Connected companies. Companies within the same control relationship. They are counted on both sides of the ERIS intensity ratio, so a company that looks comfortably intensive on its own figures can fail on the group’s. The mechanics are in the 30% R&D intensity condition. (Aggregation for the SME test runs on a different concept: see Linked and partner enterprises below.) Consumables. Materials used up or transformed in the R&D, plus the water, fuel and power it consumes. Items that end up in something sold in the ordinary course of business fall outside the category. One of the six qualifying cost categories. Contracted-out R&D. R&D one company pays another to carry out. Only one of them can claim it: the customer claims where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken, and otherwise the contractor claims in its own right. Worked through in contracted-out R&D: who claims? Corporation Tax Act 2009 (CTA 2009). The statute containing the R&D reliefs. The merged scheme sits in Chapter 1A of Part 13, inserted by Finance Act 2024 — see is R&D tax relief State aid? — and ERIS in Chapter 2, which decides what rescue route is open if a claim is removed. CT600. The company tax return. An R&D claim is made in it, which is why backdating a claim means amending a return already filed. The steps are in how do I claim R&D tax credits? D–F Discovery assessment. HMRC’s route to recovering relief after the twelve-month enquiry window has closed, available where relief given is or has become excessive. The time limits run to four years ordinarily, six for careless behaviour and twenty for deliberate — see can HMRC make me pay back an R&D tax credit? DSIT Guidelines. The Guidelines on the meaning of research and development for tax purposes, issued by the Department for Science, Innovation and Technology. They carry the statutory definition of R&D — the project, the advance, the uncertainty and the competent professional test — and are applied in what counts as qualifying R&D. Enhanced R&D expenditure. Qualifying costs uplifted by a set percentage, with the enhanced amount deducted from taxable profits before the tax is worked out. It is a sum taken off the profit, several steps from any cash, so an enhancement figure is not what a claim pays — a distinction drawn in the Tanglewood tribunal decision. Enhanced R&D Intensive Support (ERIS). The relief for loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure. It pays up to 26.97p per £1 of qualifying spend, in cash and tax free, the most generous rate in the current system. Covered in full in the ERIS guide. Enquiry. A formal HMRC compliance check into a claim, opened by letter. HMRC checked around one in six R&D claims in 2023-24, its latest published figure. What one involves, and how claims are defended, is in HMRC R&D enquiries. Error and fraud. HMRC’s estimate of the proportion of R&D relief incorrectly claimed, published separately from the annual statistics. It fell from 17.6% in 2021-22 to 6.4% in 2023-24 on random-enquiry evidence, with an illustrative 5.3% for the two years since — the trend that explains the current compliance regime, read in HMRC’s R&D statistics explained. Externally provided worker (EPW). A worker supplied by a third party, typically an agency, who works under your direction but is paid by their provider. Payments to unconnected providers qualify at 65%, and for accounting periods beginning on or after 1 April 2024 only where the workers are within UK PAYE and Class 1 NIC. The conditions are in which costs qualify. First-tier Tribunal (FTT). The first tier of the tax tribunal, reached after an appeal to HMRC and any statutory review: corporation tax is a direct tax, so you cannot start at the tribunal. Its decisions are cited in the form [2026] UKFTT 1137 (TC), which is the Tanglewood decision. The route to it is set out in what happens if my R&D claim is rejected? G–L GfC3. HMRC’s guidelines for compliance on R&D, published as “Help to see if your work qualifies as research and development for tax purposes”. It is not the statutory definition — the DSIT Guidelines carry that — but it describes what HMRC expects of a competent professional and of the records behind a claim. Going concern. A condition of claiming, met where the latest published accounts were prepared on a going concern basis, nothing in them indicates that basis was adopted only because of an entitlement or expected entitlement to the relief, and the company is not in liquidation or administration. Set out in who can claim R&D tax relief?, and applied to companies in difficulty in R&D tax relief when a company is in trouble Grace period. The one further period a company can claim ERIS in after its intensity drops below 30%. It has to be earned: the company must have met the intensity condition in its most recent prior twelve-month period and actually obtained relief for it. Explained in the ERIS guide. Ineligible company. A body that cannot claim whatever it spends: a charity, an institution of higher education, a scientific research association or a health service body. It is a test of what the body is, not what it does — see can a charity claim R&D tax relief? Intended or contemplated. The test deciding who claims contracted-out R&D: whether it is reasonable to assume, from the contract and the surrounding circumstances, that the customer intended or contemplated R&D of that sort when the contract was made. Evidence, not labels, settles it. Worked through in contracted-out R&D: who claims? Intensity condition. The gateway to ERIS: relevant R&D expenditure of at least 30% of total relevant expenditure, with connected companies counted on both sides. Total relevant expenditure is broadly the trading costs in the accounts, not just the R&D ones. Explained in the 30% R&D intensity condition. Linked and partner enterprises. Other businesses whose figures are added to yours when testing SME status. Linked enterprises, broadly holdings of more than 50% of the voting rights, are added in full; partner enterprises, holdings of 25% to 50%, in proportion to the stake. Covered in what happens if my company outgrows the SME definition? M–P Merged R&D expenditure credit (merged RDEC). The single scheme for accounting periods beginning on or after 1 April 2024, paying a taxable credit of 20% of qualifying expenditure, worth 14.7p to 16.2p per £1 after tax. It applies to companies of every size except loss-making SMEs claiming ERIS. Covered in the merged R&D scheme explained. Notional tax. Tax calculated on a loss-maker’s merged scheme credit even though there are no profits to pay it from, deducted at the 19% small profits rate. It is why the loss-maker’s net rate is 16.2p rather than 20p, and it is not lost: it carries forward or can be surrendered within a group. Shown working in the worked examples. Old SME scheme. The pre-merger relief for smaller companies, applying to accounting periods beginning before 1 April 2024. It ran on an additional deduction and a payable credit on surrendered losses, at rates that changed in April 2023. The figures are in R&D tax relief rates by year. Overseas restriction. The rule limiting relief to work done in the UK for accounting periods beginning on or after 1 April 2024: subcontracted R&D only where undertaken in the UK, EPWs only where within UK PAYE and Class 1 NIC. The narrow way through it is in overseas R&D costs. Patent Box. A separate relief applying an effective 10% corporation tax rate to profits attributable to qualifying patents. It sits alongside an R&D claim rather than competing with it — see can I claim Patent Box and R&D tax relief together? PAYE cap. The limit on the cash credit a company can receive in a period: £20,000 plus 300% of its relevant PAYE and National Insurance contributions. It applies under both current schemes, with an exemption turning on intellectual property activity and low connected-party subcontracting. Explained in what is the PAYE cap? PCRT. Professional Conduct in Relation to Taxation, the conduct rules binding members of the main tax and accountancy bodies. It requires advice to have a sustainable basis in law and prohibits letting a fee shape a filing position; an adviser outside those bodies is bound by none of it. Set out in how to choose an R&D tax adviser. Period of account. The period for which a company draws up accounts. It is usually the same as the corporation tax accounting period but can differ, and it is the date the claim notification and amendment deadlines both count from — see the claim notification requirement. Project. A defined piece of work with an objective, a start and an end. Relief is claimed project by project, and the R&D project is usually narrower than the commercial project containing it, beginning when work on the uncertainty starts and ending when it is resolved or abandoned. Covered in what counts as qualifying R&D. Q–R Qualifying indirect activities (QIAs). Supporting tasks that form part of an R&D project without themselves resolving the uncertainty — maintaining equipment, recruiting onto the team, preparing the report of findings. The Guidelines treat them as R&D, but the list at paragraph 31 is exhaustive. Set out in what are qualifying indirect activities? Qualifying overseas expenditure. The narrow exception to the overseas restriction, for conditions necessary for the R&D — geographical, environmental, social or regulatory — that are absent in the UK and would be wholly unreasonable to replicate here. Cost and workforce availability are expressly excluded. Covered in overseas R&D costs. R&D allowances (RDAs). A 100% capital allowance for capital expenditure on R&D, sitting in the capital allowances rules rather than in R&D tax relief. They are the route for spending the credit cannot reach, such as building a laboratory — see what are R&D allowances? R&D-intensive. Describing a company that passes the 30% intensity condition. Together with being an SME and loss-making, it is what qualifies a company for ERIS rather than the merged scheme. RDEC. The R&D expenditure credit: an above-the-line taxable credit, recognised as income in the accounts before the tax charge, and now the mechanism of the merged scheme. Its rates rose from 11% in 2015 to 20% in 2023 — listed in rates by year. Reasonable care. The standard that decides whether a penalty arises at all on an incorrect claim: where reasonable care was taken there is none, only repayment. A careless error attracts up to 30% of the amount overclaimed, reducible as far as nil where the disclosure is unprompted; the deliberate bands run higher and have floors beneath which they cannot be reduced. The ranges are set out in can HMRC make me pay back an R&D tax credit? S–T Scientific or technological uncertainty. Uncertainty existing where knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or readily deducible by a competent professional working in the field. Difficulty, expense and commercial risk are not the same thing. Explained in what is a scientific or technological uncertainty? Senior internal R&D contact. The named senior person at the claimant company, connected to the R&D, who must be identified on the Additional Information Form. HMRC’s follow-up questions are directed there, so it should be someone who can speak to the technical work. SME. For R&D purposes, a company with fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less, with linked and partner enterprises aggregated. Status changes only after the thresholds are crossed in two consecutive years. Covered in outgrowing the SME definition. State aid. The subsidy control concept the old SME scheme depended on. The current schemes carry no notified State aid machinery, so grants no longer restrict claims, with one exception for Northern Ireland-registered companies claiming ERIS. Explained in is R&D tax relief State aid? Subcontracted R&D. R&D activity contracted out to a third party. Payments to unconnected subcontractors enter the customer’s claim at 65% of the portion attributable to UK R&D; connected-party payments follow different rules. Covered in can I claim for subcontracted R&D? Subsidised expenditure. The old rule pushing grant-funded costs out of SME relief. It was abolished for accounting periods beginning on or after 1 April 2024, though much online guidance still describes it as live — corrected in grant funding and R&D tax relief. For old periods still open, the First-tier Tribunal held that payments under ordinary commercial contracts are not, in themselves, subsidies: see Collins Construction and Stage One. Surrender. Handing a loss to HMRC in exchange for a cash credit rather than carrying it forward against future profits. Under ERIS the surrendered loss is paid at 14.5%, and because the credit does not carry forward, the surrender has to be sized to the PAYE cap before filing. Shown in the worked examples. Systematic investigation. The method HMRC expects a qualifying project to be able to show: hypothesis, test, result, next iteration, recorded while the work runs. Effort and expense do not amount to a method, and the absence of one was among the failures in the Tanglewood tribunal appeal. Technical report. The optional narrative document some companies prepare alongside a claim. It is not required — the Additional Information Form is the mandatory one — and it earns its place only where it carries something the form cannot. Weighed up in do I need a technical report? Two-year amendment window. The period for adding a claim to a return already filed: two years from the end of the period of account. It is not the only gate — a missing claim notification closes a claim the amendment window would otherwise leave open. Covered in how far back can I claim? Knowing what a term means is not the same as knowing how it applies to your company, and most of the questions worth asking sit in the gap between the two. If a definition here has raised one, talk it through with a chartered adviser, or work through the full R&D tax relief guide. Sources DSIT Guidelines: meaning of R&D for tax purposes — the advance, uncertainty, competent professional and qualifying indirect activity definitions. Merged scheme & ERIS guidance — the 20% merged credit, the ERIS 186% deduction and 14.5% payable credit, the 30% intensity test and the PAYE cap. Help to see if your work qualifies as R&D (GfC3) — HMRC’s guidelines for compliance on qualifying activities, the competent professional and record keeping. Corporate Intangibles Research and Development Manual (CIRD) — HMRC’s internal guidance, cited page by page in the guides each entry links to. --- # Free R&D tax relief calculators and checkers | LimestoneGrey URL: https://www.limestonegrey.com/tools/ Description: Five free tools for UK R&D tax relief: eligibility, claim notification, a deadline calculator, claim value and ERIS intensity. Each runs in your browser. Tools Calculators and tools Five tools we built because we needed them ourselves, using the rates for accounting periods beginning on or after 1 April 2024. Each is free, runs entirely in your browser, and gives an illustration rather than advice — real positions turn on details a calculator cannot see. Our guides cover the same ground in depth, starting with which scheme applies. R&D eligibility checker Is our work likely to qualify at all? Seven short questions on the tests that decide most claims: what you were aiming at, what was genuinely unknown, who can explain it and who commissioned it. It tells you plainly when the answer is no. Seven questions → a reasoned verdict, not a score → Claim notification deadline checker Do we have to tell HMRC before we can claim? Enter your period of account and claim history. It gives you the notification deadline, whether the window is still open, and whether the rule catches you at all. Year to 31 Mar 2026 → notify by 30 Sep 2026 → R&D deadline calculator When does every date in our claim fall? Enter your accounting dates. It returns every deadline: filing, claim, notification, AIF, enquiry and discovery. Year to 31 Dec 2025 → claim by 31 Dec 2027 → Claim value calculator What would a claim actually be worth? Enter your qualifying spend and profit position. It shows the after-tax value under the merged scheme, or ERIS if you are a loss-making, R&D-intensive SME. £100,000 qualifying spend → up to £26,970 → ERIS intensity calculator Do we clear the 30% intensity threshold? Enter your relevant R&D spend and total relevant expenditure. It gives your intensity ratio and how much headroom — or shortfall — you have against the threshold. £450k R&D of £1.4m total relevant expenditure → 32.1% → --- # R&D tax relief eligibility checker: do you qualify? URL: https://www.limestonegrey.com/tools/eligibility-checker/ Description: Seven questions on the tests that decide most R&D claims: the advance, the uncertainty, the competent professional and who owns the work. Free, no sign-up. Tools R&D eligibility checker Seven questions at most, and fewer if your answers settle it early — about a minute. It applies the tests that decide most claims and tells you plainly where you land, including when the answer is no. Nothing is stored, and there is no sign-up. Four things decide whether work is qualifying R&D. There must be a project: a defined piece of work with an objective, a start and an end. It must aim at an advance in science or technology — new knowledge or capability in the field, or an appreciable improvement to what already exists. There must be scientific or technological uncertainty: at the outset, it must not have been known whether the aim was achievable, or how to achieve it in practice. And that uncertainty must be one a competent professional in the field could not readily resolve using existing knowledge. Difficulty is not the test: work can be complicated, slow and expensive while remaining entirely predictable to an expert, and a solution that was merely new to your company was not new to the field. The checker below works through these same four tests, in the order an adviser would. 01 / 07 Who is claiming What kind of business would make the claim? R&D tax relief is a corporation tax relief, so this is the first gate. A UK limited company It pays corporation tax and files a company tax return. A sole trader, partnership or LLP Any business that is not itself a company paying corporation tax. Not sure ← Back Nothing is stored. No sign-up. What this is, and what it is not This checker walks the same ground a scoping call covers, in the same order. It is a first read on the answers you give, not a review of your claim and not tax advice: it cannot see your contracts, your cost records or the technical detail that decides a real position. Every route through it ends in the same place — a conversation with a chartered adviser, or a link to the guide that explains the point properly. It will tell you when a claim looks unlikely. That is deliberate. If you would rather talk it through than click through, that costs nothing either. Tests last reviewed 24 August 2026. --- # ERIS 30% intensity calculator | LimestoneGrey URL: https://www.limestonegrey.com/tools/eris-intensity-calculator/ Description: Check whether your company meets the 30% R&D intensity threshold for Enhanced R&D Intensive Support (ERIS), including the connected-company rule. Tools ERIS intensity calculator Enhanced R&D Intensive Support (ERIS) is available to loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure, for accounting periods beginning on or after 1 April 2024. Both sides of the ratio aggregate connected companies, but payments between those companies come out of the total. This calculator checks the intensity condition; our ERIS guide covers the other conditions. How the 30% test works The ratio compares relevant R&D expenditure with total relevant expenditure for the period, aggregating connected companies on both sides. At or above 30%, a loss-making SME can claim ERIS: an additional 86% deduction and a 14.5% payable credit worth up to 26.97p per £1 of qualifying spend. Below 30%, the company claims under the merged scheme instead, unless the grace period applies. One rule inside the aggregation catches groups out. Connected companies are counted on both sides — connection tested on any day in the period, so a subsidiary bought or sold part-way through the year still comes in — but a payment, or other transfer of value, to a connected company is excluded from total relevant expenditure. Leave intra-group recharges in the total and the denominator is inflated, which understates intensity and can put a qualifying company below the line on paper. Qualifying R&D expenditure still counts on the R&D side even where it takes that form, so the exclusion moves the ratio one way only: up. The threshold is period-specific. The 30% test applies to accounting periods beginning on or after 1 April 2024; R&D-intensive support was introduced at 40% for expenditure from 1 April 2023, and periods on that older threshold can still be within their amendment window. If yours began before 1 April 2024, check what applied to it on our rates by year page — this calculator tests 30% only. Intensity questions are rarely clean: connected companies, period lengths and cost boundaries all move the ratio. We will give you a straight answer on where you stand. The 30% intensity test *For loss-making SMEs, in accounting periods beginning on or after 1 April 2024. Connected companies are aggregated on both sides, with payments between them excluded from the total. A one-year grace period can hold ERIS where intensity dips below 30%, but only where the company both met the condition in its most recent prior 12-month accounting period and obtained relief for it: eligibility without a claim does not bank the protection. Relevant R&D expenditure (£, including connected companies) Total relevant expenditure (£, including connected companies, excluding payments between them) Strip out payments, and other transfers of value, between the connected companies: they are ignored for this figure. Leaving them in inflates the total and understates your intensity. Qualifying R&D expenditure still counts in the figure above, even where it takes that form. Check intensity Rates and rules last reviewed 10 August 2026. --- # R&D tax credit calculator: what your claim is worth URL: https://www.limestonegrey.com/tools/claim-value-calculator/ Description: Enter your R&D spend and see the merged scheme or ERIS figure in seconds. No sign-up, and the gross credit, the tax on it and the net are all shown. Tools R&D claim value calculator Current rates for accounting periods beginning on or after 1 April 2024: the merged scheme pays a 20% expenditure credit (worth 14.7p to 16.2p per £1 after tax), and ERIS pays loss-making, R&D-intensive SMEs up to 26.97p per £1. Not sure which applies? Start here. How the numbers work Merged scheme: a 20% credit is added above the line and then taxed, so £100,000 of qualifying spend gives a £20,000 gross credit worth £15,000 at the 25% rate, or £16,200 at 19%. Companies with augmented profits between £50,000 and £250,000 pay tax on the credit at the 26.5% marginal rate, which leaves £14,700. Loss-makers have notional tax deducted at 19% only, so the cash outcome is also £16,200 per £100,000. ERIS works differently: the additional 86% deduction takes the total to 186%, and a payable credit of 14.5% of the surrenderable loss produces up to £26,970 per £100,000 of qualifying spend, tax free. Cost boundaries, subcontracting rules and the PAYE cap all change the outcome. A scoping conversation with a chartered adviser will give you a number you can plan around. Qualifying R&D expenditure (£) Is the company profitable or loss-making? Profitable Loss-making Position Change Roughly what are the taxable profits for the period? Under £50,000 £50,000 – £250,000 Over £250,000 The £50,000 and £250,000 limits are divided by one plus the number of associated companies, and reduced proportionately for an accounting period shorter than 12 months, so a company in a group may fall into a different band than its profits alone suggest. Taxable profits Change Is relevant R&D expenditure at least 30% of total relevant expenditure? Yes No Not sure Our R&D intensity calculator works the ratio out: the test compares relevant R&D expenditure with total relevant expenditure, connected companies are counted together, and payments between them come out of the total, though they stay in the R&D figure. R&D intensity Change Estimate claim value Rates and rules last reviewed 10 August 2026. --- # R&D claim notification checker: do you need to notify? URL: https://www.limestonegrey.com/tools/claim-notification-checker/ Description: Enter your accounting period and find out whether your company has to send HMRC a claim notification before it can claim R&D tax relief. Tools Claim notification deadline checker For accounting periods beginning on or after 1 April 2023, companies claiming R&D relief for the first time (or with no claim in the three years ending with the notification deadline — and claims made by amendment on or after 1 April 2023 for earlier periods do not count) must send HMRC a claim notification. The window opens on the first day of the period of account, so you can notify as soon as the period starts; the deadline is six months after the end of the period of account. Miss it and the claim is invalid, even if the tax return amendment window is still open. If you have changed your year end, the long or short period that creates moves this date. Full guide here. Claim notification is the trap that silently kills otherwise valid claims. If your deadline is near, speak to us this week, not this quarter. The claim notification window Applies to accounting periods beginning on or after 1 April 2023. The deadline holds even where the tax return amendment window is still open. End date of your period of account Start date of your period of account We have assumed a 12-month period of account — change this date if yours is different. When did the company's last R&D claim reach HMRC? Leave blank if the company has never claimed, or you are not sure — the checker will assume notification is needed. The three-year exemption is measured to the notification deadline, not from today, so the exact date matters. Which of these describes that claim? Some past claims do not count towards the three-year exemption. A normal claim that still stands On the original return, or an amendment for an accounting period that began on or after 1 April 2023 — and HMRC did not remove it. An amendment for an earlier period It reached HMRC on or after 1 April 2023, for an accounting period that began before that date. A claim HMRC removed HMRC rejected it by removing it from the company tax return. Not sure Check deadline Rates and rules last reviewed 31 July 2026. --- # R&D deadline calculator: every date in the claim lifecycle URL: https://www.limestonegrey.com/tools/rd-deadline-calculator/ Description: Enter your period of account and get every R&D deadline it produces: accounting periods, filing date, claim and notification deadlines, the AIF, the enquiry window and the discovery long-stops. Tools R&D deadline calculator An R&D claim is governed by six separate clocks, and they do not run together. The return has a filing date. The claim has its own two-year limit. A first-time claimant has six months to notify HMRC, and missing that ends the claim whatever the other dates say. The Additional Information Form has no date of its own but a strict sequence. HMRC's enquiry window opens off the day the return arrives, not the year end. And behind all of it sit the discovery long-stops, which outlive every other date by years. Enter one period of account and this works out all of them. Each date comes with the rule behind it and a link to the guide that derives it, so you can check the reasoning rather than take the number on trust. Why the dates diverge Because they are anchored to different things. The filing date and the claim deadline run from the period of account; the discovery limits run from the accounting period; the enquiry window runs from the day the return was delivered. For a company with a straightforward twelve-month year those distinctions stay invisible. Change the year end, or draw up accounts for longer than twelve months, and they separate — a period of account over twelve months is not one accounting period at all but two, each with its own return, its own claim and its own form. One date is worth singling out. The claim notification deadline is unforgiving: six months after the period of account ends, no late route, no appeal, and the claim is invalid even where the two-year window is still open. Where a period began before 1 April 2024 it sits under the old SME scheme or old RDEC rather than the merged scheme and ERIS, and the last standard old-scheme deadlines fall in late March 2027. Which regime applies turns on your own accounting dates, covered in which scheme applies to your company. Deadlines are the part of an R&D claim with no remedy attached. If one of yours looks close, or looks passed, that is a conversation to have this week. End date of your period of account Start date of your period of account We have assumed a 12-month period of account — change this date if yours is different. Has the company claimed R&D relief before? No, or not sure The checker will assume a claim notification is needed. Yes Tell us when the last claim reached HMRC and we will apply the three-year test. When did the company's last R&D claim reach HMRC? The exemption is measured to the notification deadline, not from today, so the exact date matters. A claim made by amendment on or after 1 April 2023 for an earlier accounting period does not count — our notification checker handles that case in full. Date the return was, or will be, delivered (optional) Leave blank if you do not know it yet. Without it we can state the enquiry rule but not the date, because the window runs from the day the return arrives. Show every deadline Rates and rules last reviewed 3 September 2026. Your deadlines Deadline | Date | The rule | Guide The rules applied, and where they come from Every date this tool produces comes from one of the rules below. Each links to the primary source, so nothing here has to be taken on trust. Two things it is not: it is general information rather than advice, and it is not a substitute for checking a deadline that matters against your own facts. A period of account longer than 12 months divides into a 12-month accounting period and a stub, because an accounting period ends at the latest twelve months from its beginning. CTA 2009 s 10(1) The filing date is the last of the dates para 14 gives: twelve months from the end of the accounting period, or twelve months from the end of the period of account. FA 1998 Sch 18 para 14(1) A company may not amend its return more than twelve months after the filing date. FA 1998 Sch 18 para 15(4) An R&D claim must be made, amended or withdrawn within two years from the end of the period of account. Accounting periods beginning before 1 April 2023 instead run to the first anniversary of the filing date for that period’s own return. FA 1998 Sch 18 para 83E The claim notification period ends with the last day of the period of six months beginning with the first day after the period of account, and the requirement catches accounting periods beginning on or after 1 April 2023. A company is outside it where it made an R&D claim in the three years ending with that deadline. CTA 2009 s 1142A and s 1042C A claim is invalid unless the Additional Information Form was provided no later than the day the claim was made or amended, and the form goes in at least once for each accounting period claimed for. It applies to claims made on or after 1 August 2023 — in practice 8 August 2023, when the regulations came into force. FA 1998 Sch 18 para 83EA and SI 2023/813 HMRC may give notice of enquiry up to twelve months from the day a return was delivered where it was delivered on or before the filing date; where it was delivered late, or where the company amends it, the window runs to the quarter day next following the first anniversary of that delivery or amendment. The quarter days are 31 January, 30 April, 31 July and 31 October. An enquiry opened off an amendment once the ordinary window has shut is limited to what the amendment changed. FA 1998 Sch 18 paras 24 and 25(2) An assessment may not ordinarily be made more than four years after the end of the accounting period, six years where the loss of tax was brought about carelessly, or twenty where it was brought about deliberately or where the company failed to notify its chargeability or to meet a disclosure obligation for a notifiable arrangement — and only where the discovery gateway is open at all. FA 1998 Sch 18 paras 41, 43, 44 and 46 The merged R&D expenditure credit and ERIS apply to accounting periods beginning on or after 1 April 2024; earlier periods sit under the old SME scheme or old RDEC. FA 2024 Sch 1 para 16 and SI 2024/286 What it does not do Para 14(1)(d) is not applied: where HMRC served the notice to deliver late, the filing date can be three months from the date of that notice, which no calculator can know. The enquiry window assumes the company is not a member of a group other than a small group. For a company that is, para 24(6) runs the twelve months from the filing date rather than from the day the return was delivered. The discovery long-stops are outer limits, not a schedule. A discovery assessment can only be made where the gateway is open at all: careless or deliberate behaviour (FA 1998 Sch 18 para 43), or an officer who could not reasonably have been expected to be aware of the situation from the information made available (para 44). Bank holidays and weekends do not move any of these dates; none of them is a "working day" rule. Windows can be reopened or extended in ways no calculator models: an officer may allow a late R&D claim under para 83E(5), and HMRC operates a narrow administrative easement for notification periods that ended between 8 September and 30 November 2024. No delivery date was entered, so the enquiry window is stated as a rule rather than a date. No prior claim was entered, so the notification answer assumes the company has not claimed within the three years ending with the deadline. --- # Insights | LimestoneGrey URL: https://www.limestonegrey.com/insights/ Description: Analysis and firm news on R&D tax relief: scheme changes, HMRC enquiry practice and tribunal decisions, from the chartered advisers who prepare the claims. Insights Technical analysis and firm news on R&D tax relief, written by the advisers who prepare the claims. All insights Read more 13 Aug 2026•Compliance & enquiries A care home's R&D claim reached a tribunal. It should never have been filed. MJ Matthew Jones ACA CTA Founder & Managing Director Read more 12 Aug 2026•Scheme changes & policy Tax advisers have to register with HMRC. You still can't check. MJ Matthew Jones ACA CTA Founder & Managing Director Read more 3 Aug 2026•Sector spotlights The R&D tax rules changed. Most fintech claims haven't caught up. MJ Matthew Jones ACA CTA Founder & Managing Director Read more 10 Jul 2026•Sector spotlights ERIS for pre-revenue biotech and medtech MJ Matthew Jones ACA CTA Founder & Managing Director Read more 8 Jul 2026•Making a claim Innovate UK grants and R&D tax relief together MJ Matthew Jones ACA CTA Founder & Managing Director Read more 7 Jul 2026•Firm news From brilliant science to big business: reflections from Climb26 LJ Lisa James Business & Marketing Director Read more 3 Jul 2026•Sector spotlights CRO contracts and R&D tax relief: who owns the claim? MJ Matthew Jones ACA CTA Founder & Managing Director Read more 30 Jun 2026•Sector spotlights Robotics prototyping and technological uncertainty MJ Matthew Jones ACA CTA Founder & Managing Director Read more 29 Jun 2026•Firm news LimestoneGrey to join the 'From Brilliant Science to Big Business' panel at Climb26 LJ Lisa James Business & Marketing Director --- # Fintech R&D tax relief under the merged scheme URL: https://www.limestonegrey.com/insights/fintech-rd-claims-merged-scheme/ Description: The relief a UK fintech claimed in 2021 no longer exists. What the merged scheme pays, where these claims get argued, and the deadline that kills them. Sector spotlights •3 August 2026 •5 min read The R&D tax rules changed. Most fintech claims haven't caught up. MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards The R&D tax relief a UK fintech claimed in 2021 no longer exists in the form it took then. For accounting periods beginning on or after 1 April 2024, the SME scheme and RDEC have been replaced by a single relief: the merged R&D Expenditure Credit. One scheme, one rate, for a ten-person payments start-up and a listed bank alike. Most finance teams have absorbed the headline. Fewer have revisited the claim underneath it, where the changes that decide whether a claim survives HMRC scrutiny actually sit. What the merged scheme pays A taxable credit worth 20% of qualifying R&D expenditure, which lands at between 14.7p and 16.2p per £1 once tax is accounted for. On £100,000 of qualifying spend the gross credit is £20,000. A company paying corporation tax at the 25% main rate keeps £15,000; one at the 19% small profits rate keeps £16,200. The low end of the range catches companies in the marginal band, where augmented profits fall between £50,000 and £250,000 and the effective rate is 26.5%: they keep £14,700. A loss-maker receives £16,200 in cash, because the notional tax deducted from its credit is fixed at 19% whatever rate it would otherwise pay. The credit sits above the line, in operating performance rather than below the tax charge, so it is visible to your board and to anyone reading the accounts during a raise. Our guide to the merged scheme covers the mechanics, including the PAYE cap that restricts payable credits where the UK payroll is small and development is largely outsourced. One carve-out survives: a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure claims Enhanced R&D Intensive Support instead, at up to 26.97p per £1. Pre-revenue fintechs should work that ratio first, and the ERIS intensity calculator does it including connected companies. Why fintech claims get argued hardest The rate is the easy part. The definition is where these claims are won and lost, and it has not softened. Qualifying R&D means a project seeking an advance in a field of science or technology by resolving uncertainty that a competent professional could not readily resolve. The advance has to belong to the field, not to your company. That makes uncomfortable reading for a sector where much of what gets built is genuinely difficult, commercially novel and technologically routine all at once. Building a product on established frameworks, languages and APIs used as intended is not R&D. Neither is configuring an existing platform, replicating functionality the field already understands, or interface work, however much engineering judgement it takes. What can qualify is narrower: algorithms developed because published approaches cannot meet a constraint on scale, latency, accuracy or concurrency, or integration whose combined behaviour cannot be settled from documentation. Where a qualifying core sits inside a larger commercial build, as it usually does in fintech, the claim covers the work that resolved the uncertainty, not the product around it. Drawing that boundary precisely separates a defensible claim from one written in product language. What counts as qualifying R&D works through the test element by element, and our software sector page sets out where the line falls for development work specifically. The deadline that ends the conversation If your company has never claimed, or has not claimed in the three years ending with your notification deadline, you must tell HMRC you intend to claim within six months of the end of your period of account. Miss it and the claim is invalid. Not reduced, not delayed. HMRC has no discretion to accept a late notification, there is no appeal, and the two-year window for amending the return does not rescue you. The rule applies to accounting periods beginning on or after 1 April 2023, and it bites hardest on early-stage companies, whose heaviest development spend sits in the years nobody spent reading tax legislation. Count the exact day: six months from a 30 June year end is 31 December, and a diary entry recording only the month is how these get missed. Our claim notification deadline checker returns the date in seconds, and the claim notification guide explains who is caught. Preparing for the one in six HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, with more than 500 staff working on R&D compliance. Enquiries run for months rather than weeks, and while one is open the payable credit for that period is unlikely to be paid, which matters more to a company that has budgeted the cash than the outcome does. Defensible preparation starts from the statutory definition rather than the spend. Projects are selected because they meet the test. The competent professional is interviewed and their reasoning recorded. The uncertainty is documented as it was experienced, failed approaches included. Costs reconcile to the accounts, and the Additional Information Form answers HMRC’s questions before they are asked. For a software business the most persuasive evidence is usually already in the building: version control history timestamps the iterations and shows the dead ends a tidy write-up loses. What an enquiry involves, and how prepared claims hold up, is covered in our guide to HMRC R&D enquiries. If you want a straight answer on whether your development work qualifies, talk it through with a chartered adviser. And if we do not think you should claim, we will say so. Sources R&D tax relief: the merged scheme and ERIS — the 20% expenditure credit, the ERIS intensity condition and the rates behind the figures above. Guidelines on the meaning of R&D for tax purposes — the advance, uncertainty and competent professional tests that decide which development work qualifies. Tell HMRC that you’re planning to claim R&D tax relief — the claim notification requirement and the six-month window. HMRC’s approach to R&D tax reliefs 2023 to 2024 — the compliance coverage behind the one-in-six figure and the resource committed to R&D checks. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # CRO contracts and R&D tax relief: who owns the claim? URL: https://www.limestonegrey.com/insights/cro-subcontracting-merged-scheme/ Description: Whether the sponsor or the CRO claims R&D tax relief turns on the contract. The intended or contemplated test, the 65% rule and overseas CRO work. Sector spotlights •3 July 2026 •7 min read CRO contracts and R&D tax relief: who owns the claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards When a UK biotech engages a contract research organisation (CRO), the R&D tax relief on that work usually belongs to the sponsor, not the CRO. Under the merged scheme the customer claims where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken, and a sponsor commissioning a defined study almost always did. The CRO claims in its own right only where its customer did not, or where the customer is overseas or otherwise outside UK corporation tax. Getting this wrong means one party claiming relief that belongs to the other. Why does the sponsor usually own the claim? Because the sponsor’s paperwork proves intention better than almost any other contracting relationship. A CRO engagement is typically built around a protocol or work order that describes the scientific work in detail: the study design, the endpoints, the methods. The R&D was not merely contemplated when the contract was made; it was specified page by page. That is precisely what the merged scheme’s test asks. The customer claims contracted-out R&D where, at the point of contracting, it intended or contemplated that R&D of that sort would be undertaken, and the full analysis of that test sits in our guide to contracted-out R&D: who claims? For a sponsor and CRO, the usual answer is short: the sponsor claims, and the CRO’s fees enter the sponsor’s claim as subcontracted R&D. The same logic covers CDMOs and other specialist providers wherever the commissioning documents specify the technical work in advance. When does the CRO claim instead? Two situations move the claim to the CRO. The first is an overseas or untaxed customer. A contractor whose customer carries on no trade within the charge to UK tax can claim in its own right, and this is the everyday reality for UK CROs serving US and European sponsors. The test is any UK tax, not corporation tax alone: a UK sole-trader customer is within the charge to income tax, so that route does not apply there. A UK CRO running qualifying R&D for a Boston biotech claims on its own costs for that programme, because the sponsor can claim nothing here. The second is work the customer never intended or contemplated. This is rarer in sponsor relationships, but CROs also do R&D of their own: developing new assay methods, platforms or analytical techniques beyond any client commission. That internal development is the CRO’s own R&D, claimable in its own right under the normal rules. How much of a CRO invoice enters the sponsor’s claim? 65%, where the CRO is unconnected to the sponsor. Pay an unconnected CRO £100,000 for qualifying work and £65,000 enters the claim, generating a £13,000 gross credit at the merged scheme’s 20% rate. Loss-making sponsors whose relevant R&D expenditure is at least 30% of total relevant expenditure may do better under Enhanced R&D Intensive Support (ERIS), which is worth up to 26.97p per £1 of qualifying expenditure. The 65% restriction on unconnected subcontractor payments applies under both current schemes, so the split between CRO fees and in-house costs shapes claim value either way. One practical point on invoicing: only R&D services qualify. Where a CRO invoice bundles qualifying scientific work with routine services, ask for the split. A single line item forces you to apportion later, on weaker evidence. What is the relief worth to a loss-making sponsor? Per £100,000 of qualifying expenditure, the current schemes pay out as follows. Remember that the 65% restriction sits in front of these figures: £100,000 of unconnected CRO invoices contributes £65,000 of qualifying expenditure. Position | Credit on £100,000 of qualifying spend | Net benefit Merged scheme, profitable at the 25% CT rate | £20,000 gross credit | £15,000 Merged scheme, loss-making | £20,000 gross credit, notional tax deducted at 19% | £16,200 in cash ERIS, loss-making and R&D-intensive | £26,970 payable credit, not taxable | £26,970 in cash One cap matters particularly to sponsors who outsource heavily. Payable credits under both schemes are limited to £20,000 plus 300% of the company’s relevant PAYE and NIC, and a sponsor with a small internal team and a large CRO programme has a small payroll. An exemption exists, and it is more particular than the shorthand suggests. It asks that the company’s own employees create relevant intellectual property, take steps towards creating it, or perform a significant amount of management activity on IP the company itself holds, and that connected-party spend on subcontractors and externally provided workers does not exceed 15% of qualifying R&D expenditure. Note the shape of that first condition: creating IP is not the only route into it, since taking steps towards creating IP counts as well, but the activity has to be the company’s own employees’. Establish whether you meet it before the claim is built, not when the credit is capped. Our PAYE cap page works through both conditions. What if the CRO does the work overseas? Then most of it falls out of the sponsor’s claim. For accounting periods beginning on or after 1 April 2024, subcontracted R&D qualifies only where the work is undertaken in the UK. Global CROs deliver through networks of sites, so a single engagement can produce qualifying UK work and non-qualifying overseas work under one contract. Sponsors need the work mapped by location, not by contracting entity. The exception is qualifying overseas expenditure: where conditions necessary for the R&D, geographical, environmental, social or regulatory, are not present in the UK and would be wholly unreasonable to replicate here. A trial needing a patient population the UK cannot supply, or a regulator requiring in-territory studies, can meet it. Cheaper delivery and staff availability are expressly excluded. The rule and its planning consequences are set out in overseas R&D costs under the merged scheme, and the trials angle in clinical trial costs in R&D claims. Which contract terms decide the claim? The ones that evidence intention and location. When we review a sponsor and CRO agreement with the claim in mind, we look for: a scope of work that describes the scientific programme, or incorporates the protocol, so the intended R&D is visible on the face of the contract an express statement of which party intends to claim R&D tax relief delivery locations: which sites, in which countries, will perform which work packages invoicing terms that separate qualifying scientific work from routine services clarity on any onward subcontracting by the CRO, so you know who is actually doing the work and where None of this wording overrides the facts, and HMRC can look behind any recital. But a contract that matches the facts closes off most arguments before they start. A practical checklist for biotech sponsors Before the claim is prepared, a sponsor should be able to answer yes to each of these: We hold the contract, work order and protocol showing the R&D was specified when we signed. We have confirmed the CRO is unconnected, so the 65% figure applies. We know where the work was physically performed, site by site. Any overseas costs in the claim rest on a written qualifying overseas expenditure case, made on conditions the UK cannot supply, not on cost. Invoices distinguish qualifying R&D services from everything else. Both parties know who is claiming, and nobody is claiming the same work twice. If this is our first claim, or our first in the three years ending with the notification deadline, HMRC received a claim notification within six months of the end of the period of account. A file that supports those seven answers will also stand up if HMRC enquires into the claim; HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. CRO structures sit inside a wider set of sector questions, from grant funding to long pre-revenue loss phases, covered on our life sciences R&D tax relief page. If your CRO arrangements do not fit neatly into the scenarios above, talk it through with a chartered adviser: we will tell you who owns the claim and what evidence to put in place. Sources CIRD161000: contracted-out R&D — the intended-or-contemplated test and the treatment of customers with no trade within the charge to UK tax. Merged scheme & ERIS guidance — the merged-scheme and ERIS rates and the 65% contractor rule that shape claim value. Draft guidance: contracting-out & overseas restrictions — the UK-location and qualifying-overseas-expenditure conditions for contracted work. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Clinical trial costs in R&D tax relief claims URL: https://www.limestonegrey.com/insights/clinical-trial-costs-qualifying-expenditure/ Description: Clinical trial volunteer payments, staff time, consumables and CRO fees can qualify for R&D tax relief. When overseas trials count and what to document. Sector spotlights •18 June 2026 •5 min read Clinical trial costs in R&D claims MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Clinical trial costs reach an R&D claim through several categories: a dedicated category for payments to trial volunteers, staff costs for your own clinical and scientific team, consumables including investigational product used up in the trial, and payments to CROs and other subcontractors at 65%. The two complications are location and boundaries. Overseas trials qualify only through a narrow exception, and each study still has to sit within qualifying R&D activity. Which cost categories cover a clinical trial? Trial spending maps onto the standard categories set out in which costs qualify for R&D tax relief, plus one category that exists for trials specifically. Trial cost | Category | Notes Payments to trial volunteers | Clinical trial volunteer payments | A qualifying category in its own right Your clinical, scientific and data staff | Staff costs | Apportioned to time on qualifying activity Investigational product, comparators, lab materials | Consumables | Must be used up or transformed in the R&D CRO and other subcontracted work | Subcontracted R&D | 65% for unconnected providers; who claims depends on the contract Agency and contract staff | Externally provided workers | 65% for unconnected providers; qualifying so far as earnings are within UK PAYE and Class 1 NIC Volunteer payments are the distinctive line. They are a qualifying category in their own right, arising almost entirely in pharmaceutical, biotech and medtech claims, and they are easy to evidence if payment records are kept per study. Do all trial phases qualify? Not automatically. Qualifying R&D means seeking an advance in science or technology through resolving scientific or technological uncertainty that a competent professional could not readily resolve, and each study should be tested against that definition rather than assumed in. The full definition is explained in what counts as qualifying R&D. In practice, early-phase studies sit comfortably inside it. A trial run to establish whether a candidate is safe, tolerated or effective is directed at exactly the kind of unresolved scientific question the definition describes. Later and post-authorisation studies need a closer look. Where a study gathers evidence about questions the science has already answered, for marketing or routine surveillance purposes, it is unlikely to qualify. Where it seeks to resolve remaining scientific uncertainty, it can. The honest position is that this is a study-by-study judgement, and it should be made by reference to the protocol and what your competent professionals say was genuinely unknown. Can overseas trial costs qualify? Sometimes, and clinical trials are the clearest case for the exception. The default rule for accounting periods beginning on or after 1 April 2024 is that subcontracted R&D qualifies only where the work is undertaken in the UK, and externally provided workers only so far as their earnings are within UK PAYE and Class 1 NIC — where any part of a worker’s earnings is UK-payrolled, all of them qualify. The exception, qualifying overseas expenditure, applies where conditions necessary for the R&D (geographical, environmental, social or regulatory) are not present in the UK and would be wholly unreasonable to replicate here. A trial that needs a patient population the UK cannot provide, or that a regulator requires to be conducted in its own territory, is the textbook example. Cost and workforce availability are expressly excluded as justifications, so running a trial abroad because sites are cheaper or recruit faster does not get through. The rule, and how to build the evidence for an exception case before the spend, is covered in overseas R&D costs under the merged scheme. Who claims when a CRO runs your trial? Usually the sponsor. The customer claims contracted-out R&D where it intended or contemplated R&D of that sort when the contract was made, and a sponsor commissioning a protocol-defined study almost always did. The CRO’s fees then enter the sponsor’s claim at 65% where the parties are unconnected. The position reverses where the sponsor is outside UK corporation tax, which is how UK CROs serving overseas sponsors claim in their own right. The contract mechanics, and a sponsor checklist, are in CRO contracts and R&D tax relief: who owns the claim? What is trial spend worth in relief? Under the merged scheme, £100,000 of qualifying expenditure produces a £20,000 gross credit: £15,000 net at the 25% corporation tax rate, or £16,200 for a loss-making company. Most clinical-stage companies are loss-making and heavily R&D-intensive, which is the profile Enhanced R&D Intensive Support (ERIS) exists for. A loss-making SME whose relevant R&D expenditure is at least 30% of total relevant expenditure can instead receive a payable credit worth up to 26.97p per £1: £26,970 on the same £100,000, and the credit is not taxable. Both schemes cap payable credits at £20,000 plus 300% of relevant PAYE and NIC. That can bite where a trial programme is heavily outsourced and payroll is small, so settle the scheme position early in trial budgeting rather than at year end. What should you document? A trial claim stands or falls on records that already exist in a well-run study; the work is keeping them connected to the claim: the protocol and development plan, which evidence the scientific uncertainty and the activity boundaries contracts and work orders with CROs and sites, showing what was commissioned and where it is performed site locations for every work package, separating UK from overseas delivery volunteer payment records, per study the apportionment basis for staff time across studies and other work the written case for any qualifying overseas expenditure position, made at planning stage HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and trial-heavy claims invite questions on location, subcontracting and activity boundaries in particular. Our guide to HMRC R&D enquiries sets out the process and how prepared claims hold up. Clinical development rarely raises these questions in isolation: grant funding, long loss-making phases and CRO structures usually arrive together, and the sector picture is drawn on our life sciences R&D tax relief page, with device and diagnostic investigations covered on medtech. If you are planning a trial programme and want the claim position settled before contracts are signed, talk it through with a chartered adviser. Sources Check what R&D costs you can claim — the qualifying cost categories and the 65% restriction on payments to unconnected contractors. Draft guidance: contracting-out & overseas restrictions — the UK-location rule and the qualifying-overseas-expenditure exception. CIRD161000: contracted-out R&D — the intended-or-contemplated test for who claims contracted-out R&D. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # ERIS for pre-revenue biotech and medtech companies URL: https://www.limestonegrey.com/insights/eris-pre-revenue-biotech/ Description: Most pre-revenue biotechs qualify for ERIS, worth up to 26.97p per £1 of qualifying spend in cash. The intensity maths, grace period and cash timing. Sector spotlights •10 July 2026 •6 min read ERIS for pre-revenue biotech and medtech MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards For a pre-revenue biotech or medtech company, Enhanced R&D Intensive Support (ERIS) is usually the most valuable R&D relief available: up to 26.97p per £1 of qualifying spend, paid in cash. A typical pre-revenue burn profile passes the 30% intensity test with a wide margin. The planning work sits elsewhere: in how the ratio moves as the company approaches launch, in connected company aggregation, and in when the cash actually lands in the bank. This article works through each of those, with the arithmetic on the page. The scheme’s full conditions are set out in our guide to Enhanced R&D Intensive Support. What is ERIS worth to a pre-revenue company? Up to £26,970 in cash for every £100,000 of qualifying R&D expenditure. The mechanics are an additional 86% deduction (186% in total) followed by a payable credit of 14.5% of the surrenderable loss: £100,000 x 186% x 14.5% = £26,970. The credit is not taxable, so the headline figure is the net figure, and the “up to” assumes losses of at least 186% of the qualifying spend. A deeply loss-making preclinical biotech, or a medtech still building its regulatory evidence, usually has losses to spare, so the full rate is realistic. The same company under the merged scheme would receive £16,200 per £100,000 as a loss-maker. On a £1m annual R&D budget, the difference between the two schemes is over £100,000 a year of non-dilutive cash. Does a typical pre-revenue burn profile pass the 30% test? Almost always, and usually comfortably. The test asks whether relevant R&D expenditure is at least 30% of total relevant expenditure, with connected companies counted on both sides. It is an expenditure ratio: revenue does not appear in it at all, so having no sales is no obstacle. Take an illustrative preclinical biotech spending £1,500,000 in the year. Of that, £1,050,000 goes on scientists’ salaries, CRO studies, lab consumables and other relevant R&D expenditure. The remaining £450,000 covers management, finance, premises, patent and legal costs. Intensity is £1,050,000 divided by £1,500,000, which is 70%. The threshold is not a close call for a company shaped like this. The ERIS intensity calculator runs this ratio on your own numbers, including the connected company adjustments. When does a biotech or medtech start to fail the test? On the approach to launch, when the denominator grows faster than the R&D. Extend the same illustration forward. R&D spend holds at £1,050,000, but the company is now building regulatory, quality and commercial functions ahead of first revenue, and total relevant expenditure reaches £3,000,000. Intensity is 35%: still a pass, but the margin has gone. A year later, with manufacturing scale-up and a sales team taking total relevant expenditure to £4,000,000 against unchanged R&D, intensity is 26.25% and the test fails. Notice what happened: the R&D did not change at all. Medtech companies are especially exposed, because the path from working device to revenue runs through exactly this kind of spend. The time to see the problem is at budget setting, not after year end when the ratio is already fixed. How should the grace period be used? As a buffer for one lumpy year, not as a plan. A company that met the intensity condition in its most recent prior twelve-month period, and obtained relief for that period, keeps access for the following period even if intensity has since dipped below 30%, provided the other conditions are still met. In the illustration above, the 26.25% year could still be claimed under ERIS because the 35% year before it both met the condition and was claimed. Two practical consequences follow. First, the sequence matters. A dip year is protected only where the prior twelve-month period both met the condition and was claimed, so a company hovering near the line needs to know its position every year, and to file in the years it qualifies. Eligibility left unclaimed banks nothing. Second, once the grace year is spent, a second consecutive sub-30% year falls to the merged scheme, and the cash forecast should say so in advance. For a company whose intensity is trending down as it commercialises, the honest model is a planned transition from 26.97p to 16.2p per £1, with the grace period deciding the timing. A company that reaches profitability leaves ERIS regardless of intensity, and claims the merged scheme’s 20% credit for that period. How do connected companies change the answer? They can change it twice over. The intensity ratio includes connected companies on both sides, so a hugely R&D-intensive spinout connected to a trading business can fail on the combined numbers despite passing easily alone. And the SME definition (fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less) aggregates connected and partner enterprises, which is where venture-backed structures need care: a company that looks small on its own can lose SME status through its investors or group. Both tests should be worked at the structure level before a claim is assumed in any forecast. For biotech and medtech groups with a topco, an IP company and an operating company, where the R&D spend sits within the structure is itself a planning question. When does the cash actually arrive? After the claim is filed, so the company controls more of the timing than founders often assume. The ERIS credit is claimed through the corporation tax return, with the Additional Information Form submitted before or with the CT600. A company that closes its year end promptly and files early brings the credit forward; one that files near the statutory deadline pushes it back by the same margin. For a business on a measured runway, that difference is worth building into the cash forecast. Three things can delay or reduce the payment: The claim notification deadline. A first-time claimant, or one that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. Missing it invalidates the claim entirely. Pre-revenue companies are disproportionately first-time claimants, so the claim notification requirement belongs in the calendar from day one. The PAYE cap. Payable credits are capped at £20,000 plus 300% of relevant PAYE and NIC. A company running its science through CROs with a small internal team has a small payroll, and the cap bites there first. An exemption exists, and pre-revenue companies read it too narrowly. It covers a company whose own employees are creating relevant intellectual property, taking steps towards creating it, or performing a significant amount of management activity on IP the company itself holds, provided connected-party spend on subcontractors and externally provided workers also does not exceed 15% of qualifying R&D expenditure. Having created no IP yet is therefore not the disqualifier founders assume: preparing to create it is a route in on its own terms, so long as the people taking those steps are employees of the company. Establish the position before the claim, not after the credit is restricted; the conditions are set out in full on our PAYE cap page. An HMRC check. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and an enquiry suspends the cash until it resolves. A claim with the intensity ratio, SME test and loss position evidenced at the time of filing resolves faster than one rebuilt under pressure. Our page on HMRC R&D enquiries covers the process. One point that no longer affects timing or value: grant funding. Since April 2024, an Innovate UK or other grant neither blocks nor reduces ERIS. Getting the forecast right ERIS rewards exactly the profile of company we work with most: loss-making, R&D-intensive, and dependent on the credit as a real line in the runway model. The sector context sits on our biotech and medtech pages. If you want a considered view on your intensity trajectory, your group structure or a first claim, talk it through with a chartered adviser: we will show you the arithmetic before any work starts. Sources Merged scheme & ERIS guidance — the ERIS 186% enhancement, 14.5% payable credit and the loss-making, R&D-intensive conditions. CIRD123000: ERIS intensity condition — the 30% R&D-intensity test and the one-year grace period. R&D relief for SMEs (definition & old rates) — the SME definition a company must meet to use ERIS. Tell HMRC you plan to claim (claim notification) — the six-month claim-notification window and the three-year test. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Innovate UK grants and R&D tax relief together URL: https://www.limestonegrey.com/insights/innovate-uk-grants-rd-tax-relief/ Description: An Innovate UK grant and a full R&D tax relief claim can sit on the same project. How the two combine, and the old-rule adviser errors to avoid. Making a claim •8 July 2026 •6 min read Innovate UK grants and R&D tax relief together MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards An Innovate UK grant and an R&D tax relief claim can sit on the same project, at full value, for accounting periods beginning on or after 1 April 2024. The subsidised expenditure rules that once pushed grant-funded work into a lower-value scheme were abolished with the old SME scheme. The two supports now stack — with one exception for SMEs registered in Northern Ireland claiming ERIS, noted below. That is the whole legal position, and it is set out in full on our pillar page, grant funding and R&D tax relief. This article covers the practical side: what the combination is worth, how to run the project accounting, and the errors advisers still carry over from the old rules. What is the combination worth? Take the standard example. A company spends £100,000 on qualifying R&D in a period beginning on or after 1 April 2024, and an Innovate UK grant funds part of the project. The grant changes nothing in the tax computation. Under the merged scheme, the full £100,000 generates a £20,000 gross credit, worth £15,000 net at the 25% corporation tax rate and £16,200 where the 19% rate applies or the company is loss-making. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure does better still under Enhanced R&D Intensive Support (ERIS): £100,000 x 186% x 14.5% = £26,970 as a payable credit, which is not taxable. Many Innovate UK award holders are exactly this kind of company, which is why the abolition of the old restriction matters most to them. One detail worth stating plainly: the ERIS intensity test is a ratio of expenditure to expenditure. How the spending was funded does not enter the calculation, so grant income neither helps nor hurts the 30% test. Do you need to separate grant-funded costs from the claim? No. There is no subsidised proportion to strip out, no ring-fencing of the funded work package, and no splitting of one project across two schemes. The qualifying expenditure is the qualifying expenditure, whoever funded it. What you do still need is two sets of project boundaries, because the grant project and the R&D claim project are not the same thing: The grant project is defined by your application and offer letter: the work packages, milestones and eligible costs you report to Innovate UK under the funder’s rules. The R&D claim project is defined by the DSIT guidelines: it starts where work to resolve a scientific or technological uncertainty begins and ends where the uncertainty is resolved or abandoned. What counts as qualifying R&D covers the test in full. Expect overlap rather than identity. A grant project often contains work packages that do not qualify for tax relief (commercialisation, dissemination, market research), and qualifying R&D often continues beyond the grant’s scope, in match-funded work and follow-on development. Code your costs so you can report to the funder and evidence the claim from the same ledger, and keep both definitions visible in the file. There is also a quiet benefit in the paperwork. An Innovate UK application sets out technical objectives, the state of the art and the risks, written before the work began. That is close to ideal contemporaneous evidence for the claim’s technical narrative. Which old-rule errors do advisers still make? Five recur, all inherited from the pre-April 2024 rulebook. Stripping grant-funded costs out of the claim. Under the old SME scheme, subsidised expenditure had to be identified and relegated to old RDEC. For current periods that machinery is gone, and removing the costs simply understates the claim. Splitting one project across two schemes. The old grant-funded RDEC plus SME-relief-on-the-balance analysis no longer exists. Current periods have one answer per company: merged scheme or ERIS. Advising companies to refuse or defer grants to protect the relief. Under the old rules a notified state aid grant could take an entire project out of SME relief, so the advice had a logic. Today there is no trade-off to manage, and turning down non-dilutive funding to protect a tax claim is a straightforwardly bad decision. Running state aid analysis on current claims. How an award was classified for state aid purposes mattered greatly before April 2024. For current periods the classification of the grant has no bearing on the claim for companies registered in Great Britain. The one exception applies to companies with a registered office in Northern Ireland only: an NI-registered SME claiming ERIS can be subject to a de minimis State aid cap on the extra benefit over the merged scheme, covered in grant funding and R&D tax relief, and in full at are R&D tax credits State aid?. Leaving old periods unrevisited. The old rules still govern accounting periods that began before 1 April 2024, and companies that under-claimed because of a grant may still be able to amend: the last standard old-scheme amendment deadlines fall in late March 2027. See backdated R&D claims and the March 2027 deadline. A reliable test when reading anything on this subject, including advice you were given at the time of your award: if it does not say which accounting periods it covers, assume it describes the old rules. What should grant-funded claimants still watch? Three compliance points, none of them grant-specific but all of them common in grant-funded companies. Claim notification. A company that has never claimed, or has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account, or the claim is invalid. Grant winners making a first claim miss this more than most, often assuming the grant paperwork covers it. It does not. See the claim notification requirement. The Additional Information Form. Every claim needs an AIF submitted before or with the CT600, naming the senior internal R&D contact and every agent involved. The project descriptions in it should reflect the R&D claim boundaries, not the grant work packages. See the R&D Additional Information Form. The PAYE cap. Payable credits under both schemes are capped at £20,000 plus 300% of relevant PAYE and NIC. The exemption from it turns on two conditions. The first looks at what the company’s own employees do: creating relevant intellectual property, taking steps towards creating it, or performing a significant amount of management activity on IP the company holds. The second requires connected-party spend on subcontractors and externally provided workers not to exceed 15% of qualifying R&D expenditure. Grant-funded companies running lean teams with outsourced delivery should check the cap before relying on a projected credit, because a programme delivered mostly by consortium partners is the shape that struggles with the first condition. Both are set out on our PAYE cap page. The companies this matters to most Grant-funded deep tech businesses, biotechs above all, were the companies the old rules penalised hardest, and they are the companies with the most to gain from the current position. Our biotech sector page covers how ERIS, grants and the PAYE cap interact for a typical pre-revenue company. If you hold an Innovate UK award and were told, at any point, that it restricted your R&D claim, the position deserves a fresh look: current periods under the current rules, and older periods while the amendment window remains open. Talk it through with a chartered adviser and we will tell you plainly what is claimable. Sources Merged scheme & ERIS guidance — the 20% merged-scheme credit and the ERIS payable credit for loss-making, R&D-intensive SMEs. Merged scheme RDEC reform (policy paper) — the merged scheme from 1 April 2024, under which the old subsidised-expenditure restriction was not carried forward. R&D relief for SMEs (definition & old rates) — the SME definition and the pre-merger SME relief rates. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # When machine learning development qualifies as R&D URL: https://www.limestonegrey.com/insights/machine-learning-qualifying-rd/ Description: Machine learning work qualifies for R&D tax relief where it advances the field, not just your product. Where the line falls and the evidence HMRC expects. Sector spotlights •24 June 2026 •6 min read When machine learning development qualifies as R&D MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Machine learning development qualifies for R&D tax relief when it seeks an advance in the field of computer science or machine learning, through resolving uncertainty that a competent professional could not readily resolve from published knowledge. Fine-tuning a well documented model on your own data, following the vendor’s playbook, does not usually meet that test. Pushing past what published architectures, training methods or deployment toolchains can demonstrably do often does. The distinction matters because ML claims sit inside the software category that HMRC scrutinises most closely. This article sets out where the line falls, and what evidence keeps a genuine ML claim on the right side of it. The underlying definition is covered in full in what counts as qualifying R&D. What does “an advance in the field” mean for machine learning? It means extending what the field can do, not what your company can do. The DSIT guidelines require an advance in the overall knowledge or capability of a field of science or technology. Applying a published state-of-the-art model to a commercial problem it has not met before is usually an advance for your business only: the field already knew the technique worked. The question to ask of any ML project is concrete. Could a competent ML engineer, with access to the published literature, model documentation and standard tooling, have said in advance how to hit your targets? If yes, the work was development, not R&D, however valuable the product. If no, and you can say why not, you are probably looking at a qualifying project. Commercial novelty proves nothing either way. Being first in your market with an ML-driven product is a business fact, not a technological one. Which kinds of ML work usually reach the bar? Three recurring territories, described at concept level. Novel architectures and training methods. Where published approaches cannot meet the accuracy, reliability or latency targets the problem demands, and the team designs or substantially modifies architectures, loss functions or training regimes to get there, the outcome is genuinely uncertain. The published benchmarks define the baseline; the work is the systematic attempt to beat it. Difficult data regimes. Much published ML performance assumes large, clean, well labelled datasets. Real problems often offer sparse, noisy, heavily imbalanced or restricted data on which established methods degrade unpredictably. Systematic experimentation to achieve reliable performance in such a regime, where the literature cannot say what will work, can qualify. Collecting and labelling data by standard methods, on its own, cannot. Deployment constraints. Getting a model to run within a hard memory, latency or power budget, on edge hardware or inside a real-time system, can involve genuine uncertainty where documented compression, quantisation and optimisation techniques demonstrably fall short of the target. If the vendor toolchain gets you there by its documented route, it does not. In each case the test is the same: the uncertainty must be technological, resident in the field, and beyond ready resolution by a competent professional. Difficulty is not enough. Long training runs and expensive compute can be entirely predictable, and predictable work does not qualify. What ML work does not qualify? The recurring non-qualifiers in claims we review: fine-tuning or prompt-engineering a documented model by established practice, however good the result integrating hosted model APIs into a product standard MLOps: pipelines, orchestration, monitoring, dashboards, labelling operations routine data cleaning and feature engineering using known methods projects whose only uncertainty was commercial: whether users would adopt the product, whether the unit economics would work Some of these activities can sit inside a qualifying project as support for the experimental work. What they cannot do is carry a claim by themselves. The correction runs the other way too. A project is not excluded merely because its individual components are already known — the First-tier Tribunal said exactly that in Tanglewood Care Services v HMRC, accepting that system uncertainty can arise from the interaction of known parts. An ML system built entirely from published components can still qualify, if what those components do together could not be predicted from what is known about them separately. Why is the baseline harder to establish in ML? Because the field moves quickly, and the claim must be judged against the field as it stood during the accounting period, not as it stands when the claim is written. A capability that was genuinely open in the year the work was done may be a solved problem eighteen months later. Write the baseline down at the time, with references to what was published and what the team tried first, and the later claim inherits that credibility. Reconstructing it afterwards invites hindsight bias, and HMRC’s reviewers are alert to baselines that quietly assume today’s knowledge. This is also where the competent professional test does its work. HMRC expects the claim anchored in the judgement of a named senior technical person, and the Additional Information Form requires the senior internal R&D contact to be named on every claim. When we prepare an ML claim, that person’s account of what the field could and could not do is the spine of the narrative. What experiment evidence does HMRC expect? The ordinary artefacts of real ML research, kept as you go: experiment tracking records, training logs, ablation results, evaluation runs against the baseline, dataset version histories, and notes on why approaches were abandoned. Failed experiments are not an embarrassment in a claim; they are often the clearest proof the uncertainty was real. Teams running a disciplined experiment tracker already hold most of this. The gap is usually the connective tissue: a record of what question each experiment was asking and what the result changed. A short running log alongside the tracker turns raw runs into evidence. On the cost side, ML claims draw on staff time (apportioned to the qualifying work), and on software, data and cloud computing costs, which are claimable categories for current periods. The detail is in which costs qualify for R&D tax relief. How closely does HMRC look at AI and ML claims? Closely, and claimants should plan on that basis. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and has more than 500 staff on R&D compliance; software claims have long attracted particular attention because weak ones are common. HMRC publishes dedicated guidance on software projects, reinforcing the distinction between commercial and technological progress, and an ML claim written in product language rather than in terms of baseline, uncertainty and experiment tends to read as exactly what it is. None of that should deter a company doing genuine ML research. It changes how the claim is prepared, not whether it is worth making. Our page on HMRC R&D enquiries covers what a check involves and how defensible preparation changes the outcome. For a loss-making, R&D-intensive AI company, the stakes are worth the discipline: ERIS pays up to 26.97p per £1 of qualifying spend in cash. Where to go next The sector picture, including how HMRC scrutinises AI and software claims and how we approach them, is on our AI and robotics sector page. If your uncertainty lives in hardware as much as models, see robotics prototyping and technological uncertainty. If you are unsure which of your ML projects would survive the test, talk it through with a chartered adviser. A short technical conversation usually settles it. Sources DSIT Guidelines: meaning of R&D for tax purposes — the tests of advance in a field, technological uncertainty and the competent professional. CIRD81960: Guidelines applied to software — the advance must lie in the underlying technology, not the product. HMRC’s approach to R&D tax reliefs 2023–24 — HMRC’s compliance focus, with 17% of claims checked and 500-plus staff on R&D compliance. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Robotics prototyping and technological uncertainty URL: https://www.limestonegrey.com/insights/robotics-prototyping-qualifying-uncertainty/ Description: Robotics prototypes qualify for R&D tax relief where they resolve genuine technological uncertainty. Integration, control systems and the evidence. Sector spotlights •30 June 2026 •5 min read Robotics prototyping and technological uncertainty MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards A robotics prototype qualifies for R&D tax relief when it is built to resolve technological uncertainty: when, at the point of design, a competent engineer could not say whether the system would meet its targets, or how to make it do so. A prototype built to demonstrate or sell technology that already works does not qualify, however impressive the machine. In robotics, the qualifying uncertainty usually lives in three places: system integration, control, and the gap between the lab and the operating environment. This article takes each in turn, then covers the evidence that makes iterative prototype work stand up to HMRC review. The general definition sits in what counts as qualifying R&D. Is building a prototype automatically R&D? No. The question is what the prototype is for. A prototype built as an experiment, to answer a technical question the team could not answer on paper, sits squarely inside a qualifying project. A prototype built as a demonstrator, to show investors or customers a design whose technical questions are already settled, sits outside it. The same discipline draws the project boundary in time. The R&D ends when the uncertainty is resolved or abandoned, so the third prototype that finally holds its accuracy across the operating envelope may be the last qualifying build. The pre-production units made afterwards for marketing, customer pilots of proven capability, and cosmetic and enclosure work belong to the commercial project around the R&D, not the R&D itself. Drawing that line precisely, rather than claiming every unit ever built, is what keeps a robotics claim defensible. Why does integration count as uncertainty? Because a robot is a system, and system behaviour is not deducible from component datasheets. The motors, sensors, grippers, compute modules and vision stacks in a typical build are individually well documented. What the field often cannot predict is whether they will work together as a whole within the machine’s constraints: timing interactions between perception and actuation, vibration and thermal behaviour under load, electromagnetic interference between subsystems, and weight and power budgets that every component fights over. This is recognised in the DSIT-based definition: combining components that are each well understood can still involve genuine technological uncertainty where the field cannot predict whether or how they will work together. The flip side holds too. Routine integration, assembling a cell from a vendor’s catalogue by the vendor’s instructions, does not qualify, however skilled the work. The honest test is whether a competent robotics engineer could have specified the working system in advance. If the answer was no, and the prototypes existed to find out why, the integration work is the R&D. Where is the uncertainty in control systems? In making the machine behave correctly across its whole operating envelope, not just in the demo. Concept-level examples of control problems that regularly carry genuine uncertainty: keeping a controller stable across the full range of loads, speeds and configurations the machine must handle, where established tuning methods cannot be shown in advance to cover the envelope fusing noisy, conflicting sensor inputs into state estimates reliable enough to act on in real time motion planning around dynamic obstacles within hard latency limits on constrained onboard compute characterising the behaviour of learned components inside a safety-relevant control loop, where the field has no settled method for bounding what the model will do That last category overlaps with machine learning development, and the dividing line for ML work has its own article: when machine learning development qualifies as R&D. What about the gap between the lab and the real world? The lab-to-field gap is often where the hardest, and most clearly qualifying, uncertainty sits. A system that performs in simulation and on the bench meets conditions in deployment that neither fully represents: changing light, dust and weather, unstructured and cluttered spaces, surfaces and objects that vary in ways neither the simulator nor the bench ever captured, and people behaving unpredictably around the machine. Where the field cannot predict whether a system will hold its performance under those conditions, the structured field trials run to find out, and the redesign work they force, are part of resolving the uncertainty. The boundary discipline still applies: a field trial designed to answer an open technical question qualifies; routine site acceptance testing of a proven system does not. What evidence do the iterations need? Records that show the iteration was systematic rather than improvised: what question each build was asking, what the tests showed, and why the design changed in response. In practice that means design revisions with reasons, test logs and failure reports, and short notes on abandoned approaches. Failed prototypes are strong evidence, not something to write out of the story, provided the record shows what each build was asking. Three builds prove nothing by themselves, because iteration forced by a moving brief is not a technological uncertainty; three builds each testing a question the field could not answer are exactly the account HMRC is looking for. Hardware teams usually generate this material anyway; the discipline is keeping it, and keeping it dated, because a claim assembled years later from memory reads exactly that way to an inspector. The cost side rewards the same records. Staff time apportioned to the qualifying work, materials consumed in building and testing prototypes, and software used in the R&D can all enter the claim; the categories and their rules are set out in which costs qualify for R&D tax relief. What is a robotics claim worth? For a pre-revenue robotics SME still in prototype iterations, often the maximum the system offers. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure claims under ERIS, worth up to 26.97p per £1: on the standard example, £100,000 x 186% x 14.5% = £26,970 as a payable cash credit. Companies outside ERIS claim the merged scheme’s 20% credit, worth £15,000 net per £100,000 at the 25% corporation tax rate and £16,200 for loss-makers. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and hardware claims are examined on exactly the points above: whether the prototypes resolved genuine uncertainty and whether the boundary between R&D and productisation was drawn honestly. The iteration evidence described here is what a claim leans on if HMRC opens an enquiry. Where to go next The wider sector picture, including how AI and robotics claims fit together, is on our AI and robotics sector page. If you are mid-programme and unsure which builds and trials belong in the claim, talk it through with a chartered adviser: boundary questions like these are quicker to settle before year end than after it. Sources DSIT Guidelines: meaning of R&D for tax purposes — the tests of technological advance, scientific or technological uncertainty and the competent professional. Merged scheme & ERIS guidance — the merged-scheme and ERIS rates under which qualifying prototyping work is claimed. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Collins Construction and Stage One R&D verdicts URL: https://www.limestonegrey.com/first-tier-tribunal-verdicts/ Description: Two First-tier Tribunal decisions rejected HMRC's reading of subsidised and subcontracted R&D under the old SME scheme. What they mean for claims now. Compliance & enquiries •1 December 2024 •4 min read Collins Construction and Stage One: what the tribunal verdicts mean for R&D claims MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Two First-tier Tribunal decisions, Collins Construction Ltd v HMRC and Stage One Creative Services Ltd v HMRC, rejected HMRC’s interpretation of subsidised and subcontracted R&D under the old SME scheme. Neither decision was appealed, and HMRC updated its guidance in February 2025. For companies with old-scheme accounting periods still open to amendment, and for anyone defending an enquiry into an old-scheme claim, these cases remain the reference points. This article was first published after the Stage One verdict and has been revised in July 2026 to cover what happened next. Why did these cases reach the tribunal? From late 2021, HMRC hardened its reading of two restrictions in the old SME scheme. It argued that where a company did R&D in the course of work for a paying customer, the expenditure was either “subsidised” by the customer’s payments or the R&D had been subcontracted to the company, and in both cases the SME claim failed. Stage One Creative Services, a creative design and construction business, had its SME claims challenged on exactly those grounds. It appealed, as Collins Construction had before it. In both cases the tribunal found for the taxpayer: payments under an ordinary commercial contract are not, in themselves, a subsidy, and being paid to deliver a project does not by itself make you a subcontractor of R&D. What did HMRC do after losing? Neither decision was appealed, and HMRC updated its Corporate Intangibles Research and Development (CIRD) guidance in February 2025. The updated guidance drops the blanket position and assesses who can claim case by case; we cover the detail in our article on HMRC’s updated subcontracting guidance. Two points from the cases now anchor that analysis. Commercial contract payments are not, in themselves, subsidies. And contracted-out R&D under the old SME scheme has no single definitive test: the contract terms, autonomy, financial risk and IP position all bear on it. Do First-tier Tribunal decisions change the law? No. FTT decisions bind only the parties and do not set precedent. But where a decision goes unappealed and HMRC rewrites its guidance to match, the practical effect is real: the interpretation that caused claims to be refused between 2021 and 2024 is no longer HMRC’s stated position. Matthew Jones commented when the Stage One decision landed: “While they don’t offer concrete legal changes, they validate what many advisers and businesses have long argued: the interpretations being applied were not right. I particularly sympathise with startups and smaller companies that rely heavily on R&D tax relief to sustain their innovation.” What should affected companies do now? Three situations are worth acting on. If your company was refused, or chose not to claim, on subsidy or subcontracting grounds for an old-scheme period, check whether the period is still amendable: the window runs two years from the end of the period of account, with the last standard old-scheme deadlines in late March 2027. Our guide to backdated R&D claims explains the runway and the claim-notification interaction that can silently close it. If you are in an open enquiry on these grounds, the tribunal reasoning and the revised guidance belong at the centre of your defence. This is the kind of position we run in practice; see HMRC enquiry defence. And if you do contract R&D for customers today, note that the merged scheme replaced all of this with a statutory test: the customer claims only where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Our page on contracted-out R&D sets out how the new test works, including for engineering businesses whose development work sits inside client projects. Both of these cases turned on who owns a claim. For a tribunal decision that turned on whether there was a claim at all — a care operator’s Covid-era claim dismissed on the statutory tests and the evidence — see Tanglewood Care Services v HMRC. If any of these situations looks like yours, talk it through with a chartered adviser. The facts of your contracts decide the outcome, and they are worth reading properly. Sources Collins Construction Ltd v HMRC — the decision, cited as [2024] UKFTT 951 (TC), 21 October 2024: expenditure not subsidised under section 1138, the R&D not contracted out, appeal allowed. Stage One Creative Services Ltd v HMRC — the decision, cited as [2024] UKFTT 1059 (TC), 25 November 2024: the same two issues and the same outcome. CIRD84250: subcontracted R&D (post-tribunal) — HMRC’s case-by-case factors for subcontracted R&D after the First-tier Tribunal decisions. CIRD81650: subsidised expenditure (post-tribunal) — HMRC’s position that commercial contract payments are not, in themselves, subsidies. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Common R&D tax credit claim pitfalls to avoid URL: https://www.limestonegrey.com/avoiding-common-pitfalls-in-your-rd-tax-credit-claim/ Description: The five mistakes that most often trigger HMRC problems: routine work claimed as R&D, inflated costs, inconsistent data, weak narratives, missed deadlines. Making a claim •1 January 2025 •3 min read Avoiding common pitfalls in your R&D tax credit claim MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Five mistakes account for most of the R&D claims that run into trouble: claiming routine work as R&D, inflating costs, filing figures that contradict the accounts, writing vague narratives, and missing the claim notification deadline. Each one is avoidable, and with HMRC checking around one in six R&D claims (17%) in 2023-24, the most recent year it has published, avoiding them is no longer optional housekeeping. Most companies claiming R&D relief do so in good faith. These are the places where good faith is not enough. Are you claiming routine work as R&D? Challenging and complex does not mean qualifying. To qualify, a project must seek an advance in science or technology, involve scientific or technological uncertainty, and go beyond routine development, testing or updates. The controlling question is the competent professional test: would a capable professional in your field have already known how to solve the problem? The knowledge gap has to exist in the wider field, not just inside your company. Our guide to what counts as qualifying R&D works through the test with sector examples. Are your costs accurate and apportioned? Overstated costs are one of the fastest routes to an enquiry. The recurring errors: claiming staff who were not directly or indirectly involved in the R&D including 100% of a salary where only part of the person’s time went to R&D adding marketing, commercial or customer support costs that never qualify The discipline is boundary-setting: knowing where the R&D project ends inside the wider development project, and keeping time and resource records that support the split. Our page on which costs qualify sets out each category and its rules, including the treatment of subcontractors, where assuming everything qualifies is itself a classic pitfall. Do your claim figures match your accounts? A claim does not exist in isolation. If payroll figures in the claim exceed the payroll in your accounts, or subcontractor costs differ from the financial statements, HMRC notices, and inconsistency reads as carelessness at best. Make sure whoever prepares the claim and whoever prepares the accounts are working from the same numbers. A well-documented claim tells one consistent story across the CT600, the accounts and the Additional Information Form. Does your narrative explain why the work was R&D? A vague narrative can sink a claim for work that genuinely qualified, because the HMRC caseworker only sees what you filed. A strong narrative covers three things: the technological baseline at the start of the project, the advance sought relative to that baseline, and the uncertainties, why they were hard and how you attacked them. HMRC is not asking what you built. It is asking why building it required R&D rather than the application of existing knowledge. This bites hardest in software claims, where the qualifying work is invisible unless the narrative locates it precisely. Have you checked the claim notification requirement? First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. Miss it and no claim can be made for that period at all. The rules, and the traps inside them, are on our claim notification page; our claim notification checker gives you an answer on your own dates in under a minute. What do these pitfalls have in common? They are all preparation failures, not eligibility failures. The R&D is usually real; the claim just fails to prove it. That is fixable, and fixing it is considerably cheaper than defending an enquiry after the fact. If you want a second pair of eyes on a claim before it goes in, talk it through with a chartered adviser. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # HMRC subcontracting guidance update for R&D relief URL: https://www.limestonegrey.com/hmrc-releases-major-update-on-rd-tax-relief-subcontracting-rules/ Description: In February 2025 HMRC updated its guidance on subcontracted R&D under the old SME scheme, moving to a case-by-case test. What it means for open periods. Scheme changes & policy •1 February 2025 •3 min read HMRC's updated guidance on subcontracted R&D: what changed and who can claim MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards In February 2025 HMRC updated its guidance on subcontracted R&D under the old SME scheme (CIRD84250), following its First-tier Tribunal losses in Collins Construction and Stage One Creative Services. The update abandons the blanket position that SMEs doing R&D within customer contracts could not claim, and replaces it with a case-by-case assessment. In substance, it restores the approach that applied before HMRC hardened its stance in late 2021. This matters in 2026 for one reason above all: old-scheme periods remain amendable until the last standard deadlines in late March 2027, so the companies this guidance affects still have time to act. What does the updated guidance say? Who can claim now turns on the whole relationship between customer and contractor, not a single label. The guidance points to factors including: Contract wording: does the contract define the contractor’s role in carrying out R&D? Customer awareness: did the customer know R&D would be needed? Autonomy: how much control did the contractor have over the R&D? Financial risk: who bore the risk of the work failing or overrunning? Intellectual property: who keeps the rights to what the R&D produces? No one factor decides it. That is consistent with the tribunal’s view that contracted-out R&D under the old SME scheme has no single definitive test; the background is in our article on the Collins Construction and Stage One verdicts. Does the guidance still lean towards the customer? In places, yes. The updated guidance suggests that a customer merely being aware that R&D was needed can point towards the customer holding the claim. That is a noticeably lower bar than the statutory test in the merged scheme, where the customer claims only if, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Where the facts are close, the guidance should be treated as HMRC’s reading, not the last word: the tribunal decisions are the stronger authority. What about claims that were refused under the old stance? Companies fall into three groups. Those whose old-scheme periods are still within the amendment window can file or amend now; our guide to backdated R&D claims covers the deadlines, including the claim notification rules that apply to accounting periods beginning on or after 1 April 2023. Those in open enquiries can put the revised guidance and the tribunal reasoning at the centre of their defence; see how we handle HMRC enquiries. For those whose deadlines have already passed, no general remedy has been announced, and we would not advise waiting for one. How does this compare with the current rules? For accounting periods beginning on or after 1 April 2024, the merged scheme settles the question by statute rather than guidance: broadly, the party that intended or contemplated the R&D when the contract was made holds the claim, contractors serving overseas or untaxed customers can claim in their own right, and payments to unconnected subcontractors qualify at 65%. Our page on contracted-out R&D under the merged scheme works through the scenarios. The pattern comes up constantly in engineering work delivered under customer contracts, where the contract wording decides who claims. If your company did R&D inside customer contracts between 2021 and 2024 and either did not claim or had a claim refused, the window to revisit that is closing in March 2027. Talk it through with a chartered adviser before it does. Sources CIRD84250: subcontracted R&D (post-tribunal) — HMRC’s case-by-case factors for deciding who can claim subcontracted R&D after the First-tier Tribunal decisions. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # HMRC advance assurance consultation and outcome URL: https://www.limestonegrey.com/advance-assurance-consultation/ Description: HMRC consulted in spring 2025 on overhauling advance assurance for R&D claims. The outcome: a voluntary targeted pilot, launched in spring 2026. Scheme changes & policy •1 March 2025 •3 min read HMRC's advance assurance consultation: what was proposed and what happened next MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards In spring 2025 HMRC consulted on overhauling advance assurance for R&D tax relief, asking whether businesses should be able to get certainty on their claims before submitting them. The consultation closed on 26 May 2025. The outcome is now known: a voluntary targeted advance assurance pilot was announced at the Autumn Budget 2025 and launched in spring 2026. Mandatory clearances were not taken forward, but nor were they ruled out. This article records what was proposed and, updated in July 2026, how it turned out. What was HMRC consulting on? The consultation sought views on the future of advance assurance: the process by which an eligible company can ask HMRC to confirm, before a claim is filed, that its R&D qualifies. The stated aims were to reduce error and fraud, give businesses greater certainty, and improve the experience of claiming. At the time, advance assurance was limited to certain first-time SME claimants and take-up was low. A well-designed assurance route has an obvious appeal in the current environment, where HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. Certainty up front reduces the risk of a post-submission enquiry and the cash-flow damage of a clawback. What was the most contested proposal? The possible reintroduction of a minimum expenditure threshold for R&D claims. The concern was its effect on start-ups and early-stage companies, which often run lean and may not meet a spending floor despite doing genuine qualifying R&D. Matthew Jones commented during the consultation: “The current advance assurance scheme has proved not fit for purpose. The idea of improvement is a welcome one. However, the proposed reintroduction of a minimum expenditure threshold raises some concerns. Such a threshold could inadvertently penalise start-ups and early-stage businesses, especially those with founders or directors not drawing a salary, who would otherwise be eligible under the ERIS scheme. Once again, it feels like genuine businesses could get caught in the crossfire.” The threshold worry was sharpest for exactly the companies Enhanced R&D Intensive Support exists to help: pre-revenue, loss-making and R&D-intensive, a profile we see most often in biotech. What did the consultation lead to? At the Autumn Budget 2025 (26 November 2025), the government announced a voluntary targeted advance assurance pilot for SMEs. Mandatory clearances, which the consultation had floated for areas of high non-compliance, were absent from the next steps: HMRC neither adopted them nor ruled them out, so the door remains open. The pilot launched in spring 2026: eligible SMEs can ask HMRC for its view on up to two specific high-risk areas of a claim before filing. We have written a full guide to how the targeted advance assurance pilot works, including who can apply and what HMRC asks for. Separately, HMRC launched a non-binding online tool in September 2025 that lets companies check whether their work is likely to qualify. It is a useful first filter, not a clearance. Does advance assurance replace careful claim preparation? No. Assurance, targeted or full, is only as good as the information behind it, and most claims will still be filed without any assurance at all. The foundation remains the same: a project that genuinely meets the definition of qualifying R&D, documented well enough to withstand scrutiny. If you are weighing up whether the pilot is worth using for your next claim, talk it through with a chartered adviser. Sources Advance clearances: summary of responses — the consultation outcome and the decision to pilot advance assurance. Apply for targeted advance assurance — the resulting targeted advance assurance pilot. Check if a project qualifies as R&D (checker) — HMRC’s non-binding online tool for testing whether work is likely to qualify. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Technological baseline and HMRC's software guidance URL: https://www.limestonegrey.com/following-hmrc-guidance-is-key-for-software-rd-tax-credit/ Description: Where to set the technological baseline, how to record it while the project runs, and what HMRC's software guidance expects a claim to show. Sector spotlights •1 June 2025 •3 min read Setting the technological baseline: working from HMRC's software guidance MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards A claim stands or falls on the baseline: what the field could already do when the project began, and whether the work went beyond it. The test turns on the technology rather than the market — whether the work sought an advance in computer science or software engineering, through uncertainty a competent professional could not readily resolve. A product being new to the market carries no weight on its own. That distinction, applied honestly, decides most software claims. This guide covers the baseline and the guidance behind it: where to set it, how to record it, and what HMRC expects to see. For the wider picture — where software work qualifies, where it does not and what the relief is worth — start with our software sector page. Where do you set the technological baseline? At the point the project starts, not when the claim is prepared. Software moves fast, and a claim is judged against what the field could do at the time. The baseline is the state of technology across the industry when your project began, and your claim has to show the work went beyond it. Be specific about what published techniques, frameworks and benchmarks existed in the relevant accounting period, and avoid hindsight: a problem that looks routine two years later may have been genuinely unresolved when you faced it, and the record needs to show that. What does HMRC’s software guidance actually cover? HMRC publishes guidance specifically on software projects, prompted by years of inflated claims in the sector. It sets out which software activities can qualify, gives worked sector examples, and hammers the distinction between commercial and technological progress. Every software claimant, and every adviser preparing a software claim, should work from it. Is commercial innovation enough to qualify? No. New features, market disruption and customer value are commercial achievements, and they carry no weight in the qualifying R&D test. HMRC’s guidance is explicit that the advance must be in science or technology, not in the product. Claims written around product innovation rather than the underlying technology are a leading cause of rejection and enquiry. The same field-advance logic governs machine learning work; we cover it in when machine learning development qualifies as R&D. How do you evidence a baseline you cannot point at? Software R&D is abstract: there is no prototype on a bench. The people who can locate the qualifying work are your competent professionals, the developers and architects who understand where the real technical difficulty sat. Involve them directly. Their account needs to answer the questions the Additional Information Form asks: what specific technical hurdles could a competent professional not readily resolve, and how did the project set about resolving them? HMRC cares less about the finished product than about the systematic process of experiment, iteration and failure analysis behind it. What makes the record hold up in practice? Five habits, in order of value: Start early. Record baselines and uncertainties during development, not months later. Use a regulated specialist with genuine software claim experience. Put your tech leads in the room. They articulate the uncertainty better than anyone. Be specific: algorithms, architectures, data handling. Vague narratives invite HMRC enquiries. Structure documentation around baseline, uncertainty and advance so the AIF writes itself. If you are unsure whether your development work clears the bar, talk it through with a chartered adviser. A short technical conversation usually settles it. Sources CIRD81960: Guidelines applied to software — the advance must lie in the underlying technology, not the product. DSIT Guidelines: meaning of R&D for tax purposes — the tests of technological advance, uncertainty and the competent professional. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Preparing an R&D claim that withstands scrutiny URL: https://www.limestonegrey.com/preparing-a-robust-claim/ Description: A defensible R&D tax credit claim rests on contemporaneous records, specific technical narratives and deadlines met. The habits that keep claims safe. Making a claim •1 November 2025 •3 min read How to prepare an R&D tax credit claim that withstands scrutiny MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards A defensible R&D tax credit claim is built from four things: contemporaneous records, a technical narrative specific to your projects, costs that reconcile to your accounts, and deadlines met. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published; the Additional Information Form is mandatory; and claim notification can invalidate a claim before it is even made. Generic submissions and year-end scrambles no longer survive contact with that system. Here is what works, and what to avoid, based on the claims we prepare and the enquiries we defend. What does good preparation look like? Keep records as the work happens. Contemporaneous evidence is the backbone of a claim that holds. Record project activities, experiments, failures, uncertainties, who worked on what and the direct costs as the work progresses, not in the weeks before your filing deadline. When HMRC asks questions, a dated record from the middle of the project is worth ten retrospective summaries. Leave enough time. Rushed claims produce errors, omissions and stretched eligibility judgements. Proper project analysis, evidence gathering, review by your competent professionals and a carefully drafted Additional Information Form all take time that a deadline scramble does not allow. Understand the definition. You do not need to become a tax specialist, but knowing the shape of what counts as qualifying R&D helps you recognise eligible projects early and keep records that map onto what HMRC will ask. Engage a regulated adviser early. A chartered firm involved from the start can confirm whether claim notification applies, set up record-keeping that fits your workflow and identify eligible projects accurately, before decisions get made that cannot be unmade. What sinks claims most often? Generic narratives. A description that could apply to any company in your sector reads as exactly that. The narrative must state the specific advance sought, the baseline knowledge that existed at the start, and the uncertainties that remained. Vague content undermines the credibility of everything filed with it. Commercial benefits dressed as advances. Market growth, customer satisfaction, scalability and revenue potential are not advances in science or technology. A narrative that leans on them invites HMRC to conclude the project falls outside the relief, even where genuine technological uncertainty existed underneath. Assuming all subcontractor spend qualifies. It does not. What you can include depends on the nature of the work and on whether the subcontractor is connected, and under the current rules on who claims contracted-out R&D, sometimes the claim is not yours at all. Overclaimed subcontractor costs are a common enquiry trigger. Missed deadlines. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. Miss it and the claim is invalid, however good the R&D. Our claim notification checker tells you where you stand in under a minute. Why does this matter more in deep tech? Because the qualifying work is real but technically dense. In sectors like life sciences, the gap between what the scientists did and what the claim says they did is where enquiries breed. Matthew Jones puts it this way: “We believe in educating our clients and sharing knowledge to ensure everyone is working from the same page. Engaging early with the right adviser provides access to timely guidance on structure, strategy and evidence gathering throughout the project, helping to build a compliant claim from the very beginning.” A well-prepared claim also changes what an enquiry feels like. When the records exist and the narrative is honest, an HMRC enquiry becomes a process to manage rather than a crisis. That is the standard we prepare every claim to; how we work explains the process end to end. If your next claim deserves better preparation than your last one got, talk it through with a chartered adviser. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # The R&D claim notification trap explained URL: https://www.limestonegrey.com/rd-tax-credit-pre-notification-trap/ Description: First-time R&D claimants must notify HMRC within six months of the end of the period of account. Miss it and the claim is invalid, with no appeal route. Making a claim •20 January 2026 •3 min read The claim notification trap: how companies lose R&D relief without realising MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Companies claiming R&D tax relief for the first time, or that have not claimed in the three years ending with the notification deadline, must notify HMRC of their intention to claim within six months of the end of the period of account. Miss that window and the claim is invalid. There is no appeal, no discretion and no retrospective fix, however much qualifying R&D took place and even if the tax return amendment deadline is still open. This requirement applies to accounting periods beginning on or after 1 April 2023, and it is now the single most common way we see genuine claims lost. Who has to notify HMRC? Companies that have not made a relevant R&D claim in the three years ending with the notification deadline — measured to the deadline itself, not from today, so a past claim ages out of the test sooner than you might expect. There is also a wrinkle that catches people out: claims made by amendment on or after 1 April 2023 for earlier periods do not count as prior claims for this test, so a company that has claimed before can still find itself required to notify. The full rules are on our claim notification page, and our claim notification checker applies them to your year end in under a minute. Why are start-ups losing the most? Because the deadline runs out while founders are, quite reasonably, building. In the early life of a company the attention goes to the product and the technical problems, and R&D tax relief gets considered after the first big development milestone, often when a fundraise prompts a look at ERIS and the cash it returns to loss-making companies. That early phase is usually where the technical uncertainty was greatest and the qualifying spend was highest. Arrive at an adviser after the notification window has closed on it, and the claimable work shrinks to current and future development, which by then is often iterative rather than fundamental. The claim survives; most of its value does not. For a pre-revenue biotech burning investor cash on its core science, that difference can be a material slice of runway. What are we seeing in practice? Matthew Jones: “We have spoken to companies seeking R&D tax credit advice, only to have to inform them that substantial historic R&D costs could not be claimed because notification was not submitted on time. Once the deadline passes, there is no route to appeal and no retrospective fix. In many of these cases, businesses were working with accountants who do not offer specialist R&D tax credit services and, as a result, would not typically be equipped to advise on this highly specific legislative requirement. At LimestoneGrey, we support companies from the outset, helping them meet notification obligations and track qualifying activities and expenditure, and providing ongoing guidance throughout the development lifecycle.” What should you do now? Three actions, in order. Check your position today with the claim notification checker: the answer depends only on your period of account and claim history. If the window is open, notify; it costs nothing and commits you to nothing. And if you are unsure whether your work qualifies at all, resolve that question early too, starting with what counts as qualifying R&D. The one thing not to do is wait. Every week we speak to a company that assumed the two-year amendment window meant there was time. For first-time claimants, there is a much shorter clock running inside it. If your year end was less than six months ago and you have never claimed, contact us this week, not this quarter. Sources Tell HMRC you plan to claim (claim notification) — the six-month notification window and the three-year look-back test. SI 2023/813 (claim notification & AIF regulations) — the statutory content requirements for the claim notification. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Why regulated R&D tax advice matters in 2026 URL: https://www.limestonegrey.com/professional-standards-in-rd-tax-advice/ Description: Tax advisers must register with HMRC, phased from 18 August 2026, with AML supervision a condition. What regulation means for your R&D claim. Compliance & enquiries •28 April 2026 •3 min read Why regulated R&D tax advice matters now more than ever MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Tax advisers who interact with HMRC on behalf of clients must register with HMRC, a requirement that began taking effect in stages on 18 August 2026, with anti-money-laundering supervision a condition of registration. For companies claiming R&D tax relief, the direction of travel is unmistakable: an accountable advice market, where the standards a firm works to matter as much as the claims it files. Choosing a regulated, chartered adviser is no longer a preference. It is risk management. Why has scrutiny of R&D advice increased? Because the market earned it. HMRC significantly tightened its compliance response to error, abuse and poor-quality advice in R&D claims, and the results are visible in the data: error and fraud fell from 17.6% in 2021-22 to 6.4% in 2023-24 on random-enquiry evidence, with HMRC putting an illustrative 5.3% on the two years since. Claims are now expected to be detailed, evidenced and clearly mapped to the definition of qualifying R&D. The Additional Information Form forces every claim to state the advance sought, the uncertainties faced, the work done and the costs claimed in a structured way. For deep tech companies this raises the technical bar as well as the administrative one. In life sciences and biotech, a claim must do more than describe an innovative product: it must explain why the scientific challenge could not readily be solved by competent professionals in the field. What is changing for advisers? Registration with HMRC is mandatory for tax advisers who deal with HMRC on clients’ behalf, and began taking effect in stages on 18 August 2026, and AML supervision is a condition of registering. Alongside it, HMRC published a non-binding online checker in September 2025 that lets companies test whether their activity is likely to qualify before anyone files anything. The practical question for a claimant is simple. Do you want an adviser who has operated to professional standards all along, or one scrambling to meet a minimum threshold as the market catches up? What does an unregulated adviser actually cost you? Poorly prepared claims and bad advice convert directly into HMRC enquiries, delayed repayments, penalties, amended returns and management time you do not get back. The damage also travels: historic claims that cannot be supported surface during investment due diligence, grant applications and acquisitions, at exactly the moment a company can least afford doubt about its numbers. Regulation is the counterweight. A firm regulated by a chartered body is bound by Professional Conduct in Relation to Taxation, carries professional accountability for its work and answers to a complaints route that exists independently of the firm. We set out what that means in practice, for clients rather than for us, on our regulation and standards page. What is LimestoneGrey’s position? Matthew Jones: “For innovation-led companies, regulation should not be seen as a barrier to claiming. It should be seen as a mechanism to claim properly. LimestoneGrey has been regulated since our inception because we believed from the outset that companies deserve more than transactional R&D tax advice. They deserve support from a firm operating to recognised professional standards, with accountability, technical competence and care built into the process. We are not playing catch-up as the market changes, we have always believed this is the standard businesses should expect. Companies in deep tech sectors are often carrying out exactly the kind of work the R&D tax relief regime was designed to support. But in a higher-scrutiny environment, claims need to be accurate, evidence-led and professionally prepared. This is why choosing the right adviser is now a key part of protecting your business.” LimestoneGrey approaches R&D tax relief as a professional tax matter, not a funding exercise: identifying genuine qualifying R&D, gathering the right evidence, preparing narratives that stand up to scrutiny, and standing behind the claims we prepare as standard. You can read more about the chartered adviser who leads that work on Matthew’s profile. If you are reviewing who prepares your claims, start a conversation with a chartered adviser. Sources Tax advisers to register with HMRC — mandatory adviser registration and minimum standards. HMRC’s approach to R&D tax reliefs 2023–24 — 17% of claims checked in 2023-24 and 500-plus compliance staff. Its 17.6% error-and-fraud estimate for 2021-22 stands; its 7.8% illustrative estimate for 2023-24 was superseded by the measured 6.4% below. HMRC annual report and accounts 2025–26 — error and fraud measured at 6.4% for 2023-24, with an illustrative 5.3% for the two years since. Check if a project qualifies as R&D (checker) — HMRC’s non-binding online qualification checker. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # HMRC Targeted Advance Assurance pilot explained URL: https://www.limestonegrey.com/targeted-advance-assurance-pilot/ Description: HMRC's Targeted Advance Assurance pilot lets eligible SMEs ask for a view on up to two high-risk areas of an R&D claim before filing. How to apply. Scheme changes & policy •20 May 2026 •4 min read HMRC's Targeted Advance Assurance pilot: how it works and who can use it MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards HMRC’s Targeted Advance Assurance pilot lets eligible SMEs ask HMRC for its view on up to two specific, complex or high-risk areas of an R&D tax relief claim before the claim is filed. Guidance was published on 18 May 2026. The pilot does not replace the existing full-claim advance assurance scheme, which continues to run alongside it for eligible first-time claimants. For companies with a genuinely uncertain point in an upcoming claim, this is a route to an HMRC view before the money is at stake, and it is worth understanding properly. What can you ask HMRC to look at? Up to two specific areas of uncertainty in a claim. HMRC’s examples map closely onto the questions that generate the most disputes: whether a project meets the definition of R&D for tax purposes whether overseas expenditure qualifies for relief whether relief can be claimed where work has been contracted between companies whether the company qualifies for exemption from the PAYE and NIC cap under the merged scheme Assurance is not a claim. Even where HMRC grants it, the company still claims through its Company Tax Return in the normal way, with all the usual requirements. How is this different from existing advance assurance? The existing scheme covers a first-time SME claimant’s whole claim and, where agreed, applies to the company’s first three accounting periods. The pilot is narrower and sharper: named areas of uncertainty within a claim, for companies that may have claimed before. HMRC is using it to test demand, learn which areas businesses most want assurance on, and gauge the resource a full service would need. The pilot grew out of the 2025 consultation on advance assurance, which we covered, along with the consultation’s outcome, in our article on the advance assurance consultation. Who can apply? SMEs carrying out, or planning, R&D in the accounting period concerned, provided they have not yet claimed for that period and have not already received assurance on the same areas or project. It is not open to large companies, to requests covering three or more areas, or to companies that have applied for full-claim advance assurance for the same period. It is also unavailable where the company or a connected person has a DOTAS arrangement, has been categorised as a Corporate Serious Defaulter, or has an open Corporation Tax enquiry. What does the application involve? An online form, submitted by an officer of the company or an authorised agent. It cannot be saved part-way through and attachments cannot be added, so gather everything first: company registration number, project start date, contact details for the competent professional and a senior officer, a project overview, the accounting period, forecast expenditure, project duration and the type of records held. If overseas expenditure is one of your two areas, you must also explain why you believe it qualifies. Each application covers one project and one area of relief, and a company can make up to two applications. HMRC aims to respond within 40 calendar days where the information is complete. What happens if HMRC says no? The decision cannot be appealed, and you cannot reapply on the same matter. You can still claim through your tax return if you believe you are entitled, but you would be filing against a stated HMRC view, which raises the stakes of an enquiry considerably. That is the real strategic question with this pilot: a declined application is information HMRC keeps. Matthew Jones commented: “The previous advance assurance process was not always fit for purpose and, in practice, it was not widely used by the companies it was designed to support. The introduction of Targeted Advance Assurance is a sensible step forward, but it should be viewed in context. This is a pilot, not a replacement for the existing advance assurance scheme, and its value will depend on how effectively it works in practice. If the pilot helps genuine R&D claimants better understand HMRC’s position on complex areas of a claim, that would be a positive development.” Should your company use it? Use it where you have a genuine, well-documented uncertainty and the answer changes what you would claim; think a medtech company with overseas clinical work, or a contractor unsure who holds the claim. Do not use it as a substitute for preparation: incomplete applications may be rejected, and assurance binds only to the facts you present. If you are weighing up an application, talk it through with a chartered adviser first. Framing the question well is most of the value. Sources Apply for targeted advance assurance — how the targeted advance assurance pilot works and who can apply. Advance clearances: summary of responses — the consultation outcome that led to the pilot. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Tax adviser registration with HMRC: the dates that matter URL: https://www.limestonegrey.com/insights/tax-adviser-registration-hmrc/ Description: Since 18 August 2026 the first tranche of tax advisers must be registered to contact HMRC. The two timetables, and why there is no register to check. Scheme changes & policy •12 August 2026 •9 min read Tax advisers have to register with HMRC. You still can't check. MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards From 18 August 2026, a tax adviser in the first tranche of HMRC’s new registration regime may not interact with HMRC about a client’s tax affairs unless the firm is registered or a Schedule 20 exception applies. Section 223 of the Finance Act 2026 defines interacting widely: contact by telephone, post or email, a message through a website or portal, the filing of “a return, claim, notice or other document”, or communicating “in any other way”. A phone call about your corporation tax position is caught. So is filing your Additional Information Form. The definition of “tax adviser” reaches R&D consultancies directly. Section 224 covers any organisation or sole trader that assists other persons with their tax affairs, including one that “provides assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position”. An R&D report and an AIF are exactly that. When does it actually apply? Two timetables run three months apart, and confusing them is the most common error in what has been written about this. HMRC’s guidance gives the dates on which the registration service opens for each group of advisers. SI 2026/807, the commencement regulations made on 13 July 2026, gives the dates on which the section 223 prohibition comes into force for each group. They are not the same dates and they do not do the same job. Tranche | Who is in it | Registration window opens | Registration required from First | Every adviser not in a later tranche — including all Agent Services Account holders, and advisers setting up from new | 18 May 2026 | 18 August 2026 Second | Advisers with a Self Assessment or Corporation Tax agent account but no Agent Services Account | 18 August 2026 | 18 November 2026 Third | Payroll-only agents without an Agent Services Account | 18 November 2026 | 18 February 2027 Fourth | Financial services organisations without an Agent Services Account | 31 December 2026 | 1 April 2027 The window-opening dates come from HMRC’s guidance page; each window runs for three months. The dates in the final column are the appointed days set by regulation 4 of SI 2026/807, when Chapter 1 of Part 7 of the Finance Act 2026 comes into force for that tranche. Firms that already hold an Agent Services Account sit in the first tranche as well. The regulations define every other tranche by the absence of an ASA immediately before 18 August 2026, so ASA holders fall into the first by construction. They do not apply for anything; the regulations register them. Why is everyone unsure of the date? Because the start date moved twice, and neither move was presented as a change. April 2026 was stated and restated. The consultation response of October 2024 committed to mandatory registration but put no April 2026 on it; that date first appeared on 21 July 2025, when the policy paper said it “will begin from 1 April 2026, with a transitional period of at least 3 months” and the written ministerial statement the same day said the changes would take effect from April 2026. Clause 22(2) of the draft Bill hard-coded 1 April 2026 on the face of the legislation. That date did not survive enactment. The fixed commencement date was removed, and section 249(2) of the Act as passed leaves commencement entirely to Treasury regulations. The Budget 2025 policy paper, published on 26 November 2025, then said it would “begin in May 2026”. No correction note, no acknowledgement that the date had moved. The July 2025 policy paper is still live, still unamended, still saying 1 April 2026. HMRC’s press release of 20 July 2026 groups existing Agent Services Account holders into the 31 December 2026 to 31 March 2027 window, which describes the administrative contact HMRC intends to make but reads against regulations 4 and 5 on their face. And the guidance page never once uses the word “deadline”. It gives the date each window opens, states that each runs three months, and leaves the reader to do the arithmetic. What it means for an established firm Regulation 5 does the work for anyone who already holds an ASA. Where a tax adviser has an Agent Services Account immediately before 18 August 2026, the Act applies to them as if they had applied for registration, as if that application had been approved, and as if they had been notified that registration took effect from 18 August 2026. No form. No fee. There is no renewal, no annual return and no periodic confirmation anywhere in Part 7. Something does follow later. HMRC has said it will contact existing ASA holders directly, with further guidance before any information is requested, as they are moved to the new digital service by 31 March 2027 — the names of the firm’s relevant individuals and evidence of anti-money-laundering supervision are what it expects to collect. ICAEW has confirmed that HMRC will accept a screenshot of a firm’s entry on the find-a-chartered-accountant register as proof that ICAEW supervises it. For advisers who do have to apply, the enforcement ladder is gentler than the coverage suggests. A first contravention carries no penalty. HMRC must notify the adviser and allow 30 days for representations before issuing a compliance notice, and the penalty under section 234 — £5,000, or £10,000 in aggravated cases — only arrives on a further contravention. Registering afterwards cures it: section 233(5) treats a compliance notice as withdrawn where the adviser was unregistered at the time and subsequently registers. Agent Update 145, published on 16 July 2026, goes further, and says that businesses relying on HMRC guidance in good faith to decide they do not need to register will be treated as compliant, with no sanctions or penalties, even if HMRC later clarifies that they should have registered. The register that does not exist Part 7 creates no register, no list and no lookup. HMRC notifies the adviser that the registration has effect, and that is the end of it. The Act does contain publication powers, three of them, and every one is aimed at failure: section 246 covers penalties and ineligibility orders, section 251 covers refusals to deal and suspension of online access, and section 252 requires published information to be updated or removed when circumstances change. Powers to publish the delinquent, and no power to publish the compliant. Registration is invisible. Only failure is publishable. A company cannot look up whether its adviser is registered. It can only ask. The answer would tell you less than it sounds like it tells you, in any event. HMRC’s own fact sheet of 14 May 2026 says registration “is not a form of regulation and does not reflect your competency or authorise you to advise on tax matters”. Registration is free, and HMRC says it should take no more than an hour. What a company should check instead The same things as before, which is rather the point. The verifiable signals are the ones that were always verifiable. The professional bodies’ public registers. ICAEW’s find-a-chartered-accountant register lists both firms and the chartered accountants in them, and CIOT keeps a directory of Chartered Tax Advisers. A claimed qualification can be checked in minutes. AML supervision. Ask who supervises the firm for anti-money-laundering purposes. It is a legal requirement, and a supervised firm answers in one sentence. Who signs the claim. The named, qualified person who reviews the work and signs it off. Whether enquiry support sits in the engagement letter. Ask what happens if HMRC opens an enquiry into a claim the firm prepared, and check that the answer appears in writing. It is written into our own engagement as standard. The fuller treatment, including the questions to ask and the red flags, is on how to choose an R&D tax adviser. One gap is worth knowing about. The registration requirement catches only firms that interact with HMRC. A boutique that writes the R&D report and leaves the client’s own accountant to file it never contacts HMRC, and falls outside the regime entirely. It stays caught by the money laundering regulations, which define a tax adviser by the provision of “material aid, or assistance or advice” on another person’s tax affairs and require no HMRC contact at all. Trading without that supervision has been a criminal offence since 2017, carrying up to two years’ imprisonment. Two registers, different nets. Where LimestoneGrey sits LimestoneGrey is a long-established registered agent with an Agent Services Account, so the firm falls in the first tranche and is treated as registered from 18 August 2026 under the transitional rule; it is supervised by ICAEW for anti-money-laundering purposes, and its ICAEW record is public, so the part that can be checked can be checked. How we are regulated is set out in full on our regulation and standards page. If you are reviewing who prepares your claims, start a conversation with a chartered adviser. Sources Finance Act 2026, section 223 — the prohibition on interacting with HMRC while unregistered, and what counts as interacting. Finance Act 2026, section 224 — who counts as a tax adviser, including a person who “provides assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position”. The Finance Act 2026 (Registration of Tax Advisers) (Appointed Days and Transitional Provision) Regulations 2026, SI 2026/807 — the appointed days for each tranche in regulation 4, and the automatic registration of Agent Services Account holders in regulation 5. Check if and when you need to register as a tax adviser with HMRC — HMRC’s guidance, giving the date each registration window opens and the three-month rule. Finance Act 2026, section 246 — the power to publish details of penalties and ineligibility orders under Chapter 1. Finance Act 2026, section 252 — “Power to publish information: change of circumstances”, requiring an authorised officer to publish information about a material change in a tax adviser’s circumstances where information has been published under section 251 or that section. Modernising and mandating tax adviser registration with HMRC — HMRC policy paper, 21 July 2025: “This will begin from 1 April 2026, with a transitional period of at least 3 months.” Still live, unamended, no correction note. Mandatory tax adviser registration with HMRC — Budget 2025 policy paper, 26 November 2025: “This will begin in May 2026, with a transitional period of at least 3 months for all tax adviser groups.” Published without a correction note. Tax advisers: one month left to register under new rules — HMRC press release, 20 July 2026: registration opened on 18 May 2026, and the first registration window closes on 18 August 2026. Mandatory tax adviser registration communications resources: fact sheet — HMRC, 14 May 2026, updated 18 August 2026: registration is free, “should take no more than an hour”, and “is not a form of regulation and does not reflect your competency or authorise you to advise on tax matters”. The Money Laundering Regulations 2017, regulation 86 — trading without required anti-money-laundering registration as a criminal offence, with imprisonment of up to two years on conviction on indictment. Agent Update 145, HMRC, 16 July 2026 — businesses relying on HMRC guidance in good faith to decide they do not need to register will be treated as compliant. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Tanglewood Care Services v HMRC: what the decision turned on URL: https://www.limestonegrey.com/insights/tanglewood-care-services-tribunal/ Description: HMRC warned 7,500 care homes their sector was being targeted for R&D claims. A tribunal dismissed a care operator's claim. Where the four tests failed. Compliance & enquiries •13 August 2026 •9 min read A care home's R&D claim reached a tribunal. It should never have been filed. MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards In July 2023 HMRC wrote to around 7,500 nursing and care home companies. Directors were told their sector was “being targeted by agents or third parties, who encourage them to make Research & Development (R&D) tax relief claims”, and that HMRC rejects most of the claims it sees from it. Care homes, the letter said, “have received unsolicited phone calls from agents, advising that their general business activities qualify for R&D relief”; many owners told HMRC that after the first call they sent over nothing but their accounts and PAYE records. The typical fee was 15 to 25% of whatever came back. Care homes were the first sector HMRC singled out this way. The pattern was well documented. In evidence to a House of Lords sub-committee published six months before that letter went out, ICAS said “it is my understanding, from looking at the websites of those that do cold calling—the rogue ones—that they are not members of any of the professional bodies.” The National Audit Office later found that “unaccredited agents aggressively solicited taxpayers to submit claims that challenged the definition”. The Comptroller and Auditor General has qualified HMRC’s accounts over error and fraud in R&D relief every year since 2019-20. Error and fraud peaked at 17.6% of the money claimed in 2021-22; the latest figure, for 2023-24, is 6.4% on random-enquiry evidence. On 6 August 2026 the First-tier Tribunal released its decision in Tanglewood Care Services Limited v HMRC. A care operator had claimed £880,286 of enhanced R&D expenditure for infection-control work across seven residential care homes in the year to 31 January 2021, HMRC removed the claim, and the appeal was dismissed — five and a half years after the period ended. No earlier care-sector R&D decision appears in the published tribunal record, so this is the first to be read end to end in public. The decision says nothing about how this particular claim came to be made, and the tribunal criticised nobody. It turns on the statutory tests and on the evidence put in front of it. What the relief is, and what £880,286 means R&D tax relief reduces a company’s corporation tax bill where it has run a project seeking an advance in science or technology. Effort does not qualify a project, and neither does commercial novelty. The figure is not a cheque. £880,286 is enhanced R&D expenditure: qualifying costs uplifted by a set percentage, with the enhanced amount deducted from taxable profits before the tax is worked out. A sum taken off the profit, several steps from any cash. The decision states no tax figure anywhere, and the tribunal never decided how much would have qualified (paragraph 3). Four things have to be true at once: a project — defined work with an objective, rather than innovation in general; an advance in science or technology — new knowledge or capability in the field itself, not merely in your own company; scientific or technological uncertainty — at the outset, nobody knew whether the aim could be achieved, or how; a competent professional — someone qualified in that field who could not readily resolve the uncertainty from what is already known. Our page on what counts as qualifying R&D takes each in turn. Where we would have stopped Our own view, plainly. Infection control in care homes during the pandemic was hard, important, operational work. Nothing in it was an advance in a field of science or technology. That is visible in a first conversation, before a form is filled in or a fee is agreed, and saying so is what a company pays a regulated adviser to do. This claim fails at that conversation, and we would not have filed it. The tribunal found that the company responded in a “diligent, innovative and proactive” manner (paragraph 116), and found its witnesses honest. Take both at face value. Neither defends the claim. Honest, diligent care operators do not spontaneously conclude that their infection-control procedures are a corporation tax event; someone puts that idea in front of them. Who did so here is not in the decision, and we are not going to guess. What the tribunal accepted The parts HMRC lost are the most useful thing in the decision. On the project test, paragraph 19 of the Guidelines does not require a formally documented plan: a coordinated programme of information gathering, review and implementation towards a defined objective sufficed, expressly unlike Hadee Engineering (paragraph 87). On the advance test the tribunal declined to read paragraph 6 as requiring a claimant “in every case to demonstrate an advance in underlying scientific or technological knowledge”. Advances may arise from resolving uncertainty affecting capability as well as knowledge, and a project is not excluded merely because its individual components are already known (paragraph 94). Read that with the paragraph before, which went HMRC’s way: paragraph 9 cannot be read in isolation, so “a product, process or service does not qualify merely because it exhibits some improved functionality” (paragraph 93). The tribunal also rejected HMRC’s submission “insofar as it suggests that the claim must fail simply because the individual measures relied upon by the Appellant were already known”, and held that the company need not have been advancing scientific understanding of the virus itself (paragraph 98). It accepted that the Guidelines are “broad enough to encompass system uncertainty arising from the interaction of multiple measures within a system” (paragraph 104), and repeated the point in closing (paragraph 118). Why the claim failed anyway The objective, as the tribunal put it, was to determine how best to deploy, balance and manage infection-control measures within the company’s own care homes. That involved refining a great many measures, but “the evidence does not show that those activities were directed towards achieving an advance in overall knowledge or capability beyond the Appellant’s own operations” (paragraph 99). Nothing in the definition measures an advance against the claimant’s own starting position. A finding made in the company’s favour shows the point sharply: some measures were introduced before similar approaches appeared in later Government guidance (paragraph 80). Being ahead of the official position is worth something, but it is not an advance in a field of science or technology, because the field is not the company. The uncertainties went the same way. The tribunal accepted that understanding of Covid-19 remained incomplete throughout much of the period (paragraph 103), then held that “uncertainty within the wider scientific and public-health community does not of itself establish that the Appellant’s activities were directed towards resolving scientific or technological uncertainty” (paragraph 105). Staffing arrangements, visitor policies, admissions, PPE procurement and compliance procedures were real and difficult problems, but “predominantly operational and managerial in character” (paragraph 106). Work in the social sciences sits outside science for this purpose, and the tribunal said so (paragraph 107) — a line drawn in what does not count as R&D. The evidence the tribunal did not have Three witnesses appeared, and the tribunal found each “honest, conscientious and experienced”, with significant expertise in the care sector (paragraph 111). The difficulty was scope. None “claimed expertise in virology, epidemiology, infectious disease transmission, infection science or any other scientific or technological discipline capable of assisting the Tribunal as to the relevant state of knowledge or capability in the field” (paragraph 112). The last clause repays reading twice. The absence mattered “not because we consider the relevant field must necessarily have been virology or epidemiology”. It mattered because it left the tribunal without enough evidence on whether the uncertainties were scientific or technological, whether they were readily deducible, or whether an advance beyond the company’s own operations was sought (paragraph 113). That is an evidential finding, not a ruling on which fields a care operator may claim in, and it settles nothing about who counts as a competent professional. The quietest failure is the last. The activities were extensive and resource-intensive, but the evidence did not establish “a systematic process of investigation or experimentation directed towards resolving scientific or technological uncertainty” (paragraph 115). Effort and expense do not amount to a method. A method is what the records a claim needs capture, kept while the work happens. Do First-tier Tribunal decisions change the law? No. FTT decisions bind only the parties and do not set precedent, so a loss on the facts puts no sector outside the relief, and on the main points of principle the tribunal went the claimant’s way (paragraphs 94, 98, 104 and 118). Set it against the Collins Construction and Stage One verdicts, which were not appealed and after which HMRC updated its guidance in February 2025. Those two answer who owns a claim; this one answers whether there was a claim. The period ended 31 January 2021, so the old SME scheme and the 2010 Guidelines applied (paragraph 21); the current edition puts the same four tests behind the merged R&D expenditure credit and ERIS. What an officer looks for has not changed. What this asks of a claim being prepared now Four things, each cheap at the start of a claim and impossible at a hearing. Frame the advance against the field, not yourself. The officer’s question is what a competent professional in the field could not already do. Your answer goes on the Additional Information Form, normally the first document read. Name the field, then the person who can speak to it — someone whose expertise sits in that field rather than in running the business. Separate operational difficulty from technological uncertainty in writing, while the work runs. The two feel identical in a hard year and read very differently three years later, when an HMRC enquiry asks which was which. Record the method — hypothesis, test, result, next iteration. That is a systematic investigation on paper, and the substance of how a claim withstands scrutiny. If someone has approached you about a claim and you cannot tell whether the work is R&D, talk it through with a chartered adviser before anything is filed. Sources Tanglewood Care Services Limited v HMRC — the decision, cited as [2026] UKFTT 1137 (TC) and as 01137 on its cover page. Every paragraph number in this article refers to it. Guidelines on the meaning of R&D for tax purposes — paragraphs 6, 9, 13, 14 and 19 on advance, uncertainty and what makes a project; 15A on the social sciences, numbered 15 in the 2010 revision applied here. HMRC one-to-many letter: R&D tax relief, care homes — the July 2023 letter, on agents targeting the sector, unsolicited phone calls and fees of 15 to 25%. HMRC’s approach to R&D tax reliefs 2023–24 — around 7,500 companies written to, the sectors where R&D is unlikely to be carried out, and 17.6% error and fraud for 2021-22. Tax measures to encourage economic growth — National Audit Office, HC 445, 31 January 2024, summary paragraph 18. House of Lords Economic Affairs Finance Bill Sub-Committee, HL Paper 137 — 31 January 2023, paragraph 92, recording the ICAS evidence quoted above. HMRC annual report and accounts 2024–25 — the Comptroller and Auditor General’s qualification on R&D error and fraud. HMRC annual report and accounts 2025–26 — error and fraud measured at 6.4% for 2023-24. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # LimestoneGrey finalist in One Nucleus Awards 2026 URL: https://www.limestonegrey.com/finalist-in-the-one-nucleus-awards/ Description: LimestoneGrey is shortlisted for Most Innovative Professional Services Company of the Year at the One Nucleus Awards 2026 for our life sciences work. Firm news •24 February 2026 •2 min read LimestoneGrey named finalist in the One Nucleus Awards 2026 LJ Lisa James Last reviewed September 2026 · Editorial standards LimestoneGrey has been named a finalist in the One Nucleus Awards 2026, in the Most Innovative Professional Services Company of the Year category. The shortlisting recognises our specialist work supporting the UK’s life sciences, biotech and medtech sectors. Update, September 2026: the awards ceremony has now taken place, in London on 19 March 2026. One Nucleus is one of the UK’s leading life sciences and healthcare membership organisations, and being shortlisted by it is a significant milestone for our firm. It reflects the impact of our work within one of the country’s most innovative and research-intensive industries. Recognising excellence in the life sciences community The One Nucleus Awards celebrate organisations that demonstrate innovation, impact and excellence across the life sciences ecosystem. The awards bring together pioneering biotech companies, medtech developers, life sciences innovators and the professional advisers who support them. To be recognised as a finalist in the Most Innovative Professional Services Company of the Year category places LimestoneGrey alongside some of the most exciting and forward-thinking organisations in the sector. For us, this recognition is particularly meaningful because life sciences is a community we actively support and understand deeply, more than a market we operate in; you can read about how we work with the sector on our life sciences page. Specialist R&D tax expertise for life sciences, biotech and medtech LimestoneGrey’s Managing Director, Matthew Jones, comments: “The life sciences sector presents unique technical, regulatory and scientific complexities. Preparing an R&D tax claim in this space requires more than basic compliance knowledge, it requires a genuine understanding. We are fortunate to work closely with founders, CTOs, CSOs and laboratory leads from companies striving to make a genuine difference. Our role is to ensure that R&D tax claims clearly articulate the underlying scientific or technological advance being pursued, rather than focusing solely on commercial objectives or market outcomes. We would like to congratulate all the shortlisted companies and thank our clients and partners who continue to place their trust in LimestoneGrey. Being named a One Nucleus Awards finalist reflects our commitment to technical excellence and our deep understanding of R&D in this space. The UK life sciences sector remains one of the most dynamic and globally competitive industries, and we are proud to play a role in supporting the innovators developing new diagnostics, therapies, technologies and platforms that improve lives. We are looking forward to celebrating on 19 March 2026 in London.” If you are a biotech, medtech or life sciences company looking for specialist advice on R&D tax relief, we would welcome the opportunity to talk; get in touch or read more about the firm. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # LimestoneGrey named AGP Gold Partner URL: https://www.limestonegrey.com/agp-gold-partner/ Description: LimestoneGrey is a Gold Partner of the Business Wales Accelerated Growth Programme, providing specialist R&D tax support to high-growth Welsh companies. Firm news •2 March 2026 •2 min read LimestoneGrey recognised as a Gold Partner of the Business Wales Accelerated Growth Programme LJ Lisa James Last reviewed July 2026 · Editorial standards LimestoneGrey has been recognised as a Gold Partner of the Business Wales Accelerated Growth Programme (AGP), supporting high-growth Welsh businesses with specialist R&D tax credit expertise. The firm is listed among the programme’s Gold Partners on the Business Wales site. What is the Accelerated Growth Programme? AGP works with ambitious, high-value companies that demonstrate the potential to create jobs, innovate and make a significant contribution to the Welsh economy. As a Gold Partner, LimestoneGrey joins a network of expert advisers, providing in-kind specialist R&D tax credit support to businesses within the programme and helping them use the relief responsibly as part of their innovation and growth funding. At LimestoneGrey, we understand the pressures and challenges that come with scaling, and we are committed to helping innovative businesses access the support they need to succeed. We are looking forward to working alongside AGP and its cohort of Welsh businesses. A spokesperson for Business Wales said: “We are proud to announce that LimestoneGrey has been recognised as a Gold Partner of the Business Wales Accelerated Growth Programme (AGP), a flagship initiative supporting ambitious high-potential businesses in Wales to scale and grow. AGP Gold Partners contribute high-value in-kind support across areas such as legal advice, digital innovation, marketing strategy, finance, sustainability, technology and workspace solutions.” A partnership rooted in specialist support Matthew Jones, LimestoneGrey’s Managing Director, commented: “We’re delighted to be recognised as a Gold Partner of AGP. High-growth businesses need clear, specialist guidance on R&D tax relief, and we’re looking forward to supporting ambitious Welsh companies achieve their growth potential. This partnership reflects our commitment to innovation and economic development and we are honoured to play a role in supporting the next generation of Welsh business leaders.” For more information on the Business Wales Accelerated Growth Programme, visit businesswales.gov.wales/growth. If your company is on a growth journey and wants a considered view on R&D tax relief, start with how we work, see the sectors we support, or get in touch. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # LimestoneGrey finalist at Finance Awards Wales URL: https://www.limestonegrey.com/limestonegrey-named-finalist-in-the-finance-wales-awards/ Description: LimestoneGrey has been shortlisted for Independent Accounting Practice of the Year at the 2026 Finance Awards Wales, held on 15 May at Holland House. Firm news •25 March 2026 •2 min read LimestoneGrey named finalist at the Finance Awards Wales 2026 LJ Lisa James Last reviewed July 2026 · Editorial standards LimestoneGrey has been named a finalist at the 2026 Finance Awards Wales, shortlisted in the Independent Accounting Practice of the Year category. The Finance Awards Wales celebrates the achievements of finance professionals, teams and firms from across the Welsh finance community, recognising the individuals and organisations making a real impact within the profession. This year’s event brings together finalists from across Wales, with winners announced at the awards ceremony on Friday 15 May 2026 at the Holland House Hotel. Recognition for independent, specialist practice The Independent Accounting Practice of the Year category highlights leading independent practices delivering outstanding service and value to clients, and we are honoured to be recognised alongside other respected firms from across Wales. At LimestoneGrey, we specialise exclusively in R&D tax credits, supporting innovative businesses with clear, specialist advice. Our focus has always been on helping innovative businesses approach a complex area of tax with confidence. Being recognised as a finalist reflects the commitment of our team, the trust our clients place in us and our ambition to raise standards in specialist tax advisory services; our regulation and standards page sets out what those standards mean in practice. Matthew Jones, LimestoneGrey’s Managing Director, comments: “We are incredibly proud to be named a finalist at the 2026 Finance Awards Wales. To be recognised in the Independent Accounting Practice of the Year category is a fantastic achievement for our team and a reflection of the passion and expertise that goes into supporting our clients. At LimestoneGrey, we take great pride in offering a personal and high-quality service, helping innovative businesses access the support they deserve in an increasingly complex area of tax. Being shortlisted is a meaningful endorsement of the work our team does every day and of the strong relationships we have built with our clients and partners.” If your company is looking for specialist R&D tax advice, we would welcome the opportunity to discuss how we can support you: read more about the firm, see our work with life sciences companies, or get in touch. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # LimestoneGrey joins Climb26 ClimbHealth panel URL: https://www.limestonegrey.com/limestonegrey-at-climb26/ Description: Matthew Jones joins the From Brilliant Science to Big Business panel at Climb26 in Leeds, on the ClimbHealth stage chaired by Bionow CEO Geoff Davison. Firm news •29 June 2026 •3 min read LimestoneGrey to join the 'From Brilliant Science to Big Business' panel at Climb26 LJ Lisa James Last reviewed July 2026 · Editorial standards LimestoneGrey’s Managing Director, Matthew Jones, will be attending Climb26 in Leeds, speaking as part of ClimbHealth, the life sciences and health innovation programme within the UK’s Festival of Business Growth and Innovation. Update, July 2026: the panel has now taken place. Read Matthew’s reflections from Climb26. Climb26 brings together founders, investors, academics, industry leaders and specialist support organisations to examine the opportunities and challenges facing high-growth businesses. For companies working at the forefront of innovation, it provides a platform to share ideas, build relationships and highlight the strength of the UK’s innovation ecosystem. Discussing the journey from research to commercial success Matthew will be taking part in the panel discussion “From Brilliant Science to Big Business”, on the journey from scientific discovery through to commercial success. The panel takes place on Wednesday 1 July, 12pm, on the ClimbHealth stage, chaired by Geoff Davison, CEO of Bionow. He will be joined by Chris Allen, CEO and Co-Founder at Broughton Group, Professor Helen Philippou, CEO at ClotProtect Therapeutics, Karen Davies, Head of Strategic Relationships at Equans Sci-Tech, and Paul Thorning, CEO at CrystecPharma, each bringing a different perspective on what it takes to turn innovative science into a successful, sustainable business. For many companies in life sciences, medtech and wider deep tech, developing innovative technology is only one part of the challenge. Taking that technology to commercialisation often requires investment, the right partnerships, regulatory understanding, governance and clear strategic planning. Events such as Climb26 give founders the chance to hear directly from people who have supported companies through those stages. Why should R&D tax relief be part of the conversation? Matthew’s contribution will focus on funding, the role R&D tax relief can play in supporting innovative businesses, and why it pays to build the right processes around it from an early stage. R&D tax credits remain a significant source of non-dilutive income for innovative companies. But the rules have changed substantially in recent years: increased HMRC scrutiny, additional reporting requirements and a greater emphasis on contemporaneous evidence mean businesses can no longer treat the relief as a year-end exercise. Companies benefit from embedding good practice from the outset: systems for tracking qualifying activities, documenting technological uncertainties and capturing project spend throughout the year. Done well, this strengthens future claims, reduces the administrative burden and keeps companies compliant as they scale; our article on preparing a claim that withstands scrutiny covers the same ground in detail. It matters most in life sciences and deep tech, where projects span years, teams cross disciplines and investment runs far ahead of commercial outcomes. The value of collaboration The strength of UK innovation lies in more than the quality of its science and technology. It also rests on the network of organisations working together to support ambitious companies as they grow. Bringing industry, academia, investors and specialist advisers together creates opportunities that are hard to replicate in isolation. Thank you to Bionow for inviting LimestoneGrey to be part of the panel. Matthew Jones commented: “Turning brilliant science into a successful business takes more than technical excellence alone. It requires the right support, the right partnerships and access to funding that allows companies to keep investing in innovation. R&D tax relief can play an important role in that journey, but only when businesses approach it with the right processes, evidence and understanding from the outset. I’m really looking forward to joining the panel at Climb26 and contributing to this important discussion.” If you were at Climb26 and would like to continue the conversation, get in touch. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # Reflections from Climb26: science to business URL: https://www.limestonegrey.com/reflections-from-climb26-innovation-festival/ Description: Matthew Jones reflects on the Climb26 ClimbHealth panel: funding sequence, cheapest money first, investor readiness and the UK life sciences opportunity. Firm news •7 July 2026 •6 min read From brilliant science to big business: reflections from Climb26 LJ Lisa James Last reviewed September 2026 · Editorial standards Matthew Jones, Managing Director of LimestoneGrey, was invited to speak at Climb26, the UK’s Festival of Business Growth and Innovation, held in Leeds. Climb26 brought together founders, investors, scale-ups, business leaders and innovation partners with a shared purpose: to move beyond conversation and focus on practical, commercial growth. For companies in innovation-led sectors, that purpose feels timely. The challenge is no longer whether the UK can produce excellent science. It can. The bigger question is how more of that science can be translated into investable, scalable and commercially successful businesses. A panel built around science, scale and support Matthew joined the “From Brilliant Science to Big Business” panel on the ClimbHealth stage, invited by Bionow. The panel brought together founders, CEOs and people who support high-growth science-led companies: Matthew Jones, Managing Director of LimestoneGrey; Chris Allen, CEO of Broughton Group; Professor Helen Philippou, CEO of ClotProtect Therapeutics; Paul Thorning, CEO of Crystec Pharma; and Karen Davies, Head of Strategic Relationships at Equans Sci-Tech. That blend of perspectives made for a valuable discussion: not simply celebrating innovation, but looking honestly at what it takes to build a business around it. Good science is only the starting point One key theme was the difference between good science and a real commercial opportunity. In life sciences, medtech and deep tech, technical excellence is essential but rarely enough on its own. A strong business needs a clear route to market, a defined customer or patient need, credible evidence, the right team, sound finances and a funding strategy that supports the journey from research to commercialisation. For founders, that means thinking commercially much earlier than many expect. Investors are not just backing the science; they are backing the company’s ability to execute. Building for scale, not just growth Growth can happen organically. Scale requires readiness: systems, governance, financial discipline, a clear commercial model and the ability to withstand investor, partner and regulatory scrutiny. The panel also considered whether the UK does enough to help companies stay and scale here. The UK has world-leading research, strong academic institutions and a deep life sciences ecosystem, but many companies still struggle in the move from early-stage innovation to later-stage commercial growth. This is where predictability matters: founders need to understand the support available, and they need stability in the funding and tax rules so they can plan with confidence. Funding growth: cheapest money first From LimestoneGrey’s perspective, the most important message was about funding sequence. The principle Matthew discussed was simple: cheapest money first. Grants first, then R&D tax relief, then debt, with equity used last where possible. Every pound of non-dilutive funding secured is a pound of equity a founder does not need to give away. For life sciences companies, where timelines are long and milestones expensive, this can make a significant difference. R&D tax relief should not be treated as a year-end afterthought: for a loss-making research company, ERIS can return around a quarter of qualifying R&D spend as cash, helping to extend runway to the next technical, regulatory or commercial milestone. Investor confidence starts before the pitch A compelling story and exciting technology matter, but investor confidence is also built through diligence-readiness: clean books, clear records, well-supported technical evidence and an R&D claim that can survive scrutiny. A well-prepared R&D claim strengthens a company’s financial position. A badly prepared one does the opposite: if a claim is weak, poorly documented or unable to withstand HMRC review, it becomes a liability rather than a win. Investors want to understand the risks as well as the opportunity, and credible R&D documentation is part of that picture. The UK life sciences opportunity The life sciences sector remains one of the UK’s most important growth opportunities. Launching the Life Sciences Sector Plan in July 2025, the Government put the sector at around £100 billion to the economy and around 300,000 people. The Office for Life Sciences has since estimated 2023/24 turnover at £146.9 billion and employment at 359,600, on a revised methodology that is not comparable with the earlier figures. There are also signs of renewed focus on scale-up funding: under the Government’s modern Industrial Strategy, the British Business Bank is committing an additional £4 billion of Industrial Strategy Growth Capital across the eight growth-driving sectors, life sciences among them, expected to crowd in around £12 billion of private capital. The sector’s potential is not in question. The UK has the science, the talent and the entrepreneurial ambition. The challenge is ensuring more companies have the right financial, commercial and strategic support to grow here. Relief has reduced, but predictability is returning From an R&D tax perspective, the picture is nuanced. Relief for a typical SME is now roughly half what it was three years ago, but the most R&D-intensive companies have been protected, with support for qualifying loss-making businesses held at up to 26.97p per £1 under ERIS. After several years of significant change, the regime has started to settle, and for founders and finance teams, predictability can be just as important as headline generosity. Advice for founders: build the business around the science A recurring message: do not wait until you are fundraising, scaling or preparing for diligence to get the foundations in order. Protect your runway, preserve your equity where possible, document your R&D properly and treat compliance as part of commercial readiness. Our article on preparing a claim that withstands scrutiny sets out where to start. Matthew Jones commented: “Climb26 was a valuable opportunity to discuss the realities of turning brilliant science into sustainable businesses. The UK has an exceptional life sciences sector, but innovation alone is not enough. Founders need the right funding sequence, strong financial foundations and a business that is ready for scrutiny. For early-stage companies, non-dilutive funding can be incredibly powerful when used properly. Grants and R&D tax relief can help extend runway, protect equity and support the journey to the next milestone. But the key is doing it well. A well-evidenced R&D claim can strengthen a business. A poor one can create risk. It was a pleasure to contribute to the panel alongside such experienced voices, and thank you to Bionow for inviting me to be part of the conversation.” To discuss how R&D tax relief could form part of your funding strategy, get in touch. Sources Life Sciences Sector Plan to grow economy and transform NHS — DSIT, 16 July 2025: the launch-day framing of the sector as “worth around £100 billion to the economy, and employing around 300,000 people”. Life Sciences Sector Plan — DSIT, DBT, DHSC and the Office for Life Sciences; plan published 16 July 2025, HTML edition updated 9 July 2026: Action 13 commits the British Business Bank to an additional £4 billion of Industrial Strategy Growth Capital across the eight Industrial Strategy sectors, crowding in £12 billion of private sector capital. Bioscience and health technology sector statistics 2023 to 2024 — Office for Life Sciences, 2 October 2025: 359,600 people employed and £146.9 billion of turnover across the UK life sciences industry in 2023/24. Life Sciences Sector Plan: One Year On — DBT, DSIT, DHSC and the Office for Life Sciences, 9 July 2026 (PDF): page 23 records the British Business Bank’s additional £4 billion as “expected to crowd in around £12 billion of private investment”, and page 48 that “£379 million of public capital has been committed by the British Business Bank to specialist life sciences funds and companies over the last year”. This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us. --- # R&D tax relief FAQ | LimestoneGrey URL: https://www.limestonegrey.com/faq/ Description: Straight answers to the questions companies ask about R&D tax relief: schemes, eligibility, qualifying costs, the claim process, and HMRC compliance. Frequently asked questions Straight answers on the schemes, eligibility, costs, process and compliance. If your question is not here, ask us directly. The schemes Which R&D scheme applies to my company? It depends on when your accounting period begins and on your tax position. For periods beginning on or after 1 April 2024 there are two schemes: the merged R&D expenditure credit, the default for companies of every size, and Enhanced R&D Intensive Support (ERIS) for a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Periods that began before 1 April 2024 fall under the old SME and RDEC schemes, which remain open to amendment for roughly two years after the period ends. Our guide to which scheme applies works through the decision step by step. What is £100,000 of qualifying R&D spend worth? Under the merged scheme, £100,000 of qualifying spend generates a £20,000 gross credit. Because the credit is taxable, the net benefit is £15,000 at the 25% corporation tax rate, or £16,200 where the 19% rate applies or the company is loss-making. Under ERIS, a loss-making R&D-intensive SME with sufficient losses receives £26,970 in cash on the same spend: £100,000 x 186% x 14.5%. Your own figure depends on scheme, tax position and losses. Our calculator gives an estimate on your numbers, and the merged scheme guide shows the full workings. Five claims are costed in full in our worked examples. Read the full answer → What is Enhanced R&D Intensive Support (ERIS)? ERIS is the higher-rate relief for loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure, with connected companies counted on both sides of the ratio. It works through an additional 86% deduction (186% in total) and a payable credit of 14.5% of the surrenderable loss, worth up to 26.97p per £1 of qualifying spend. The credit is not taxable. A one-year grace period can protect a company whose intensity later dips, but only where it met the intensity condition in its most recent prior 12-month accounting period and obtained relief for it. See the full ERIS guide, or test your ratio with the ERIS intensity calculator. Read the full answer → Can I claim R&D tax credits if my company is loss-making? Yes. Loss-making companies claim under the merged scheme and receive the credit in cash, worth 16.2p per £1 of qualifying spend after notional tax at 19%, subject to the PAYE cap. Loss-making SMEs that pass the 30% intensity test can claim ERIS instead, worth up to 26.97p per £1. Making a loss does not weaken a claim; for R&D-intensive companies it opens the most generous rate in the system. Can we claim if the project was grant funded? Yes. For accounting periods that begin on or after 1 April 2024 the subsidised-expenditure rules are gone, so an Innovate UK award, or any other grant, leaves the merged scheme and ERIS alone: you can take both. Most of what is still online describes the old SME position, where grant funding pushed spend into a lower-value scheme, and that analysis now bears only on claims for earlier periods. One narrow carve-out applies to companies registered in Northern Ireland claiming ERIS; Great Britain registrations are unaffected. Our grants guide has the current position in full. Read the full answer → Is there a limit on the cash credit I can receive? Yes — a ceiling on cash, not on the claim. No company takes more payable credit from a period than £20,000 plus three times its relevant PAYE and National Insurance. “Relevant” is adjusted for connected companies: added where one supplies you, removed where you supply one — in each case only the payroll behind that supply. It applies under the merged R&D expenditure credit and ERIS alike. Under the merged scheme the restricted amount carries forward as an expenditure credit for the next period. Under ERIS the credit does not carry forward at all: what survives is the loss the company chooses not to surrender, so an ERIS claim must be sized to the cap before filing. An exemption lifts the cap altogether, on two conditions about the company’s own intellectual property and its connected-party spend: what is the PAYE cap on R&D tax credits? sets out what each demands. If your payroll is small and your R&D is largely subcontracted, model the cap before the year end. Read the full answer → Can I still claim under the old SME or RDEC schemes? Yes, for accounting periods that began before 1 April 2024, provided the claim window is still open. Claims can generally be made for two years from the end of the period of account, so the last standard deadlines for old-scheme claims fall in late March 2027. Take care with claim notification: a company caught by the notification requirement that missed its six-month window cannot rescue the claim, even where the amendment deadline is still open. Our guide to backdated claims covers the remaining runway and the traps. Eligibility What does my company need to do to qualify for R&D tax relief? Four things: your company must be subject to UK corporation tax, carrying out qualifying R&D — a project seeking an advance in a field of science or technology through resolving uncertainty that a competent professional could not readily resolve — and spending money in the qualifying cost categories, such as staff, subcontractors and consumables. The going concern condition then applies differently by scheme: under the merged scheme it governs whether the payable amount is actually paid, with the payment reinstated if the company becomes a going concern again before the amendment deadline, while under ERIS it bars the claim itself. Beyond those basics, details such as contracts, grants and group structure shape which scheme applies and what the claim is worth. Read the full answer → Are R&D tax credits only available to limited companies? Effectively, yes. R&D relief runs through the corporation tax system, so it reaches only entities within the charge to UK corporation tax; a sole trader or an ordinary partnership pays income tax and has no equivalent to claim. An LLP cannot claim in its own right, but relief can still find its way to a corporate member, through the way that member’s own corporation tax computation picks up its slice of the partnership profits — so long as the R&D relates to a trade the partnership carries on, or will carry on. One limit applies whichever scheme is in point, not only to old periods: HMRC reads the partnership computation rule as doing nothing beyond fixing the corporate member’s profit, so the benefit lands as reduced profits and no payable cash credit can be claimed on it. Read the full answer → Is there a minimum amount I need to spend on R&D to claim? No. The minimum expenditure requirement was removed on 1 April 2012, precisely so that small companies and start-ups were not shut out. A small claim still carries the same compliance obligations as a large one, including claim notification for first-time claimants and the Additional Information Form, so the practical question is whether the benefit justifies preparing the claim properly. We will tell you honestly if it does not. Read the full answer → Can I claim for an R&D project that failed? Yes — the test looks at what the work set out to resolve, not at whether it got there. The Guidelines are explicit that R&D still happens even where the advance is never achieved, and dead ends often make the strongest case that the uncertainty was real: a problem a competent professional could settle readily does not defeat a team for months. Failure on its own qualifies nothing, though — a product that flopped commercially, or a build that stalled on ordinary engineering difficulty, counts only where the underlying work sought an advance in science or technology through uncertainty nobody in the field could readily resolve. Write down what you tried, where existing knowledge ran out and what the work taught you; our guide to what actually qualifies marks where the line falls. Read the full answer → Who counts as a competent professional? Someone whose qualifications, practical experience, or both place them genuinely inside the project’s own field — competence is judged field by field, so a software architect is not one on a fermentation problem. Their job in a claim is to pin down the uncertainties and say why the answers were not readily available to anyone working in that field. Degrees are not a legal requirement, but HMRC looks for command of the underlying principles, awareness of where the field’s knowledge currently stands, and a genuine track record; an intelligent interest in a subject qualifies nobody. Identify yours before drafting starts, because the AIF is built around their judgement — and the full definition sets out the remaining tests. Read the full answer → How do linked and partner enterprises affect the SME test? The SME thresholds (fewer than 500 staff, and either turnover of €100m or less or a balance sheet total of €86m or less) are tested across your wider group, not your company alone. A linked enterprise is one that controls you or that you control, typically through more than 50% of the voting rights; its headcount, turnover and assets are added to yours in full. A partner enterprise holds between 25% and 50%; you add its figures in proportion to the holding. Exceptions exist for certain venture capital firms, universities and institutional investors. Under the current schemes this matters chiefly for ERIS, which only SMEs can claim. Read the full answer → What happens to my claims if my company outgrows the SME definition? Company size only changes for R&D purposes once the thresholds have been crossed in two consecutive years; in the first period you cross them, your existing status holds. The exception is ownership. Where the enterprise whose figures come in already exceeds the headcount limit or both financial limits on its own account, there is no grace year and SME status ends for that period — and a minority stake can be enough. Where the acquirer is itself an SME, a relief runs the other way and the target keeps SME status for that period; what happens if my company outgrows the SME definition sets out the full position. Under the current schemes, size matters chiefly for ERIS, which only loss-making SMEs can claim; the merged scheme applies to companies of every size at the same rate. Read the full answer → Can I claim for R&D I carry out under contract for another company? Often, yes. For accounting periods beginning on or after 1 April 2024, the customer claims only where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Where it did not, because it bought an outcome and left the how to you, you can claim in your own right as the contractor. Contractors working for overseas customers, or for customers outside UK corporation tax, can also claim in their own right. Contract wording usually decides the point, so review it before either side claims. Our guide to contracted-out R&D works through the scenarios. Can an LLP or partnership claim R&D tax credits? Not in its own right. A partnership is not a company for corporation tax, so it cannot hold an R&D claim, and a limited liability partnership is in the same position because it is taxed as a partnership on its members. Where a member is a company within the charge to corporation tax, section 1259 CTA 2009 computes the firm’s trade profits as though a company carried on the trade, and R&D relief can reach that member through its profit share — provided the R&D relates to a trade the partnership carries on or intends to carry on. What does not follow is cash: HMRC’s stated view is that the payable tax credit cannot be claimed on relief reaching a corporate member this way. Our full answer sets out whether an LLP or partnership can claim R&D tax credits. Read the full answer → Qualifying costs What costs can I include in an R&D tax credit claim? Six categories: staff costs, apportioned to time spent on R&D; externally provided workers, such as agency staff; subcontracted R&D, which qualifies at 65% for unconnected subcontractors; consumables, meaning materials used up or transformed in the work plus an apportionment of water, fuel and power; software, data licences and cloud computing used in the R&D; and payments to clinical trial volunteers. Capital expenditure, rent and patent costs sit outside the relief, though capital spending on R&D can instead attract R&D allowances. The detail matters, particularly apportionment and the UK-only rules for subcontractors and external workers, so start with our qualifying costs guide. Can I claim our software licences and cloud bills? Three things, broadly: licence fees for software the R&D actually used, licences to access someone else’s data, and cloud services — remote compute, storage and platforms — where the spend is directly attributable to the work. The test is what the tool was doing, not what it is: spend has to trace back to resolving the project’s scientific or technological uncertainty. That keeps the CRM, the finance system and the cluster running live customer traffic out of the claim, however necessary they are. Very little is used only on the R&D, so apportionment is most of the job — take the share on a basis you can justify, whether that is billing data, project tags or hours, and write down what that basis was. Our full cost list has the detail. Read the full answer → How much of a subcontractor's invoice can I claim? Payments to unconnected subcontractors qualify at 65% of the portion attributable to R&D undertaken in the UK or within the narrow overseas exception, so a £10,000 invoice for qualifying UK R&D contributes £6,500 to the claim. Two conditions sit around that rate. First, for accounting periods beginning on or after 1 April 2024 the subcontracted work must be undertaken in the UK, unless it meets the narrow qualifying overseas expenditure exception. Second, you can only claim at all if the R&D was not contracted to you in terms that give your customer the claim: the contracted-out R&D rules decide who claims. Read the full answer → Can I claim for R&D carried out overseas? Usually not, for accounting periods beginning on or after 1 April 2024. Subcontracted R&D must be undertaken in the UK, and externally provided workers’ earnings must attract UK PAYE and Class 1 NIC. Both restrictions share the same narrow exception, qualifying overseas expenditure: conditions necessary for the R&D (geographical, environmental, social or regulatory, such as clinical trial populations or a regulator’s requirements) that are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate here. Cost savings and workforce availability are expressly excluded as justifications. Our overseas R&D guide covers the planning implications. The claim process How is an R&D tax credit claim submitted? Through your Corporation Tax return. The claim itself is made in the CT600, and the Additional Information Form must be submitted before or with it, covering project descriptions, cost breakdowns, the senior internal R&D contact and every agent involved. Preparation runs in two strands: establishing which projects meet the qualifying R&D definition, and calculating the qualifying costs. We are registered with HMRC as tax agents and prefer to handle the whole sequence ourselves, submitting the return that contains the claim, or amending it if it has already been filed, so nothing reaches HMRC out of order. Read the full answer → How long does an R&D claim take to prepare and pay? How long preparation takes depends on the claim and on the state of your records; once the information is gathered from your team, a few weeks is common, and there is no standard answer worth quoting. Once submitted, HMRC’s processing time varies with the complexity of the claim, the quality of the supporting information and the volume of claims in the queue — and nobody outside HMRC controls that queue, so treat a promised payment date from any adviser with suspicion. If HMRC opens a compliance check, payment is withheld until it is resolved, which is one reason preparation standards matter more than speed. We agree a realistic timeline at the start and keep you informed throughout; HMRC’s own published aims are set out in how long it takes to receive the payment. Read the full answer → Does my accountant need to be involved in my R&D claim? Only lightly. We are registered with HMRC as tax agents, so we prepare the claim, the calculation and the Additional Information Form, and we prefer to submit the corporation tax return containing the claim ourselves, or amend it if it has already been filed. From your accountant we typically need copies of the return, the accounts and payroll records; their day-to-day role and the client relationship stay theirs, and many of our clients arrive through their accountant. If you are an accountant considering a referral, our working with accountants page explains the arrangement. The fuller comparison, including when your accountant is the right answer, is at specialist or accountant: who should prepare the claim? What records do I need to keep for an R&D claim? There is no statutory format. HMRC accepts that some R&D costs will be an estimated proportion of known expenditure — staff time, for example — provided the estimate is arrived at using evidence and reason; that latitude applies to any claim, not just a first one. Still, keep records as you go: timesheets or staff allocation records, project documents describing the scientific or technological uncertainties, subcontractor and externally provided worker agreements, and test results. Good records make the next claim faster to prepare and far easier to defend if HMRC opens an enquiry, because the evidence exists from the time the work was done. Read the full answer → How far back can I claim R&D tax relief? Generally two years from the end of the period of account. That means the last standard deadlines for claims under the old SME and RDEC schemes fall in late March 2027, and the deadlines roll shut year end by year end — several have already passed. Two cautions. First, the claim notification requirement can invalidate a backdated claim where the six-month notification window was missed, even though the amendment deadline is open. Second, extended or shortened accounting periods complicate the dates, so check yours rather than assuming. Our backdated claims guide shows how to work out your own runway. Read the full answer → Compliance and enquiries Do I need to notify HMRC before making an R&D claim? Probably — the requirement catches first-time claimants, and anyone who has not claimed within the three years ending with the notification deadline. It bites on accounting periods that begin on or after 1 April 2023, and HMRC has to receive the notification inside six months of the period of account ending; there is no late route, so miss it and the claim dies even though the return could still be amended. The trap for established claimants is that a pre-April 2023 period claimed by an amendment filed on or after 1 April 2023 does not count as a prior claim. Test your own dates with the deadline checker, or work through examples by year end in the full guide. Read the full answer → What happens if I file a claim without the Additional Information Form? HMRC rejects the claim. The AIF has been mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023 — and must be submitted before or with the CT600 containing the claim; a claim filed without it is treated as invalid and no relief is processed until a compliant form is in. The AIF requires project descriptions, cost breakdowns, the senior internal R&D contact and every agent involved in the claim. A thin or inaccurate AIF also raises enquiry risk, because it is the first thing HMRC reads. Our AIF guide explains what a well-prepared form contains. Read the full answer → How often does HMRC check R&D claims? Common enough that you should plan for it. In 2023-24, the most recent year HMRC has published, roughly one claim in six drew a compliance check — 17%, up from 10% a year earlier — handled by a team HMRC puts above 500 people. The scrutiny is working, so it is unlikely to ease: HMRC’s July 2026 annual report puts error and fraud at 6.4% for 2023-24 on random-enquiry evidence, down from 17.6% in 2021-22. Being checked is not an accusation; it is a request to evidence what you filed, and how well the claim was built in the first place is usually what settles it. See how likely an HMRC enquiry is. If a check has already arrived, HMRC enquiry defence is the standalone engagement that covers it. Read the full answer → Can HMRC withhold an R&D credit payment or ask for it back? Both are possible. HMRC can hold a payable credit back while it checks a claim, and it can come back afterwards: for twelve months from delivery of the return it may open an enquiry as of right, with no new information needed to justify it. Once that window shuts HMRC can still assess by discovery, but only where the loss of tax was brought about carelessly or deliberately, or where its officer could not reasonably have known of the excess from what the return and the claim disclosed — and then up to four years after the period ends, six where the error was careless, twenty where it was deliberate. An overclaim is then recovered as if it were unpaid tax, with late-payment interest on top; a penalty arises only where the error was careless or deliberate, which is what makes reasonable care worth paying for. We prepare on the assumption that a claim will be read critically rather than waved through. Read the full answer → What penalties can HMRC charge on an incorrect R&D claim? Penalties scale with behaviour. Where you can show reasonable care was taken, no penalty arises at all. A careless error can attract a penalty of up to 30%, reducible to nil where you disclose it unprompted. A deliberate error that was concealed can attract a penalty of up to 100% of the amount overclaimed, on top of repaying the relief itself. Cooperation counts: prompt disclosure and constructive engagement with HMRC reduce the percentage. The dependable way to avoid penalties is to be able to show the claim was prepared with care, on evidence, by people who understood the legislation. That record is what a regulated chartered adviser builds into a claim from the start; see how to respond to an HMRC enquiry. Read the full answer → What evidence do I need if HMRC opens a check? An enquiry asks you to prove what you filed. Expect HMRC to want a technical account from the competent professional behind each project, workings that build the cost figure up rather than state it, something showing who worked on the R&D and for how long, the contracts sitting behind any subcontracted work, and whatever the project generated while it was running — notes, plans, test results. Material written while the work was happening carries far more weight than anything assembled once the letter arrives, so we gather it during preparation rather than after. On claims we prepare, enquiry support is included as standard, and we also take on enquiries into claims another adviser filed. Read the full answer → Can I get advance assurance that my R&D claim will qualify? Sometimes, though less often and less completely than the name suggests. Advance assurance on a full claim is the meaningful version and the most restricted: an SME making its very first claim can have HMRC agree the claim as a whole, covering up to three accounting periods. The 2026 targeted route, open since May, admits SMEs that have claimed before, but only puts up to two defined areas of a claim to HMRC; the separate online qualification checker is not assurance at all and binds nobody. None of it removes the need to get the claim right, because assurance addresses whether the projects qualify — not your cost figures, and not compliance steps such as notifying HMRC first. Read the full answer → HMRC paid my R&D claim. Does that mean it was right? No. HMRC operates a process now, check later approach: most claims are paid when they are filed, and questions come afterwards if they come at all. Payment tells you the claim was processed, not that it was checked or approved, and an enquiry can arrive well after the money has been received and spent; how likely an HMRC enquiry is sets out the current check rate. HMRC says as much itself: its published account of its approach to R&D reliefs records that it opens some compliance checks after payment, which gets money to companies quickly but leaves open the possibility that a claim is later found non-compliant and the payment recovered. If the claim contained errors, relief can be repaid with interest, and in some cases with penalties, years later. If your claims have always been paid without questions and you have never had an independent view of them, our free claim review is a confidential way to find out where you actually stand. Read the full answer → Does my R&D adviser have to be registered with HMRC? Yes, if they deal with HMRC for you. The Finance Act 2026 requirement began taking effect in stages on 18 August 2026, and filing an Additional Information Form or an amended return is squarely inside it. Established firms holding an Agent Services Account are registered automatically, without applying. What you cannot do is check: there is no public register, and the only details HMRC publishes are of advisers it has penalised, banned or refused to deal with. Ask the company that will sign your engagement letter, and rely on the checks that produce evidence — the professional bodies’ registers and AML supervision. The full answer covers the dates, the automatic-registration rule and the gaps. Read the full answer → --- # Can I claim R&D tax relief for a failed project? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-i-claim-rd-tax-relief-for-a-failed-project/ Description: Yes. The relief follows the attempt to resolve technological uncertainty, not the outcome. Failure alone qualifies nothing: what matters is why it failed. Questions •3 min read Can I claim R&D tax relief for a failed project? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Yes. R&D tax relief rewards the attempt to resolve scientific or technological uncertainty, not the outcome. A project that never reached a working result can still qualify in full, and the legislation has always worked this way: the test is whether the work sought an advance through resolving uncertainty that a competent professional could not readily resolve, not whether the advance was achieved. Why failure can strengthen a claim Failed iterations are often the clearest evidence that the uncertainty was genuine, but the inference only runs one way. Failure on its own qualifies nothing. A project can miss its target because the money ran out, because the specification moved, or because the work was done badly, and none of those is a scientific or technological uncertainty. What decides the claim is why the work failed. A prototype that missed its performance target because the underlying behaviour could not be predicted, a process that could not be scaled because it behaved differently at volume, an approach abandoned once testing showed the route would not work: each records an attempt to resolve something a competent professional in the field could not readily answer, which is what HMRC needs to see. Where that is the case, we find the abandoned branches of a project are frequently easier to defend than the branch that eventually worked, because nobody can argue the solution was obvious. The same logic applies within successful projects. Most R&D that ends in a working product passes through failed attempts on the way, and those attempts are part of the qualifying activity. Leaving them out of a claim both understates the qualifying work and weakens the story of uncertainty the claim depends on. What you need to be able to show The relief attaches to the attempt, but the attempt has to be evidenced. The Guidelines put it directly: even where the advance sought is not achieved or fully realised, the R&D still takes place — what matters is being able to describe what was attempted, why existing knowledge was insufficient, what was tried, and what was learned, including from the failures. The Additional Information Form requires a project description covering exactly this ground, and HMRC checked around one in six claims in 2023-24, its latest published figure, so the description needs to hold up under questioning. Records do not need a statutory format. HMRC’s guidelines for compliance accept that some R&D costs will be an estimated proportion of known expenditure, provided the estimate is arrived at using evidence and reason, and that where nothing was written down at the time a detailed explanation provided later may be acceptable in some cases. That latitude is not confined to first claims, as what records you need for an R&D claim explains. Nor is it a reason to leave records to the year end: keep project documents, test results and staff time records as you go, because evidence created at the time the work was done is far more persuasive than reconstruction after the event. Commercial failure and technical failure also pull in different directions here. A product that flopped in the market may rest on work that qualifies in full, and a project that ran into serious difficulty may qualify for none of it. Only the statutory definition settles which you have, and our guide to what counts as qualifying R&D sets out where the line falls. Where to go next If you shelved a project and assumed the spend was lost, it may still be claimable: the window for amending a return generally runs two years from the end of the period of account. We will tell you honestly whether the work qualifies before any claim is prepared. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 10: R&D still takes place even where the advance sought is not achieved; paragraphs 6 and 13, the advance and uncertainty tests that decide whether a failed project qualifies at all. Check if a project qualifies as R&D for tax purposes — the definition the outcome does not change. GfC3: Recommended approach to claims and record keeping (part 5) — estimates arrived at using evidence and reason, and explanations provided later where written records do not exist; the latitude is not limited to first claims. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can a sole trader claim R&D tax credits? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-a-sole-trader-claim-rd-tax-credits/ Description: No. R&D tax relief is a corporation tax relief, so only companies can claim. Where that leaves sole traders, partnerships and LLPs, and the one route in. Questions •3 min read Can a sole trader claim R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards No. R&D tax relief is a corporation tax relief, available only to entities chargeable to UK corporation tax, which in practice means companies. Sole traders pay income tax on their profits, not corporation tax, so they sit outside the relief entirely, however genuinely scientific or technological their work is. There is no income tax equivalent to claim instead. The relief can still reach a sole trader’s work, but from the other side of the invoice. A company that engages a self-employed individual directly is not paying for an externally provided worker — CIRD84100 is explicit that there is no externally provided worker without a contract between the individual and a staff provider — but the payment may be a contractor payment for contracted-out R&D under CTA 2009 s1133, which turns on whether the company intended or contemplated, on the contract terms and the surrounding circumstances, that R&D of that sort would be done. Where it did, s1136 puts 65% of the portion attributable to UK R&D into the company’s claim. The sole trader claims nothing either way; the company that commissioned the work is the one holding the claim. Partnerships and LLPs An ordinary partnership of individuals is in the same position as a sole trader: its members pay income tax, so there is no route to the relief. An LLP normally cannot claim in its own right either, but there is one way in. Where a member of the LLP is a company, relief can reach that corporate member through the corporation tax computation of its share of the partnership’s profits, provided the R&D relates to a trade carried on, or to be carried on, by the partnership itself. The individual members get nothing either way. The mechanics differ by scheme, and can a partnership or LLP claim R&D tax credits? works them through. Whichever scheme applies, the position should be checked rather than assumed. One restriction is not scheme-specific. HMRC reads CTA 2009 s1259 as applying only for the purpose of calculating the profit attributable to the company, so the relief reaches the corporate member as reduced partnership profits in its own corporation tax computation and a payable tax credit cannot be claimed in respect of it. That is HMRC’s published reading of the computation rule rather than an explicit statutory bar, and it is the position to plan on. The usual conditions apply on top: qualifying R&D, qualifying costs and the compliance steps every claim now carries. What if you incorporate? A company you form can claim for the qualifying R&D it carries out and pays for once it exists. What it cannot do is reach back: expenditure you incurred personally as a sole trader, before the company existed, is not the company’s expenditure and cannot go into the company’s claim. If you are doing genuine development work and weighing up incorporation, the availability of R&D relief is one factor among the commercial and tax considerations, and timing matters, because only work from incorporation onwards can ever be claimed. Two compliance points catch new companies in exactly this position. A first-time claimant is usually caught by the claim notification requirement: HMRC must be notified within six months of the end of the period of account, and a missed window invalidates the claim with no late route. And every claim requires the Additional Information Form before or with the return. Neither step is difficult; both are unforgiving. Where to go next If you trade through a company already, the four conditions for a claim are set out in what your company needs to qualify. If you are a sole trader considering incorporation and want the R&D position considered properly alongside everything else, talk to us before you decide, not after. Sources R&D tax relief: the merged scheme and ERIS — relief claimed through corporation tax by companies. Tell HMRC you plan to claim — the notification requirement that catches first-time claimants. CIRD81220: company as member of partnership — s1259 applies only for calculating the profit attributable to the corporate member, and payable tax credit does not follow. CIRD84100: externally provided workers, definition — a payment to a self-employed consultant is not a payment for an externally provided worker, and may instead be on subcontracted R&D. CTA 2009 s1133 and s1136 — contracted-out R&D and the intended-or-contemplated test, and the 65% qualifying element of a contractor payment. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Who counts as a competent professional in an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/who-counts-as-a-competent-professional/ Description: A competent professional has relevant qualifications or experience in the project's field. What the role involves, who qualifies, and why HMRC asks. Questions •4 min read Who counts as a competent professional in an R&D claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards A competent professional is someone with relevant qualifications or experience, or both, in the specific field of science or technology the project sits in. The concept anchors the whole R&D definition: work qualifies where it seeks to resolve uncertainty that a competent professional in the field could not readily resolve, so every claim needs at least one identifiable person against whose knowledge that test is applied. What the role actually involves The competent professional’s job in a claim is to identify the scientific or technological uncertainties and explain why a professional working in the field could not readily resolve them. That means describing what was already known or deducible in the field, why the project’s problems went beyond it, and what had to be worked out through the R&D itself. This is a technical judgement, not a tax one, which is why it has to come from your team rather than your adviser: we shape and test the account, but the expertise it rests on is the company’s. The field matters. Competence is judged in the specific field of the uncertainty, so a highly experienced software architect is not a competent professional on a fermentation problem, and vice versa. Projects that span disciplines often need more than one professional’s input for the claim to hold together. A device programme spanning engineering, software and clinical evaluation is the common case, worked through in R&D tax credits for medtech companies. Do they need formal qualifications? Formal academic qualifications are not a strict legal requirement, and there is no definition to measure yourself against: the Guidelines that carry the statutory meaning of R&D use the term without defining it, and HMRC’s guidelines for compliance describe a competent professional as someone suitably qualified or experienced in the field. In fast-moving fields deep practical experience can be exactly what competence looks like. But the bar HMRC sets is higher than time served. Its guidance expects three things together: knowledge of the relevant scientific or technological principles, awareness of the current state of knowledge in the field as a whole, and accumulated experience with a successful track record — and it warns in terms that having worked in a field, or having an intelligent interest in it, does not by itself make someone a competent professional. Strong credentials make all three easier to evidence, which matters, because the account has to survive questioning: HMRC checked around one in six claims in 2023-24, its latest published figure. Those guidelines also set out what the professional’s written opinion should cover: what HMRC’s Guidelines for Compliance expect from an R&D claim. They do not have to be your employee. HMRC’s guidelines for compliance say a competent professional may work for your company or may not, and the approach they recommend is to get the opinion of a competent professional in the field — often, they note, someone suitable already works on the project. A retained consultant, a fractional CTO or a specialist brought in for the work can hold the role, provided the attributes are there and the person was genuinely working in the field and on this project. It does not stretch to your claims adviser, though: competence is judged in the project’s field of science or technology, and R&D tax is not that field. The Additional Information Form’s project questions are built around this judgement — HMRC’s guidance on answering the uncertainties question asks why a competent professional in the field could not readily resolve them — so identify yours early, before drafting starts rather than after. A claim written first and attributed to a professional afterwards tends to read that way. Where to go next The competent professional test is one strand of the statutory definition; our guide to what counts as qualifying R&D covers the rest, including the advance and uncertainty tests the professional’s account has to support. If you are unsure whether anyone in your team fits the description, that is worth resolving before a claim is prepared, and we will give you a straight answer. Sources Guidelines on the meaning of R&D for tax purposes — the definition the competent professional test sits inside. GfC3: the importance of a competent professional — HMRC’s description of a competent professional, the three attributes it expects, its warning about the bar, and that the professional may or may not work for your company. GfC3: Recommended approach to claims and record keeping (part 5) — HMRC’s recommendation to get the opinion of a competent professional in the field, often someone already working on the project. Submit detailed information before you claim — the AIF’s project questions the professional’s account has to answer. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How far back can I claim R&D tax credits? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-far-back-can-i-claim-rd-tax-credits/ Description: Generally two years from the end of your period of account. The last old-scheme deadlines fall in late March 2027, and many year ends have already closed. Questions •3 min read How far back can I claim R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Generally two years from the end of the period of account. For accounting periods beginning on or after 1 April 2023, the R&D time limit is its own rule: a claim must be made, amended or withdrawn within two years of the last day of the period of account the claim relates to. For most companies, whose accounts and accounting period are the same twelve months, that means what people expect: at any moment you can usually still claim for your two most recently ended years. The 2027 line — and the deadlines already gone The two-year window is why the old SME and RDEC schemes are still live. They apply to accounting periods that began before 1 April 2024, and for the last of those periods, with a standard twelve-month period of account, the claim window runs out in late March 2027. Just as important is the other direction: the deadlines roll shut year end by year end, and many have already passed — a company with a 31 March 2024 year end lost its last old-scheme period in March 2026. A company that never claimed, or under-claimed, for a still-open year has a runway, and it is shortening on a fixed schedule; when it closes, the old schemes close for good, and with them the loss-making SME rates of up to 33.35p per £1 that applied to expenditure before April 2023. Work the deadline out from your own year end rather than from a headline date. The trap that closes claims early The claim window is not the only gate. For accounting periods beginning on or after 1 April 2023, a company claiming for the first time, or that has not claimed in the three years ending with the notification deadline, must have sent HMRC a claim notification within six months of the end of the period of account. Miss that window and the claim is invalid even though the two-year window is still open; there is no late route. One wrinkle is especially unforgiving: a claim that appears in a return only because of an amendment made on or after 1 April 2023, for a period that began before that date, does not count as a prior claim for this test — so a company that thinks of itself as an established claimant can be caught as if it were new. In practice the notification rule closes more backdated claims than the deadline itself does. Two further cautions. Extended or shortened periods of account move every date on this page — a shortened period pulls the notification deadline forward — so check your own periods rather than assuming twelve-month years. And a backdated claim made now still needs its own Additional Information Form, mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Where to go next Our backdated claims guide works through the remaining runway year by year, and the claim notification deadline checker tests your own dates in a minute. If an older period looks claimable, move before the window decides for you. Sources FA 1998 Sch 18 para 83E — the R&D claim time limit: two years from the last day of the period of account. CIRD81800: time limits for claims — HMRC’s guidance on the limits, including the position for earlier periods. Tell HMRC you plan to claim — the six-month notification window and who it catches. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Does grant funding stop me claiming R&D tax relief? URL: https://www.limestonegrey.com/rd-tax-relief/questions/does-grant-funding-stop-me-claiming-rd-tax-relief/ Description: No. For accounting periods beginning on or after 1 April 2024, grants including Innovate UK awards do not block or reduce R&D relief. The two now stack. Questions •3 min read Does grant funding stop me claiming R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards No. For accounting periods beginning on or after 1 April 2024, grant funding, including Innovate UK awards, does not block or reduce relief under either of the current schemes. A company can take the grant and claim the merged R&D expenditure credit, or ERIS if it qualifies, on the same project. The grant and the tax relief now stack. Why so much online advice says otherwise Under the old SME scheme, grants genuinely were a problem. The subsidised-expenditure rules pushed grant-funded spend out of the generous SME scheme, typically into RDEC where its conditions were met, and a notified State aid grant could taint an entire project — though not every grant was a notified State aid, so even the old analysis was rarely as blunt as the folklore around it. A whole planning industry grew up around structuring grants to protect R&D claims, and much of the guidance still published online describes that world as if it were current. It is not. The subsidised-expenditure rules were abolished for accounting periods beginning on or after 1 April 2024, so the old interaction problems fall away. The old rules now matter mainly for backdated claims: accounting periods that began before 1 April 2024, where the claim window generally runs two years from the end of the period of account. For those periods the old analysis still has to be run, and grant-funded companies with unclaimed old-scheme years should take advice before assuming either way. Does any State aid rule still reach a grant-funded claim? Only in Northern Ireland, and not because of the grant: an SME registered there and claiming ERIS is subject to a de minimis State aid limit on the extra benefit ERIS gives over the merged scheme, whether or not it has ever held a grant, because that extra benefit is itself the aid being counted. Is R&D tax relief State aid? sets out the ceilings, what happens above them and the written opt-out; companies registered in Great Britain have nothing here to manage, wherever in the UK they trade. What still matters under the current rules The grant changes the corporation tax picture even though it no longer restricts the R&D claim: grant income is taxable, so for a loss-making SME weighing an ERIS claim it reduces the trading loss and with it the loss available to surrender. What it does not touch is the 30% intensity condition. That ratio compares relevant R&D expenditure with total relevant expenditure — expenditure on both sides — so grant receipts have no place in it, and grant-funded spending counts in it like any other spending. So the right way to think about it is not “does the grant block the claim”, which it does not, but “what does the whole funding stack look like on our numbers”. This combination matters most to pre-revenue deep tech companies, exactly the businesses whose R&D runs on grant funding, and it is a calculation we run routinely. Funding does still bear on one question under the current schemes, though not on the size of the relief. Where one party pays another to carry out R&D, who commissioned the work, who bore the risk and who intended or contemplated the R&D decide which company is entitled to claim: the subject of contracted-out R&D. Where to go next Our guide to grant funding and R&D tax relief sets out the current position in full, with a worked example. If a funder, accountant or old blog post has told you a grant kills your claim, check the date of the advice before you act on it, or ask us and we will give you the current answer. Sources R&D tax relief: the merged scheme and ERIS — the current schemes, with no subsidised-expenditure restriction. The merged scheme policy paper — the reform that abolished the old rules. CIRD125000: ERIS and Northern Ireland companies — the limit applying to the additional benefit amount of all claims made under NI ERIS, and that it applies whether or not the company holds a grant. Finance Act 2025, section 29 — the Northern Ireland provisions substituted into CTA 2009, with effect under section 29(9) “in relation to claims made on or after 30 October 2024”. Section 1045ZA, Corporation Tax Act 2009 — the intensity condition, comparing relevant R&D expenditure with total relevant expenditure. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # The 30% R&D intensity test for ERIS: how it's calculated URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-is-the-30-percent-rd-intensity-condition/ Description: How the intensity fraction works, what goes into the denominator, why connected companies count on both sides, and how the one-year grace period applies. Questions •5 min read What is the 30% R&D intensity condition for ERIS? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The intensity condition is the gateway to Enhanced R&D Intensive Support: a loss-making SME (measured before the additional deduction is taken) qualifies only where its relevant R&D expenditure is at least 30% of its total relevant expenditure for the period. Pass it and the claim is worth up to 26.97p per £1 of qualifying spend, tax free; miss it and the company claims the merged scheme instead at 16.2p in cash. Few thresholds in the tax system carry that much value on a single percentage point. If you want the arithmetic on your own figures, the ERIS intensity calculator works the ratio out on a basis that includes your connected companies. How the ratio is counted Both sides of the ratio come from the accounts, and neither is quite what people first assume. The numerator is the company’s relevant R&D expenditure; the denominator is its total relevant expenditure — broadly, everything brought into account in calculating profit under generally accepted accounting practice, which is not turnover and includes costs that are disallowable for tax. A payment, or other transfer of value, to a connected company comes out of the total, so an intra-group recharge is not counted twice — but qualifying R&D expenditure still counts on the R&D side even where it takes that form, so the exclusion moves the ratio one way only: up. The statutory words are wider than cash paid on an invoice. And the test is not run on the company alone: connected companies worldwide are counted on both sides of the ratio, so a trading subsidiary with heavy non-R&D costs can dilute the intensity of the group’s development company below 30% even though the development company on its own sits far above it. Connection is tested across the whole period rather than at a point in it — a company connected with another on any day within the period counts as connected for the period — so a subsidiary bought or sold part-way through the year still comes into the aggregation. Group structure decides marginal cases, and it needs checking before the claim is assumed, not after. R&D tax relief in groups covers the rest of what group structure changes. Intensity is not the only condition. ERIS also requires the company to be an SME on the R&D definition, to be making a trading loss, and not to be an ineligible company — the statutory term for a charity, an institution of higher education, a scientific research organisation or a health service body. The threshold has moved once already, which still confuses claims for earlier periods: it was 40% when R&D-intensive support was introduced for expenditure from 1 April 2023, and fell to 30% for accounting periods beginning on or after 1 April 2024 under ERIS. Guidance written in 2023 quotes the old figure. The grace period A one-year grace period protects companies whose intensity dips below 30%, so a single softer year, a hiring round or a revenue spike that swells total spending, does not immediately cost the enhanced rate. Its conditions are specific. Two things must be true of the company’s most recent prior accounting period of twelve months’ duration: it met the intensity test in that period, and it obtained relief for it. It must also still be loss-making in the grace year. Eligibility without a claim banks nothing. Where the earlier period began before 1 April 2024, the threshold it had to clear was 40%, and a period ending before 1 April 2023 does not count at all. The relief has to have been SME scheme relief or ERIS; a merged scheme claim does not bank the grace period. The lookback is to the most recent twelve-month period rather than simply the preceding one, so a short period in between does not break the link. It runs one way: it holds ERIS for a company that has already claimed, it does not help a company reach the threshold in the first place. Companies hovering near 30% should model the ratio before the year end, while spending decisions can still move it. What passing is worth ERIS works through an additional 86% deduction, 186% in total, and a payable credit of 14.5% of the surrenderable loss: on £100,000 of qualifying spend, £100,000 × 186% × 14.5% = £26,970 in cash, assuming sufficient losses and no cap restriction, and the credit is not taxable. The payable credit is subject to the PAYE cap of £20,000 plus 300% of relevant PAYE and NIC, and the statute sets the entitlement itself at the lesser of 14.5% of the surrenderable loss and that cap, so the cap sizes the credit rather than voiding the claim. The contrast with the merged scheme is what happens to the excess. There, an over-cap amount is carried forward as credit for the next accounting period. ERIS has no equivalent: the capped excess is not paid as credit at all, and HMRC’s manual goes further still, treating a claim above the cap as invalid. The loss behind the credit need not be written off, but keeping it means surrendering less: only the amount actually surrendered is written off, and the balance carries forward for relief against future profits. Either way the cap needs checking before the claim is sized. Where to go next Test your own ratio with the ERIS intensity calculator, then read the full ERIS guide for the conditions around it. If your intensity sits anywhere near the line, or your group structure makes the arithmetic unclear, that is precisely the case to take advice on early. Sources R&D tax relief: the merged scheme and ERIS — the intensity condition, rates and grace period. CIRD123000: ERIS — HMRC’s manual on the intensity calculation and the other ERIS conditions, including the ineligible company condition. Section 1045ZA, Corporation Tax Act 2009 — the ratio, the exclusion of a payment or other transfer of value to a connected company, and connection on any day in the period. Section 1058, Corporation Tax Act 2009 — the credit as the lesser of 14.5% of the surrenderable loss and the PAYE and NIC cap. Finance Act 2024, Schedule 1, paragraphs 20 and 21 — the grace-period lookback to periods beginning before 1 April 2024, read with a 40% threshold and limited to periods ending on or after 1 April 2023. CIRD140000: PAYE cap — the merged scheme carry-forward and HMRC’s position on an ERIS claim above the cap. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Do I need to tell HMRC before I make an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/do-i-need-to-tell-hmrc-before-i-claim/ Description: Companies with no R&D claim in the three years ending with the notification deadline must tell HMRC within six months of the period of account ending. Questions •4 min read Do I need to tell HMRC before I make an R&D claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards You do if you are claiming for the first time, or have not claimed in the three years ending with the notification deadline, for an accounting period beginning on or after 1 April 2023. The claim notification must reach HMRC within six months of the end of the period of account. Miss the window and the claim is invalid, even though the return amendment deadline typically stays open for around another eighteen months. There is no late route: the legislation contains no reasonable-excuse provision and gives HMRC no discretion, so if HMRC removes the claim from your return you can make written representations within 90 days — but only on the ground that something it stated in its notice was wrong. Fairness, and not having heard of the rule, are not arguments the statute leaves room for. Who is caught The rule is aimed at new claimants, but its reach is wider than it looks. The test asks whether the company made an R&D claim in the three years ending with the last day of the notification period — a window shifted six months later than “the last three years” suggests. The shift cuts both ways: a claim made after the year end, during the notification window itself, can exempt the company, while a claim that felt recent at the year end may already have aged out, because the three years run to the deadline rather than from today. One wrinkle catches established claimants: a claim that appears in a return only because of an amendment made on or after 1 April 2023, for an accounting period that began before that date, does not count as a prior claim for this test. A company that has claimed for years, but always by amendment, can find that none of its recent claims counts, and that it needed to notify like a first-timer. A second exception works the same way: a claim HMRC rejected by removing it from the company tax return does not count as a prior claim either, so a company whose last claim was struck out has to notify again as though it had never claimed. Groups need care too: the statute frames every test at the level of the single company, so a subsidiary claiming for the first time is caught even where a sister company claims routinely. The rule bites hardest on start-ups, because the companies most likely to be caught are the ones least likely to have heard of it. A young company typically discovers R&D relief when it first talks to an adviser about its accounts, which is often more than six months after the period ended, and by then the window on the most valuable period is often already shut. What notifying involves The date arithmetic is mechanical once you have the right starting point. The deadline runs six months from the end of the period of account, so a period of account ending 31 May 2026 has a notification deadline of 30 November 2026, and one ending 31 December 2026 has 30 June 2027. Long and short periods of account are where it stops being obvious, and the claim notification deadline checker handles those; changing your accounting date explains how a change of year end creates them, and which way it moves the deadline. The notification is submitted online and covers the company’s details, the periods, an overview of the R&D, the officer responsible for its accuracy and the details of every agent involved; it commits you to nothing. HMRC’s guidance confirms that if you notify and then decide not to claim, you need do nothing further — so where a period might contain qualifying R&D, notifying protects the option. Two timing details are easy to miss: the window opens on the first day of the period of account, so a notification cannot validly be made before the period begins, and filing the claim itself early — in a return or amendment HMRC receives before the notification deadline — also satisfies the requirement without a separate notification. The claim then needs the Additional Information Form. Deciding not to bother, or deciding late, is the way to get this wrong. Where to go next The claim notification deadline checker tests your dates in under a minute, including the awkward cases: long periods, short periods and the amendment wrinkle. The full claim notification guide works through examples by year end. If your deadline has not yet passed and R&D is even a possibility, notify first and decide the claim afterwards. Sources Tell HMRC you plan to claim — the notification requirement, deadline and exceptions, including the two that override a recent claim: a claim HMRC removed from the return, and a pre-April 2023 period claimed by an amendment received on or after 1 April 2023. CTA 2009 s1042C, s1045A and s1054A — the requirement itself for each route into the relief, the three-year test measured to the last day of the claim notification period, and the subsection (2) exclusion for pre-April 2023 periods claimed by later amendment. CTA 2009 s1142A — the claim notification period: it begins with the first day of the period of account and ends six months after that period of account ends. FA 1998 Sch 18 para 83EB — removal from the return of claims made in error: the correction cannot be rejected, written representations run to 90 days on the ground that a matter stated in the notice was incorrect, and no new claim can be made for the same expenditure where a notification was required and none was made. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What goes in the Additional Information Form (AIF)? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-goes-in-the-additional-information-form/ Description: Project descriptions, costs, the senior R&D contact and every agent. Mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Questions •4 min read What goes in the Additional Information Form? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Four things, in essence: descriptions of the R&D projects, a breakdown of the qualifying costs, the name of the senior internal contact responsible for the R&D, and the details of every agent involved in the claim. The Additional Information Form has been mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023 — and the trigger is the date the claim is made, not the accounting period, so a backdated claim filed now needs one. One form covers an accounting period, whether the claim reaches HMRC in an original return or by amendment. It must be submitted before or with the CT600 that contains the claim. Our fuller guide, the R&D Additional Information Form, works through each field, the sequencing rules and a completed project description. What each part has to do The project descriptions carry the technical case. For each described project the form requires the field of science or technology, the baseline knowledge the project set out to improve on, the advance sought, the scientific or technological uncertainties, and how the project sought to overcome them — and HMRC’s guidance on the uncertainties question expects you to explain why the answer was not readily available or deducible by a competent professional in the field. Coverage depends on project count: with one to three projects, describe them all; with four or more, describe at least three that together account for at least half the qualifying expenditure; and where reaching half would take more than ten, describe the ten largest. The cost breakdown allocates the qualifying spend across the statutory categories — staffing costs, software, data licences, cloud computing, consumable items, externally provided workers, payments to the subjects of clinical trials and the qualifying element of contractor payments — and it needs to reconcile to the figures in the return. It also has to state the qualifying expenditure attributable to qualifying indirect activities, which HMRC’s guidance asks for project by project. The category list was tightened in October 2024, when software and consumables were split into separate heads, so a claim prepared on an older template needs re-mapping before the form is drafted. Claims for accounting periods beginning before 1 April 2024 are broken down differently again: for those the schedule sets its own list of ten heads, treating the first seven as in-house expenditure and then splitting out contracted-out R&D, subsidised contracted-out R&D and contributions to independent research in place of the single contractor payments head — so a backdated claim filed now follows that list, not the current one. One disclosure sits outside both the descriptions and the cost heads. The form has to state whether the claim relies on the PAYE and NIC cap exemption in CTA 2009 s1112E or s1058D and, where it does, the company’s reasons for taking that view. That turns exemption from the PAYE cap into a position argued on the form rather than a conclusion left in the working papers. The two naming requirements are the quiet compliance teeth. The senior internal contact puts a named individual at the company behind the claim, and the agent details put every adviser who worked on it on the record. Both exist because HMRC wants accountability for what is filed, and both mean the form is a poor place for anything anyone involved would not stand behind. What happens without it, and what a thin one costs A claim filed without the AIF is invalid: HMRC treats it as not validly made, writes to the company confirming the claim’s removal from the return, and no relief is processed until a compliant form is in — and where that happens close to the amendment deadline, the chance to claim at all can go with it. That is mechanical. The subtler risk is a form that exists but says little, because the AIF is the first thing HMRC reads when it decides which claims to look at, and HMRC checked around one in six claims in 2023-24, its latest published figure. A thin or generic AIF invites the enquiry it could have prevented — and HMRC is explicit that cross-referring to a report outside the form is not an answer, even where HMRC already holds it. A precise AIF, written from real technical input and reconciled cost workings, is the claim’s first line of defence. This is why we prepare it as the core of the claim rather than a form filled in at the end. Where to go next Our AIF guide explains what a well-prepared form contains section by section, and where forms go wrong. If a claim was filed for you and you have never seen the AIF that accompanied it, ask for a copy: it tells you a great deal about the standard of the work, and a free claim review will tell you the rest. Sources Submit detailed information before you claim — the AIF requirements in full. SI 2023/813, Schedule 2 — the statutory information requirements, as substituted from 2 October 2024 by SI 2024/950: the eight cost heads at paragraph 6 and the ten at paragraph 7 for periods beginning before 1 April 2024, the qualifying indirect activities figure at paragraphs 6(9) and 7(5), and the s1058D and s1112E reliance disclosure at paragraph 9. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can I claim R&D tax relief for subcontracted R&D? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-i-claim-for-subcontracted-rd/ Description: Unconnected subcontractor costs qualify at 65% of the UK R&D portion, and the contract decides which side claims. Each piece of R&D is claimed once only. Questions •4 min read Can I claim R&D tax relief for subcontracted R&D? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Usually, yes, from either side of the contract, but never from both for the same R&D. When one company pays another to carry out R&D, the current rules are built so that each piece of R&D is claimed once, and the contract decides where it sits — a single contract can even split, with the customer claiming the part it specified and the contractor the rest. The answer therefore depends on which side you sit. If you pay subcontractors Payments to unconnected subcontractors qualify at 65% of the portion attributable to R&D undertaken in the UK, so a £10,000 invoice for qualifying UK R&D contributes £6,500 to the claim. Two conditions sit around that rate for accounting periods beginning on or after 1 April 2024. Work done overseas counts only within the narrow overseas exception: conditions necessary for the R&D — geographical, environmental, social or regulatory — that are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate here; cost savings and workforce availability are expressly excluded as justifications. And the R&D must genuinely be yours to claim: you must not yourself be doing the work under terms that hand the claim to your own customer. The 65% is the unconnected position. Where you and the contractor are connected, CTA 2009 s1134 puts the qualifying element at the whole payment or, if lower, the contractor’s own relevant expenditure on the work; unconnected parties can elect jointly for the same treatment under s1135, in writing and irrevocably, within two years of the end of the accounting period in which the contract was made. Keep the subcontractor head separate from externally provided workers. A contractor you engage directly to carry out R&D gives you a contractor payment; workers supplied to you through a staff provider, working under your supervision, are externally provided workers, and s1131 puts 65% of the staff provision payment attributable to their qualifying earnings into the claim under that head instead, with s1129 applying a similar lower-of measure, but only where you, the staff provider and the business contracting the worker are all connected. The tests are different — an externally provided worker has to be supplied by or through a staff provider, and their services must not amount to activities you have contracted out — which is why CIRD84100 says a payment to a directly engaged self-employed consultant is not a payment for an externally provided worker. If you are the contractor doing the work Often you can claim in your own right. For accounting periods beginning on or after 1 April 2024, the customer claims only where it is reasonable to assume, from the contract terms and the surrounding circumstances, that it intended or contemplated when contracting that R&D of that sort would be done. Where it did not, because it bought an outcome and left the how to you, the claim is yours as the contractor. There is a second route in: where the customer is not acting in the course of a trade within the charge to UK tax — typically an overseas customer with no UK trade — or is an ineligible company (the statutory term: a company is an ineligible company if it is a charity, an institution of higher education, a scientific research association or a health service body), the contractor can claim in its own right. That route matters to UK development houses serving international clients, but it is narrower than “overseas customer” suggests: a UK sole-trader customer is within the charge to income tax, so it does not apply there. The dividing line is the intention test, and it is objective: contract terms and the surrounding circumstances decide it, not either side’s say-so. A contract that specifies the R&D, prices it and takes its output points to the customer claiming; a contract for a deliverable that happens to require R&D the customer never contemplated points to the contractor. Review the wording before either side claims, because HMRC can ask both sides the same question and the answers need to agree. Claims for periods that began before 1 April 2024 run on the old subcontracting rules, which differ in important ways confirmed by the First-tier Tribunal; our guide covers those separately for backdated claims. Where to go next Our contracted-out R&D guide works through the scenarios in both directions, and qualifying costs covers the 65% rate and its neighbours. If you are on either side of a development contract and unsure who holds the claim, resolve it before filing, not in an enquiry. Sources R&D tax relief: the merged scheme and ERIS — the contracted-out rules and UK expenditure restriction. CIRD84250: subcontracted R&D, post-tribunal — the old-scheme position for backdated claims. CTA 2009 s1133, s1134, s1135 and s1136 — contracted-out R&D and the intended-or-contemplated test, the connected-persons measure of a contractor payment, the joint election, and the 65% default. CTA 2009 s1142 — the ineligible company definition: charities, institutions of higher education, scientific research associations, health service bodies and prescribed bodies. CTA 2009 s1131, s1129 and CIRD84100 — 65% of the staff provision payment attributable to qualifying earnings where the parties are not all connected, the connected-party measure, the staff provider condition, and why a directly engaged consultant is not an externally provided worker. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How likely is an HMRC enquiry into an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-likely-is-an-hmrc-enquiry-into-my-rd-claim/ Description: HMRC checked around one in six claims in 2023-24, its latest published figure — 9,700 compliance checks against roughly 61,000 claims received that year. Questions •3 min read How likely is an HMRC enquiry into my R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Far likelier than it used to be. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published — 9,700 compliance checks against roughly 61,000 claims received that year — up from 10% the year before, with a compliance team it put at more than 500 staff. Any figure an adviser quotes about enquiry likelihood should be read against that base rate: this is now a relief where scrutiny is normal, not exceptional, and the sensible planning assumption is that your claim will be read critically. What the numbers say The scrutiny is working, which is why it will not be relaxed. HMRC’s July 2026 annual report shows estimated error and fraud in the relief falling from 17.6% in 2021-22 to 6.4% in 2023-24 on random-enquiry evidence, with illustrative estimates of 5.3% for the two years since — while claim volumes fell 26% to 46,950 in 2023-24. That last count comes from the statistics publication and is built on a different basis from the 61,000 claims received in HMRC’s compliance figures, so dividing 9,700 checks into 46,950 does not give you the check rate. Fewer, larger, better-prepared claims, checked more often: that is the current shape of the regime, and it is the environment every claim now enters. We read the statistics in full in our guide to HMRC’s R&D tax credit statistics. Payment is not the finish line either. HMRC runs what amounts to a process-now, check-later system: most claims are paid without a compliance check, and an enquiry can arrive after the money has been received and spent. If the claim proves wrong, relief is repaid, potentially with interest and penalties. A paid claim is a processed claim, not an approved one. What an enquiry is, and what decides it An enquiry is not a verdict; it is a demand to evidence the claim. HMRC will typically ask for technical explanations of each project, evidence of the scientific or technological uncertainties, the cost workings, staff roles and time allocation, subcontractor agreements and contemporaneous records. The standard of the original preparation usually decides the outcome: claims built on real technical input and reconciled costs close enquiries; claims reconstructed after the event, or written by someone who never spoke to the engineers, are the ones that unravel. That is also why the honest answer to “how do I avoid an enquiry” is partly outside anyone’s control. Selection is HMRC’s, and it is not even-handed: its approach document says the extra checks went especially to claims made by SMEs, reflecting the higher error and fraud rates in that population. A well-prepared Additional Information Form reduces the invitation without eliminating the risk. What is fully in your control is whether an enquiry, if it comes, finds a claim that stands up. Where to go next Our HMRC enquiries guide explains the process stage by stage and how to respond; enquiry support is included as standard for claims we prepare. If you are facing an enquiry on a claim someone else filed, we take those on too, and we will tell you the truth about its strength first. Sources HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against 61,000 claims received in 2023-24, the 500-staff figure, and the weighting of checks towards SME claims. HMRC annual report and accounts 2025 to 2026 (HC 350) — the error and fraud estimates at page 107 and Figure 20 of the report: 6.4% measured for 2023-24, and 5.3% illustrative for 2024-25 and 2025-26. R&D tax credits statistics, September 2025 — claim volumes and values. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # The PAYE cap on R&D tax credits: £20,000 plus 300% URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-is-the-paye-cap-on-rd-tax-credits/ Description: The PAYE cap limits a payable R&D credit to £20,000 plus 300% of the company's relevant PAYE and NIC. How it bites, and the exemption that lifts it. Questions •7 min read What is the PAYE cap on R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards The PAYE cap limits the payable credit a company can receive in a period to £20,000 plus 300% of its relevant PAYE and National Insurance contributions. It applies to cash credits under both the merged scheme and ERIS, and it bites hardest on one profile in particular: a company with a small payroll that subcontracts most of its R&D out. How the cap is worked out CTA 2009 s1112B sets the figure. The £20,000 is a floor every claimant gets, proportionately reduced under s1112B(3) for accounting periods shorter than twelve months. On top of it sits 300% of relevant PAYE and NIC, so a company with £50,000 of relevant PAYE and NIC for the period can take up to £170,000 in cash before the cap restricts anything. “Relevant” is doing real work in that phrase. The figure is not simply what appears on your own payroll returns. Where a connected company supplies you with externally provided workers, or carries out contracted-out R&D for you, that company’s PAYE and NIC attributable to what it supplied is added to your figure. Where you are the supplier, providing workers or contracted R&D to a connected company, your own PAYE and NIC attributable to what you supplied comes out again. In a group, the cap has to be computed across those flows rather than read off a single company’s payroll. Claiming under both schemes in the same period is uncommon, and it is never a way of relieving the same spending twice: a company cannot claim both schemes on the same expenditure. What it can do is split. Where expenditure cannot go into an ERIS claim — the de minimis limits applying in certain sectors are HMRC’s own example — that expenditure can go into a merged-scheme claim instead, on those rules. The two claims share one Additional Information Form, because the form is filed per accounting period rather than per claim — but the expenditure and project sections inside it are completed for each claim separately. Where that happens, the company gets one cap, not two. Section 1112B(4) reduces the merged-scheme cap by any R&D tax credit already obtained under Chapter 2 for the period, so the two claims share a single £20,000 plus 300%: the ERIS credit comes off the headroom before the merged-scheme credit is tested against what is left. Which companies run into it is fairly predictable, because it comes down to a small UK payroll set against substantial R&D spend. That combination shows up most often in: early-stage companies paying founders and technical staff in equity rather than salary, the profile AI and robotics claims run into most often groups where the people doing the R&D are employed by a different entity from the claimant companies putting most of the work through subcontractors and agency workers What happens when the cap bites The consequence depends on the scheme, and the difference is not cosmetic. Under the merged scheme, the excess over the cap is carried forward and treated as an expenditure credit for the next accounting period, so the value is deferred rather than forfeited. Under ERIS there is no equivalent carry-forward of the credit. Section 1058(1) caps it at the lesser of 14.5% of the surrenderable loss and the cap, and HMRC’s manual goes further, treating a claim for a credit above the cap as invalid rather than merely restricted. A company that files one has to amend, and the window closes two years after the end of the period of account; past that, only an officer can let it in. That is not the same as losing the benefit, but whether the loss survives is the company’s decision, not the cap’s. A company chooses how much of its surrenderable loss to surrender. Only the amount surrendered is written off, and nothing reduces that amount to match a capped credit. Surrender the full loss against a capped credit and the balance is gone for nothing. Surrender only what the cap will pay for and the rest carries forward for relief against future profits. What the cap changes is the form and the timing — cash at 14.5p per £1 of loss now, against relief at the corporation tax rate whenever profits arrive. For a pre-revenue company that can be a long wait, which is why sizing an ERIS claim correctly before filing is a compliance question, not an arithmetic tidy-up afterwards. The exemption, and what it demands A company can be exempt from the cap altogether under s1112E, but only by meeting the two conditions that section sets, A and B, and both have to hold. The first, condition A, concerns intellectual property. The company must be doing one of three things: taking or preparing to take steps so that relevant intellectual property will be created by it, creating it, or performing a significant amount of management activity in relation to relevant IP it holds. Whichever applies, the activity has to be wholly or mainly undertaken by employees of the company, so work by directors counts only where those directors are employees. Where the company relies on the management limb, HMRC’s position is that the IP being managed must be owned by the company — an exclusive licence over someone else’s will not do; where it relies on creating IP, the statutory test is that the right to exploit what is created vests in the company, alone or jointly. And the condition cannot be met by subcontracting the R&D out, which is rather the point of it: the company’s own people have to be doing the creative work. The second, condition B, is a 15% limit. Spend on subcontractors and externally provided workers supplied by connected parties — including parties who have jointly elected to be treated as connected — must not exceed 15% of the company’s qualifying R&D expenditure. Read that precisely — it counts connected-party spend only, so heavy use of unconnected subcontractors does not fail this limb by itself, although a company that has contracted the creative work out tends to fail the first limb instead. Relying on the exemption also has to be declared. The Additional Information Form requires the company to state whether the claim relies on s1112E, or on s1058D for an old-scheme period, and where it does, its reasons for taking that view. So the exemption is a position argued to HMRC on the form, not a conclusion left in the working papers. Where to go next If your claim is a cash claim and your payroll is small relative to your R&D spend, model the cap before the year end rather than after the return has gone in. Both exemption conditions turn on facts — who owns the IP, who employs the people doing the work, how much goes to connected parties — that are far easier to get right in advance than to fix later. The 30% intensity condition is worth testing at the same time, because an ERIS claim turns on both — subject to the one-period grace where the company met the intensity condition and obtained relief in its most recent prior twelve-month period. One period boundary is worth naming. Claims for accounting periods beginning before 1 April 2024, which remain within the amendment window into 2027, sit under the earlier SME cap provisions rather than the ones set out here, and those differ in detail. A backdated claim needs the cap worked out on the rules for its own period. Sources CIRD140000: PAYE cap — HMRC’s manual on the cap, the relevant PAYE and NIC figure and the exemption conditions. R&D tax relief: the merged scheme and ERIS — how the cap applies to payable credits under each scheme. CTA 2009 s1112B — the cap of £20,000 plus three times relevant PAYE and NIC, with the £20,000 proportionately reduced at subsection (3) for periods shorter than twelve months and subsection (4) reducing the cap by any Chapter 2 credit obtained for the same period. CTA 2009 s1112E — the exemption: condition A on relevant intellectual property created by the company’s own employees, and condition B’s 15% limit on connected-party contractor and externally provided worker spend. CTA 2009 s1058 — subsection (1), which sets the Chapter 2 credit at the lesser of 14.5% of the surrenderable loss and the cap. CTA 2009 s1062 — carried-forward losses reduced by the loss in respect of which the company claims a tax credit, measured by the claim rather than by the cash received. CIRD122000: surrenderable loss — the company may claim in respect of all or part of the surrenderable loss. FA 1998, Schedule 18, paragraph 83E — the time limit for making, amending or withdrawing an R&D claim, running to two years from the last day of the period of account, with sub-paragraph (5) leaving anything later to an officer’s discretion. SI 2023/813, Schedule 2 — paragraph 9, requiring the Additional Information Form to disclose reliance on s1112E or s1058D and the company’s reasons for it. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How much is an R&D tax relief claim worth? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-much-is-an-rd-tax-relief-claim-worth/ Description: Under the merged scheme, £100,000 of qualifying spend produces a £20,000 credit, worth £15,000 net at the 25% main rate. ERIS pays up to £26,970, tax free. Questions •4 min read How much is an R&D tax relief claim worth? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards It depends on the scheme and your tax position, but the arithmetic is public and short. Under the merged scheme, £100,000 of qualifying spend produces a gross credit of £20,000; the credit is taxable, so the net benefit is £15,000 at the 25% main rate of corporation tax and £16,200 at 19%. The merged scheme, in cash The gross credit is 20% of qualifying expenditure, which is where £20,000 on £100,000 comes from. Because it is brought into tax, what a company keeps depends on the rate it pays: 15p per £1 of qualifying spend at the 25% main rate, 16.2p at 19% or where the company is loss-making, and as low as 14.7p where marginal relief applies. What the claim is worth and what lands in the bank are different questions. The credit is applied through a fixed sequence of steps, and the first uses it to discharge the company’s remaining corporation tax liability for the period. So a profitable claimant usually sees most of the benefit as tax it no longer has to pay rather than cash received, with only what survives the sequence paid out. A loss-maker taking the credit in cash gets £16,200 on that £100,000, because it has no main-rate profits and the notional tax applied to the credit is charged at the 19% small profits rate. The amount deducted along the way is not thrown away: it carries forward against future corporation tax, or can be surrendered to another company in the group. Payable credits are also subject to the PAYE cap, which limits the cash a company with a small payroll can receive: £20,000 plus 300% of relevant PAYE and NIC, with the £20,000 proportionately reduced for accounting periods shorter than twelve months. There is no cap at all where both exemption conditions are met. They turn on the company’s own employees creating or managing its intellectual property, and on connected-party spend staying within 15% of qualifying R&D expenditure, and the PAYE cap page sets out what each one demands. ERIS, where the rate is higher A loss-making, R&D-intensive SME claiming ERIS is on different numbers. The relief works through an additional 86% deduction, 186% in total, and a payable credit of 14.5% of the surrenderable loss: £100,000 × 186% × 14.5% = £26,970 in cash, assuming sufficient losses to surrender. That credit is not taxable, so 26.97p per £1 is what the company keeps. It is subject to the PAYE cap, and it is only available where the company clears the 30% intensity condition — or cleared it, and obtained relief, in its most recent prior twelve-month period. What moves your own number Which scheme applies comes first, and it is not a choice: ERIS is open only to loss-making intensive SMEs, while the merged scheme applies at every size. Next is your tax position — profitable at 25%, inside the marginal band, or loss-making and taking the cash — which sets the rate at which the merged scheme credit is taxed. Then there is how much of your expenditure actually qualifies, and that is where the real variance sits. Two companies spending the same on similar work can end up with very different qualifying figures depending on how the work is staffed and contracted. Earlier periods are a separate exercise. Accounting periods beginning before 1 April 2024 fall under the old SME and RDEC schemes, whose rates moved more than once; the rates by year page sets out what applied when. That still matters for claims inside the amendment window, which runs two years from the end of the period of account. The last standard deadlines for old-scheme periods fall in late March 2027, and many year ends have already closed. Where to go next Put your own figures through the claim value calculator for an indication, then treat that as a starting point rather than an answer. The same arithmetic on illustrative company figures is in our worked examples. The number that matters is the one that follows from qualifying expenditure identified properly, and that is a question about the work rather than the spreadsheet. We will tell you what we think a claim is worth before you commit to preparing one. Sources R&D tax relief: the merged scheme and ERIS — the credit rates, the intensity condition and the ERIS calculation. Work out your research and development tax relief — HMRC’s guidance on calculating a claim. CIRD112100: merged scheme payment steps — the order the credit is applied in, starting with discharging the corporation tax liability of the period. Section 1112B, Corporation Tax Act 2009 — the £20,000 plus 300% cap and its proportionate reduction for short accounting periods. Section 1112E, Corporation Tax Act 2009 — the conditions on which there is no cap at all. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Is there a minimum R&D spend to claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/is-there-a-minimum-rd-spend-to-claim/ Description: No. The £10,000 minimum went for periods ending on or after 1 April 2012. Any qualifying spend can be claimed — but the compliance is the same either way. Questions •3 min read Is there a minimum R&D spend to claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards No. There is no minimum R&D spend, and there has not been one for well over a decade: the £10,000 minimum expenditure requirement was removed for accounting periods ending on or after 1 April 2012. A company with £8,000 of qualifying expenditure can claim on it, and the relief is worked out exactly as it is for a company with £800,000. The question usually comes from somewhere else. Plenty of advisers set a minimum of their own, declining claims below a certain size because their fee model does not work at that level. That is a commercial policy rather than a rule of tax law, and it is worth knowing which of the two you are being told when someone says your spend is too small. A small claim carries the same obligations Size changes the numbers, not the process. A first-time claimant still has to deal with claim notification, and missing that window invalidates the claim however small it is. Every claim needs an Additional Information Form, with project descriptions written to the same standard whether the qualifying spend is £5,000 or £5m. The costs still have to be identified against the statutory categories, the competent professional still has to explain the uncertainty, and the records still have to stand up: HMRC checked around one in six claims in 2023-24, its latest published figure, and a small claim is not exempt from that. One thing does scale in your favour. The PAYE cap starts at £20,000 plus 300% of relevant PAYE and NIC, so a modest payable credit is rarely restricted by it. Read that £20,000 carefully if you are claiming for a short first period: it is proportionately reduced where the accounting period is less than twelve months, so a nine-month period gives £15,000 rather than £20,000. Small claims are still seldom lost to the cap. They are lost to notification deadlines and to narratives written too thinly to defend. The real question is whether it is worth preparing At merged scheme rates, £10,000 of qualifying spend is worth somewhere around £1,500 to £1,620 net, depending on your tax position — the full arithmetic is here. Set that against what a defensible claim takes: identifying the qualifying activity, apportioning time honestly, drafting a narrative that survives a check, and being ready to answer for all of it if HMRC asks. Some small claims do not clear that bar, and we will say so rather than take the fee. A cheap claim prepared badly is worse than no claim at all. It carries the same exposure as a large one and offers less to defend. HMRC enquiry support is included as standard in our fees, which is a reason to prepare a claim properly at the outset, not a reason to file a marginal one. Timing is the part companies most often get wrong. If this year’s spend is small but a larger programme is starting, the notification requirement is worth checking now rather than in eighteen months, because the deadline is fixed by your accounting period and not by when you get round to thinking about the claim. Where to go next If you are unsure whether your spend justifies a claim, send us the rough numbers and a description of the work. We will tell you honestly whether it is worth preparing, including when the answer is no. The claim value calculator will give you an indication in the meantime. Sources CIRD81600: minimum expenditure — the £10,000 minimum and its removal for accounting periods ending on or after 1 April 2012. Work out your research and development tax relief — HMRC’s guidance on calculating a claim, whatever its size. HMRC’s approach to R&D tax reliefs 2023 to 2024 — compliance checks on 9,700 claims out of around 61,000 received, the source of the one-in-six check rate. Section 1112B, Corporation Tax Act 2009 — the £20,000 plus 300% cap and its proportionate reduction for accounting periods of less than twelve months. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What happens if my company outgrows the SME definition? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-happens-if-my-company-outgrows-the-sme-definition/ Description: Size only changes after you cross the thresholds in two consecutive years, and the rule works both ways. Under today's schemes it mainly affects ERIS. Questions •4 min read What happens if my company outgrows the SME definition? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Usually nothing happens straight away. Company size for R&D purposes changes only once the thresholds have been crossed in two consecutive years, so the first year of exceeding them leaves your existing status intact. The rule works in both directions: a company that shrinks back below the limits also stays large for a year before returning to SME status. The test, and who gets counted The SME definition is fewer than 500 staff, together with either turnover of €100m or less or a balance sheet total of €86m or less. “Or less” is precise: a company sitting at exactly €100m of turnover still qualifies. Only one of the two financial limits needs to be met, but the headcount is mandatory — 500 staff or more takes a company out of the definition whatever its balance sheet looks like. The figures are not the company’s own: a linked enterprise’s are added in full and a partner enterprise’s in proportion, so a company that looks comfortably small on its own accounts can sit well over the limits once a parent’s or an investor’s figures come in. How the aggregation works, and which investors are exempt from it, is covered in how linked and partner enterprises affect an R&D claim. The two-year rule, and the exception that overrides it The two-year rule is a smoothing device. One year over the limits does not change status, and neither does one year back under, so a single strong year or a one-off headcount spike is absorbed rather than acted on. HMRC’s manual puts it in numbers: a company with 480 employees in year one that goes up to 510 in year two remains an SME for year two, and becomes a large company for year three only if it still has at least 500 employees then. There is nothing to elect and nothing to notify. The test is applied period by period from the accounts, so status follows the figures at each balance sheet date rather than any decision the company takes. One practical trap sits in the currency: the financial limits are set in euro while most accounts are drawn up in sterling, and it is the end of year or balance sheet figures that are taken, so a company anywhere near €100m of turnover or €86m of balance sheet total needs the conversion done properly rather than estimated. What it does not absorb is a change in ownership. Where the breach comes from a partner or linked enterprise that, on its own figures, already exceeded the headcount limit or both financial limits, the transition period is disapplied and SME status ends for that period with no grace year. This is broader than being bought by a large group: a 25% stake taken by an enterprise that is already over the limits can be enough, because a partner’s figures count proportionately and the enterprise itself is large. Companies raising from corporate investors should check the point before the round completes, not after. How a sale or investment round moves SME status, and what a buyer checks, is in R&D tax relief in due diligence. Two statutory reliefs pull the other way. Where a related enterprise was a partner or linked enterprise throughout the period and only became large during it, both companies keep SME status for that period; and a company outside the definition solely because of a related large enterprise is treated as an SME for the period in which an acquirer that is itself an SME takes control. Both were inserted by Finance (No. 2) Act 2023 and apply only to accounting periods beginning on or after 1 April 2023, so an earlier period still open to claim does not get them. What losing SME status actually changes Less than it once did. The merged scheme applies at every size, so a company that grows out of the SME definition claims on the same terms as before. Where size still decides the outcome is ERIS, which only loss-making, R&D-intensive SMEs can claim (with a one-year grace for a company that met the intensity test, and claimed, in its most recent prior twelve-month period). Lose SME status and ERIS goes with it, along with the difference between 26.97p and 16.2p per £1 of qualifying spend. A company sitting near the size thresholds and near the 30% intensity condition at the same time needs both tests modelled together, because they can fail independently. For accounting periods beginning before 1 April 2024 and still open to claim, size determined which of the old schemes applied: see which scheme applies. Where to go next If a funding round, an acquisition or an unusually strong year has moved you near the thresholds, work the position out before the year end, while decisions can still be taken with the answer in view. Where an outside investor is taking a stake, check the ownership exception rather than assuming the two-year rule will protect the period. Sources Section 1120, Corporation Tax Act 2009 — the staff, turnover and balance sheet thresholds for the R&D SME definition. CIRD92000: change of status to and from SME — HMRC’s manual on moving between SME and large company status, including the 480/510 employee example. Section 1119, Corporation Tax Act 2009 — the SME definition itself, taken from Commission Recommendation 2003/361/EC and qualified by sections 1120 to 1120B. Section 1120A, Corporation Tax Act 2009 — SME treatment where a related enterprise becomes large, for accounting periods beginning on or after 1 April 2023. Section 1120B, Corporation Tax Act 2009 — SME treatment where control is acquired by an SME, on the same commencement. CIRD91800: staff headcount, turnover and balance sheet total — how the limits are measured, the euro conversion and the end of year or balance sheet figures. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # R&D claim penalties: how behaviour sets the amount URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-penalties-can-hmrc-charge-if-an-rd-claim-is-wrong/ Description: Penalties turn on behaviour, not the size of the error. Reasonable care means no penalty at all; careless errors run to 30%; deliberate errors run higher. Questions •4 min read What penalties can HMRC charge if an R&D claim is wrong? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards None at all, where you took reasonable care. That is the part most companies do not expect, so it is worth stating plainly: a penalty is chargeable only where an error was careless or deliberate. An honest mistake in a claim that was prepared properly carries no penalty, even where the relief itself has to be repaid. Where a penalty does arise, the amount is set by your behaviour rather than by the size of the claim, then adjusted by what you do once the error is known. This page covers that calculation and what brings it down. Repaying the relief, the interest that runs alongside it and how far back HMRC can reach are separate questions, dealt with in can HMRC make me pay back an R&D tax credit?. The behaviour bands Four categories, in ascending order. The percentages below apply to the potential lost revenue — the extra amount payable once the error is put right, which is the overclaim rather than the claim: Reasonable care. No penalty. Careless. Up to 30%, and as low as nil where you disclose the error unprompted; 15% where the disclosure is prompted. Deliberate. Up to 70%, with a floor of 20% on an unprompted disclosure and 35% on a prompted one. Deliberate and concealed. Up to 100% of the overclaim, with floors of 30% and 50%. Two features of that structure do most of the work. Only the careless band reaches nil, so a careless error found and reported before HMRC comes looking can end in no penalty. The deliberate bands have floors instead: no amount of cooperation takes a deliberate error below 20%. The distance between nil and a floor is the real difference between the categories, which is why the line HMRC draws between careless and deliberate matters more than the headline percentages do. Those words carry narrower meanings than everyday use suggests. Careless describes how the claim was put together, not dishonesty. Deliberate means the inaccuracy was intended. Concealed adds steps taken to hide it. Companies that set out to mislead HMRC are rare; companies that end up with an error they cannot defend as careful are a good deal less rare, and that is the careless band. What moves a penalty within its band Conduct after the error surfaces. Telling HMRC about it, helping HMRC work out how much was overclaimed, and giving access to the records that let it check — do those promptly and the penalty moves towards the bottom of whichever range applies. Obstruct, delay, or answer selectively, and it moves the other way. Timing decides which end of the range is even available. A disclosure is unprompted where you had no reason to believe HMRC had discovered the error or was about to. Once a compliance check is open, the same disclosure counts as prompted and earns considerably less: the careless floor moves from nil to 15%, and both deliberate floors rise sharply. Waiting to find out whether HMRC has noticed is therefore the most expensive option available. If the error is one you have found yourself, the routes for telling HMRC differ by period and by behaviour, and the pay-back page sets them out. Reasonable care is the only band you can choose in advance Everything above happens after the fact. The band itself is decided long before, by how the claim was prepared. Several of the defects that put a claim in the careless band are the same ones that lose enquiries: an advance framed as new to the company rather than new to its field; project boundaries drawn so wide that routine development is swept in with the qualifying work; a cost category never tested against the legislation; costs that do not reconcile to the accounts, or apportionments with no evidential basis; a technical narrative with no competent professional standing behind it. None of these is bad luck. Each is a decision taken months before HMRC looks at anything. Reasonable care looks duller. Projects are selected against the statutory definition rather than the spend. The competent professional is interviewed and their reasoning written down. Costs are traced back to the accounts and the payroll. The Additional Information Form is written to answer the questions HMRC will ask. Prepared that way, the claim is likelier to survive a check — and the working file is itself the evidence that care was taken, which is the point at which the penalty question answers itself. Where to go next Our HMRC enquiries guide explains what a compliance check involves and how to respond; enquiry support is included as standard for claims we prepare. If a claim has already been filed and you would like an honest read on how it would hold up, our free claim review is a confidential second opinion, including on claims prepared by someone else. If an enquiry into a claim another adviser prepared has already arrived, HMRC enquiry defence sets out how we take that on as a standalone engagement. Sources CH81010: penalties for inaccuracies — a penalty is chargeable only where an inaccuracy is careless or deliberate; with reasonable care, none arises. CH81120: what reasonable care means — the standard itself. CH82470: penalty ranges — the ranges by behaviour, with the minima: careless up to 30% (nil unprompted, 15% prompted), deliberate up to 70% (20% and 35%), deliberate and concealed up to 100% (30% and 50%). Finance Act 2007, Schedule 24 — the careless and deliberate penalty structure for errors; paragraph 3 defines the behaviour categories, and paragraph 5 sets the base the percentages apply to as the potential lost revenue. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can I get advance assurance for an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-i-get-advance-assurance-for-an-rd-claim/ Description: In limited circumstances. HMRC's advance assurance scheme covers eligible first-time SME claimants; the 2026 Targeted Advance Assurance pilot is narrower. Questions •4 min read Can I get advance assurance for an R&D claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards In limited circumstances, and it helps to separate three different things that all get called advance assurance. Only one of them is HMRC’s view on a whole claim; the other two are narrower than most companies assume, and none of them removes the need to get the claim itself right. Three routes, and what each one actually gives you Full claim advance assurance is the substantial one. It covers an eligible first-time claimant’s whole claim and, where agreed, runs for up to three accounting periods. That is real comfort for a company about to commit to a development programme and wondering whether any of the spend will attract relief. It is also tightly restricted: the company must be an SME making its first R&D claim, with turnover below £2 million and fewer than 50 employees, and where the company sits in a group, no linked company can have claimed before. The Targeted Advance Assurance pilot is narrower. Announced at the Autumn Budget 2025 and launched on 18 May 2026 to run until May 2027, it is voluntary and gives HMRC’s view on up to two areas of a claim rather than the claim as a whole — applied for one project and one area at a time, from four defined areas: whether a project meets the R&D definition, overseas expenditure, contracted-out relief, and exemption from the PAYE and National Insurance contributions cap. The significant difference from the older service is who can use it: companies that have claimed for earlier periods qualify, provided they have not yet claimed for the period in question. The SME gate stays, though. The pilot is open to small and medium-sized enterprises only, and large companies cannot apply. Four further circumstances bar an application: having applied for full claim advance assurance for the same period, and — for the company or any connected person — entering a disclosable tax avoidance scheme, being categorised as a Corporate Serious Defaulter, or having an open enquiry into a corporation tax return. The consultation behind it raised mandatory clearances; the government has so far gone no further than this voluntary pilot. We set out what the pilot covers, and who it suits, in our note on the Targeted Advance Assurance pilot. Third, and often confused with the other two, HMRC’s online R&D qualification checker has been available since September 2025. It tests a project against the definition and gives a non-binding result. It is not assurance and commits HMRC to nothing — though HMRC does say that where your answers rest on the project’s facts and you can support them, it is unlikely to disagree, so a saved result is worth keeping. Use it to orient yourself, not to conclude. What assurance does not cover This is where the comfort gets overestimated. The targeted pilot answers the defined questions you put to it and touches nothing else, so your cost calculations remain entirely yours to get right. Full claim assurance does cover costs — but on the basis you described at application, so a claim whose costs depart from that description sits outside what was agreed. Either way, costs are where a great many claims come apart: staff time apportioned on assumption rather than evidence, or a supplier treated as a subcontractor when the contract says something else entirely. Nor does assurance cover the compliance mechanics. Claim notification still has to be filed within its deadline where it applies, and missing it invalidates the claim however well the projects qualify. HMRC’s view that your work is R&D does not file your forms for you. And the assurance is conditional, with the condition doing the work. HMRC’s manual says that where it agrees the relief applies, it will guarantee the claim is accepted — as long as the claim is in line with what was discussed and agreed in the application. Depart from the application and the guarantee does not follow you: HMRC may check that the claim you file matches what you applied for. A refusal cannot be appealed — nor can you apply again. So a company can hold assurance and still submit a claim that fails, because the qualification question and the claim question are not the same question. Our guide to what counts as qualifying R&D deals with the first. The rest is preparation, evidence and arithmetic, and it is all still yours to get right. Where this leaves you If you have never claimed, it is worth checking whether the advance assurance scheme is open to you before you file. If you have claimed before and one point is genuinely troubling you — a borderline project, a contested cost category — the Targeted Advance Assurance pilot may be the route to close it down. In most cases, though, the practical answer is not assurance at all. It is a claim built so that the qualification argument, the costs and the compliance steps each stand up on their own. We will tell you which of those routes fits your situation, and we will tell you plainly when the answer is none of them. Sources Check if you can apply for advance assurance — the two services and who each is for. Apply for full claim advance assurance — the first-claim service’s conditions, its coverage of up to three accounting periods, and the process. Apply for targeted advance assurance — the pilot’s four areas, the SME-only gate, the exclusions for large companies, full claim applicants, DOTAS, serious defaulters and open enquiries, and the process. CIRD80520 — the conditional acceptance guarantee where a claim matches the agreed application. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What will HMRC ask for in an R&D enquiry? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-will-hmrc-ask-for-in-an-rd-enquiry/ Description: Technical explanations of each project, evidence of the scientific or technological uncertainties, a cost breakdown, staff time and project records. Questions •5 min read What will HMRC ask for in an R&D enquiry? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Typically six things: detailed technical explanations of each project, evidence of the scientific or technological uncertainties, a breakdown and calculation of the qualifying costs, evidence of staff roles and time allocation, subcontractor agreements, and contemporaneous project records. An enquiry is a demand to evidence the claim, not a verdict on it, and nothing on that list should come as a surprise — it is the material that ought to have existed when the claim was filed. What each item is testing Taking them in turn: The technical explanations are the heart of it. HMRC wants the competent professional’s account: what advance in science or technology the project sought, why existing knowledge did not readily supply the answer, and what was tried. Marketing language about innovation does not survive this stage. Evidence of the uncertainties is the same point in harder form — design iterations, test results, approaches that failed and the reasons they failed. The cost breakdown has to be a calculation, not a total. Expect to show how the figure was built, how it reconciles to the accounts and the payroll, and why each category qualifies. Staff time draws particular attention: a round percentage applied across a team invites the question of how it was arrived at, whereas an apportionment traceable to timesheets, sprint records or the individuals’ own accounts of their year answers it. Subcontractor agreements matter because the contractual position, not the invoice, determines who is entitled to the relief. Then contemporaneous records: the ordinary output of doing the work. Project plans, technical notes, code commits, lab books, minutes. Enquiries move fastest when this material existed at submission rather than being reconstructed afterwards, and reconstruction is usually visible. There is no statutory format for any of it. That cuts both ways — nothing prescribes a particular document, and nothing excuses being unable to evidence what you claimed. Estimates are not fatal either: HMRC accepts that some R&D costs will be an estimated proportion of known expenditure, asks that the estimate is reached by evidence and reason, and expects less formal documentation from a small company than a large one. But an estimate is not a substitute for capturing evidence as the work happens, which is always the cheaper position to be in. How it runs, and how long it takes Most enquiries are conducted by correspondence: HMRC writes, you answer, documents follow. But HMRC can ask for a call or a meeting, and it may want to hear from the competent professional directly rather than only from the adviser. Its guidelines for compliance say a check may extend to seeing documents, visiting the site, examining prototypes and final products and talking to employees. A claim built on a real technical account has nothing to lose by that; a claim written for the file does. Duration depends on what is in dispute rather than on the size of the claim. Where the records exist and answer the questions asked, a check can close in a matter of weeks. Where HMRC contests whether the work met the definition of R&D, or whether a cost head qualifies, months is the realistic expectation and the exchanges can run longer. Nobody can promise you a timetable, HMRC included. Timing, and what it means for your money HMRC can withhold payment while it enquires. Its published aim is to pay 85% of payable tax credits within 40 days of receiving the claim, and how long it takes to receive an R&D tax credit sets out that aim in full, the figures behind it and what can hold a payment up. Those are HMRC’s aims and HMRC’s numbers, not a timetable we or anyone else can commit to on its behalf. Where it decides not to pay a claim, its published practice is to aim to open an enquiry within 60 days of receiving the claim — so a payment that has not arrived is not necessarily lost, it may be a claim under examination. Payment does not close the file either. HMRC can enquire into claims it has already paid, which is why receiving the money is best read as processing rather than approval. How long that exposure lasts is set by statute. For a return delivered on or before the filing date, HMRC has twelve months from the day the return was delivered to open an enquiry — twelve months from the filing date instead, for a company in a group that is not a small group. Amending the return gives HMRC a fresh window on the amendment, and where the original window has already closed that enquiry is limited to what the amendment changed, which matters because so many R&D claims are made by amendment. Once the enquiry window has gone, HMRC can still make a discovery assessment where relief has been given that is or has become excessive: ordinarily up to four years after the end of the accounting period, six years where the loss of tax was brought about carelessly, and twenty where it was brought about deliberately. Reasonable care keeps you in the four-year band. None of this is unusual any more. HMRC checked around one in six claims in 2023-24, its latest published figure, and our page on how likely an HMRC enquiry is sets out what sits behind that number. A well-prepared Additional Information Form does much of the groundwork in advance, because it forces the project narrative into the shape HMRC will later test. Where to go next Our HMRC enquiries guide walks through the process stage by stage. Enquiry support is included as standard for claims we prepare. If you are facing an enquiry into a claim another adviser filed, we take those on as well, and our free claim review is a confidential way to get an honest read on a claim before HMRC gives you theirs. Sources CIRD80525: practice note for ISBC and WMBC — HMRC’s aim to pay 85% of payable tax credits or make contact within 40 days, its practice on withholding payment, and the 60-day aim for opening an enquiry where it decides not to pay. GfC3: Recommended approach to claims and record keeping (part 5) — estimates by evidence and reason, the records HMRC expects, and what a compliance check may extend to: documents, site visits, prototypes and talking to employees. FA 1998 Sch 18 para 24 and para 25 — the twelve-month enquiry window running from delivery of the return, the filing-date variant at sub-paragraph (6) for a company in a group other than a small group, the fresh window on an amendment, and the confinement of a late-amendment enquiry to matters the amendment relates to or affects. FA 1998 Sch 18 para 41 and para 46 — discovery assessments where relief given is or has become excessive, and the four, six and twenty-year limits by behaviour. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 92% of claims processed within 40 days in 2023-24, against the published 85% aim. Corporation Tax: Research and Development tax relief — what a claim must contain. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can HMRC make me pay back an R&D tax credit? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-hmrc-make-me-pay-back-an-rd-tax-credit/ Description: Yes. HMRC can withhold a credit while it enquires, and can enquire into a claim it has already paid and require repayment, with interest and penalties. Questions •5 min read Can HMRC make me pay back an R&D tax credit? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Yes — both to holding the money back and to asking for it back. If HMRC opens an enquiry before paying, it can withhold the credit until the enquiry is resolved; and it can enquire into a claim it has already paid, requiring some or all of the credit to be repaid if the claim proves wrong, with late-payment interest and, depending on behaviour, a penalty on top. Payment is processing, not approval The most common misunderstanding about this relief is that receiving the money means HMRC agreed with the claim. It does not. HMRC works on a process now, check later basis: most claims are paid when they are filed, and questions come afterwards if they come at all. The credit landing in the bank tells you the return was processed, not that anyone examined the projects or the costs. An enquiry can arrive long after the money has been received and spent, which is an uncomfortable position for a company that has already put it to work. How long can HMRC come back? Long, though not indefinite. HMRC has twelve months from the day the return was delivered to open an enquiry, and once that window closes it can still make a discovery assessment where relief given is or has become excessive, provided it can show either careless or deliberate behaviour or that its officer could not reasonably have known of the excess from the information made available — ordinarily up to four years after the end of the accounting period, six years where the loss of tax was brought about carelessly, and twenty where it was brought about deliberately. The mechanism at the end of it is worth knowing: where a company was not, or is no longer, entitled to a credit it has been paid, the amount is assessed and recovered as if it were unpaid tax. That is worth planning for rather than worrying about. A claim you could defend today is a claim you can defend in two years, and the work involved is the same either way: real technical input, costs traced to records, a narrative that matches what actually happened. Our page on how likely an HMRC enquiry is sets out how routine checks have become. If the credit is being withheld A withheld credit is not always withheld in full. Where an enquiry has been opened without paying, HMRC’s own manual tells its officers to keep under review whether at least a partial payment can be made, and it recognises that for small start-ups the cash flow from a payable credit can decide whether the company survives. So where part of a claim is not in dispute, it can be worth asking for that part to be released while the rest is argued out. It is a request, not an entitlement, and the answer is often no — but the question costs nothing to ask and is rarely asked. What an overclaim costs, beyond the repayment Three things can follow. The relief itself is repayable. Late-payment interest is charged on top, running from the date the tax was due until it is paid, at HMRC’s published late-payment rate. And a penalty may be due, set by reference to your behaviour rather than the size of the error: none where reasonable care was taken, up to 30% where the error was careless, and higher where it was deliberate. How the percentage is arrived at, and what brings it down, is set out in what penalties can HMRC charge if an R&D claim is wrong?. If you find your own error Tell HMRC. If the return can still be amended, amend it; where the amendment window has closed, there is a dedicated disclosure route for overclaimed R&D relief; and a deliberate overclaim goes down a different road again — the Contractual Disclosure Facility — where advice comes before anything is said. However it is done, an unprompted disclosure — one made when you have no reason to believe HMRC has discovered, or is about to discover, the error — materially reduces any penalty. The instinct to wait and hope is the expensive one, because the same error disclosed after HMRC opens an enquiry counts as prompted, and prompted disclosure earns far less. If what arrived was a standard HMRC letter rather than a notice of enquiry, what an HMRC nudge letter about R&D is, and what to do covers where that leaves a disclosure. If you are unsure whether there is a problem at all, find out before HMRC does. If your claims have always been paid without questions and you have never had an independent view of them, silence is not evidence they were right. Our free claim review is a confidential second opinion on claims already filed, including claims prepared by someone else, and our HMRC enquiries guide explains what happens if a check does arrive. Where a check has already arrived on a claim another adviser filed, HMRC enquiry defence is the standalone engagement that covers it. There is no way to make an R&D claim enquiry-proof, and anyone offering you one is selling something. The dependable protection is duller and more effective: a claim prepared with care, on evidence, by people who understood the legislation before they filled in the form. Sources CH81010: penalties for inaccuracies — a penalty is chargeable only where an inaccuracy is careless or deliberate; with reasonable care, none arises. CH81120: what reasonable care means — the standard itself. CH82470: penalty ranges — the ranges by behaviour, with the minima: careless up to 30% (nil unprompted, 15% prompted), deliberate up to 70% (20% and 35%), deliberate and concealed up to 100% (30% and 50%). FA 1998 Sch 18 para 24 — the twelve-month enquiry window, running from the day the return was delivered. FA 1998 Sch 18 para 41 and para 46 — discovery assessments where relief given is or has become excessive, and the four, six and twenty-year limits by behaviour. FA 1998 Sch 18 para 52 — sub-paragraph (2A): an R&D expenditure credit or R&D tax credit paid where the company was not, or is no longer, entitled to it is assessed and recovered as if it were unpaid tax. TMA 1970 s87A and HMRC interest rates for late and early payments — interest on overdue corporation tax from the date it became due, and the rate that applies. CIRD80520: examining a claim — where an enquiry is opened without payment, officers should keep under review whether at least a partial payment can be made. Tell HMRC if you’ve claimed too much R&D tax relief — the disclosure route for an overclaim you find yourself. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Do cloud and software costs qualify for R&D tax relief? URL: https://www.limestonegrey.com/rd-tax-relief/questions/which-software-and-cloud-costs-qualify/ Description: Software used for R&D qualifies; data licences and cloud computing qualify for periods beginning on or after 1 April 2023. How mixed use is split. Questions •4 min read Which software and cloud costs qualify for R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Three kinds of cost, in practice: software licences used for R&D work; data licences; and cloud computing services directly attributable to the R&D — remote storage, hardware facilities, operating systems and the software platforms used for testing, modelling, simulation or data analysis. What matters is not what the software is but what it was doing: the cost has to relate to resolving the scientific or technological uncertainty, which is why general business software, CRM systems and standard commercial hosting sit outside a claim however necessary they are to running the company. What counts, and what does not HMRC’s cost guidance treats these as two categories rather than one. Software covers licence fees for software used for R&D, plus a reasonable share of the cost where software is only partly used in R&D activities. Data licences and cloud computing form a separate category, claimable for accounting periods beginning on or after 1 April 2023, which covers every claim under the current schemes. The definitions are statutory: a data licence is a licence to access and use a collection of digital data, and cloud computing services include access to, and maintenance of, remote data storage, hardware facilities, operating systems and software platforms — remote being the operative word, because a company running its own servers is buying no service, and the set-up costs may be capital. One restriction is easily missed: data and cloud costs attributable to qualifying indirect activities cannot be claimed, a carve-out that applies to these two categories and no others; software, consumables, staffing and externally provided workers can all be claimed on qualifying indirect activities. One exclusion and one definitional gap are also worth knowing: obtaining a contractual right to sell the data onward, or to publish or share it beyond what the R&D needs, disqualifies the cost even if the right is never exercised; and data the business gathered itself is not a data licence — though the staff costs of gathering it may qualify as staffing. Applied to a real ledger, the line usually falls between the environment where the R&D happened and the environment where the business runs. Compute spent on training runs, simulation, testing an unproven architecture or processing a licensed dataset for the project belongs in the claim. The production cluster serving live customers does not, and neither does the CRM, the accounting package or the everyday collaboration suite, not because they are unimportant but because they were not resolving anything uncertain. Our software sector page covers how this plays out where compute is a material cost alongside people. Mixed use is where the figure is won Very few licences or platforms are used exclusively for R&D, so most of the work is apportionment. Where a cost serves both the R&D and the rest of the business, include the R&D proportion on a justifiable basis and keep a note of what that basis was. HMRC’s guidance on software is proportionate: used almost exclusively for R&D, a high percentage is reasonable; mostly used elsewhere, a much lower one. That published steer covers software and nothing else — on apportioning data and cloud costs the cost guidance is silent. Our practice is to carry the same logic across and record the basis it rests on, whether that is staff hours, licence counts or storage ratios, choosing whichever the spend actually follows. What will not survive a check is a percentage with nothing behind it. Compute is the dominant cost line in some sectors rather than an overhead; R&D tax relief for AI and robotics companies shows what the apportionment has to carry there. Cloud costs are unusually well suited to evidencing, because the billing data already exists. Project-tagged resources, per-environment billing and usage records support an apportionment line by line, and they were created while the spend was happening rather than assembled afterwards. Where that granularity does not exist, a documented estimate tied to something real, such as the period a workload ran or the share of an environment given over to testing, is worth considerably more than a round number. HMRC checked around one in six claims in 2023-24, its latest published figure, and cost apportionments are among the first things a check tests. How it lands on the claim On the Additional Information Form the categories are finer than most finance ledgers. Software, data licences, cloud computing and consumable items are four separate cost heads, each requiring its own figure, alongside staffing costs, externally provided workers, clinical trial payments and contractor payments. The split was tightened in October 2024, when software and consumables stopped being one combined head, so claims prepared on the old grouping do not map across. Costs therefore need splitting on the right lines before the form is drafted, and reconciling to the figures in the return. Our AIF guide sets out the form section by section, and the qualifying costs guide covers every category together. If your cloud bill is substantial and nobody has asked which parts of it were R&D, that is usually value sitting unclaimed in the ledger. We will tell you which parts qualify and which do not. Sources Check what R&D costs you can claim — software licence fees, the reasonable-share basis and the high-versus-lower-percentage steer, which the guidance gives for software only; and data licence and cloud computing costs for accounting periods beginning on or after 1 April 2023. CTA 2009 s1125 and s1126ZA — the statutory definitions including “remote”, the qualifying-indirect-activity carve-out and the onward-sale and publication exclusions. CIRD82100 and CIRD135000 — the category introduced by Finance (No.2) Act 2023, the paid requirement, and HMRC’s treatment under the current schemes. SI 2023/813, Schedule 2 — the AIF cost heads, as substituted from 2 October 2024. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What records do I need for an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-records-do-i-need-for-an-rd-claim/ Description: No statutory format exists. HMRC accepts estimates built on evidence and reason; keep timesheets, project documents and test results as you go. Questions •4 min read What records do I need for an R&D claim? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards There is no statutory format. HMRC does not prescribe a record-keeping system for R&D claims, so the question is not whether your records match a template but whether they evidence the two things a claim asserts: that the work met the definition of R&D, and that the costs claimed were incurred on it. Estimates are allowed — but built, not asserted HMRC does not require every figure to come from a contemporaneous record. Its guidelines for compliance say it is not unusual for R&D costs to be an estimated proportion of known expenditure, and ask that an estimate is arrived at using evidence and reason, with the amount shown to be based on facts. Where nothing was written down at the time, HMRC accepts that a detailed explanation provided later may be acceptable in some cases, and it recommends recording the claim methodology, any sampling and the basis of any apportionment. Reconstructing a year of engineering time from memory can therefore be a legitimate starting point when nobody was recording it. Note what that is not. It is not a first-claim concession — HMRC publishes no such thing, and the latitude applies as much to a fifth claim as to a first. Nor is it permission to estimate loosely for ever: a company that has been claiming for years and still cannot say who spent what proportion of their year on which project is not relying on an HMRC allowance, it is relying on HMRC not asking. Our own position is simpler — from the point you know you are claiming, keep records as you go, so the estimate you defend in year three is tied to something recorded in year three. What to keep once you are claiming Seven things do most of the work: timesheets or staff allocation records, showing who worked on which project and for what proportion of their time project documents describing the scientific or technological uncertainties, including what was not known and why existing knowledge was insufficient subcontractor and externally provided worker agreements, since the contractual position affects who can claim and under which cost head test results, including from the attempts that failed cost workings that reconcile the claimed costs to payroll, the ledger and the statutory accounts, with the apportionment basis and any sampling written down at the time the return as filed — the CT600 and the corporation tax computation, plus any amended versions, so what was claimed and when is not left to memory the Additional Information Form itself, which is your record of the project descriptions and the cost breakdown HMRC was actually given None of this needs writing for HMRC. Design notes, technical decision records, stage-gate papers and internal write-ups all count; they simply need to exist. Our qualifying costs guide sets out what falls in each cost category and where the apportionments bite. How long to keep it is the one part of this that is fixed by statute. A company must preserve the records needed to deliver a correct and complete return until the sixth anniversary of the end of the period the return covers — and beyond that if an enquiry into the return is still open, or if HMRC can still open one. Six years is the working answer for the R&D material as much as for the rest of the return, and it is a good deal longer than most claim files survive on somebody’s laptop. Timing matters more than format. Records made at the time the work was done are far more persuasive in an enquiry than reconstruction after the event, and the reason is straightforward: contemporaneous material was not written to win an argument, and it reads that way. A design note from eighteen months ago describing an approach that did not work carries weight no retrospective narrative can manufacture, however honest the narrative is. HMRC checked around one in six claims in 2023-24, its latest published figure, and our page on what HMRC will ask for in an R&D enquiry sets out the material a check typically requests, which is, in substance, the list above. There is a commercial argument too, and it is not a small one. Good records make the next claim faster and cheaper to prepare. Much of the cost of preparing a claim is archaeology: working out who did what, when and why, from memory and half-remembered message threads. Companies that capture it as they go spend less time on their claim each year and end up with a stronger one. Where to go next Our HMRC enquiries guide explains what a check involves and how prepared claims hold up under one. If a project is starting now and you want to know what to capture before the work begins, that conversation is worth having at the outset rather than at the year end, and it costs nothing. Sources GfC3: Recommended approach to claims and record keeping (part 5) — HMRC on planning ahead, identifying a project retrospectively, the use of estimates and apportionments, and the evidence a compliance check may request. CIRD80550 and CIRD80560 — no R&D-specific record-keeping requirement, the general CTSA obligation, and the records HMRC expects to see. FA 1998 Sch 18 para 21 — the statutory duty to keep and preserve the records needed for a correct and complete return until the sixth anniversary of the end of the return period, extended while an enquiry is open or can still be opened. Check what R&D costs you can claim — the cost categories and the reasonable-share basis that apportionments have to meet. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What is a scientific or technological uncertainty? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-is-a-scientific-or-technological-uncertainty/ Description: It exists where a competent professional in the field cannot readily deduce whether something is feasible, or how to achieve it. Where the line falls. Questions •4 min read What is a scientific or technological uncertainty? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field. That definition, from the Guidelines that set out the meaning of R&D for tax purposes, sits at the centre of the relief: everything else in a claim, from the cost apportionments to the project narratives, is downstream of it. Paragraph 13, which carries that definition, adds a sentence that answers the commonest objection to a manufacturing or scale-up claim: scientific or technological uncertainty will often arise from turning something that has already been established as scientifically feasible into a cost-effective, reliable and reproducible process, material, device, product or service. That the underlying science was proven therefore settles nothing. Making it work at production volumes, to a tolerance, at a cost and repeatably is often exactly where the uncertainty sits. What is not a technological uncertainty The Guidelines are explicit that uncertainties which can readily be resolved by a competent professional working in the field are not scientific or technological uncertainties. That is the line most rejected claims fall the wrong side of. Work can be long, expensive, frustrating and commercially vital and still fail the test, because none of those things says anything about whether the answer was available. Where a competent professional could have found it in published knowledge, in standard practice, or by applying established technique with care, the problem was execution rather than uncertainty. Several things get mistaken for it. Commercial risk, whether the market will buy the thing or whether it can be built to a viable price, is not technological uncertainty. Nor is market uncertainty. Nor is routine difficulty, the ordinary hard work of delivering something to a deadline with the people available. And the Guidelines exclude one more category in terms: improvements, optimisations and fine-tuning that do not materially affect the underlying science or technology. The question is never how hard the work felt; it is whether the knowledge existed. Because the test is calibrated to a person rather than a project, who counts as a competent professional is not a side issue. The same problem can be a genuine uncertainty for one field’s professionals and routine for another’s, so the claim has to be written from the right vantage point. Complexity and combination count too Uncertainty does not have to attach to a single component; the definition itself says it includes system uncertainty. The Guidelines describe system uncertainty as scientific or technological uncertainty that results from the complexity of a system rather than uncertainty about how its individual components behave. They go further: work on combining standard technologies, devices and/or processes can involve scientific or technological uncertainty even if the principles for their integration are well known — there will be uncertainty if a competent professional working in the field cannot readily deduce how the separate components or sub-systems should be combined to have the intended function. The Guidelines state the caveat alongside the definition: assembling components (or software sub-programs) to an established pattern, or following routine methods for doing so, involves little or no scientific or technological uncertainty. That is the line to hold in integration-heavy and software-led claims. “Every part of it already existed” does not end the analysis — but nor does “we combined many parts”. If a competent professional in the field could not readily deduce whether the parts would hold together at the scale, latency, tolerance or reliability the project required, the Guidelines say there will be scientific or technological uncertainty. The converse is stated more softly — assembly to an established pattern involves “little or no” uncertainty — which leaves room for the awkward case where a mostly routine integration throws up a genuine one. The burden simply shifts, and it shifts hard. Identifying them, and showing they were genuine Uncertainties are identified per project rather than per company, and for each project described on the Additional Information Form — all of them where you have up to three; at least three covering half the qualifying expenditure, capped at ten, where you have more — they have to be explained, including why the answer was not readily available or deducible. That last requirement is where thin claims give themselves away. Asserting that a project was uncertain takes a sentence. Saying what a competent professional would already have known, and pinpointing where that knowledge ran out, takes the professional. Failed attempts are often the clearest evidence the uncertainty was genuine, which is why we ask about the approaches that were abandoned as closely as the one that worked. A dead end demonstrates the answer was not deducible in a way no narrative can. Our page on claiming for a failed project covers how that works in practice, and our guide to what counts as qualifying R&D sets uncertainty alongside the advance test it exists to serve. If you are unsure whether your project’s problems clear this bar, that is the question to settle before a claim is prepared rather than after. We will give you a straight answer either way. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 13 on uncertainty, including uncertainty arising from turning something already established as scientifically feasible into a cost-effective, reliable and reproducible process, material, device, product or service; paragraph 14 on what can readily be resolved; and paragraphs 29 and 30 on system uncertainty and combining standard technologies. Help to see if your work qualifies as R&D for tax purposes (GfC3) — HMRC’s guidelines for compliance on identifying qualifying activities and the role of the competent professional. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What doesn't count as R&D for tax purposes? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-doesnt-count-as-rd/ Description: Routine work, commercial novelty and problems a competent professional can readily solve. Plus the mathematics change most guidance still gets wrong. Questions •4 min read What doesn't count as R&D for tax purposes? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Two things put work outside the relief: it does not seek an advance in the overall knowledge or capability of a field of science or technology, or its problems are ones a competent professional could readily resolve. Every exclusion below follows from one of those. Routine work, however new it is to you Paragraph 12 of the Guidelines is blunt: the routine analysis, copying or adaptation of an existing product, process, service or material will not be an advance in science or technology. Paragraph 22 adds the part companies dislike — that stays true even where the knowledge is completely new to the company or its trade. HMRC adds that such work cannot be a qualifying project however well planned and resource intensive. The weight sits on “routine”. Paragraph 9(c) brings within R&D a project seeking an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes, and paragraph 23 sets that bar at more than a minor or routine upgrading — something a competent professional would acknowledge as genuine and non-trivial. Adapting an existing product is not excluded. Adapting it routinely is. Fields outside science and technology Paragraph 15A puts work in the arts, humanities and social sciences, including economics, outside science for these purposes. Cosmetic and aesthetic qualities sit similarly under paragraph 42: not of themselves science or technology, so improving how a product looks or feels is not R&D by itself. It adds that applying science or technology to achieve a desired aesthetic effect can require an advance. Mathematics is where much published advice is now wrong. Paragraph 15B treats mathematical advances in themselves as science, whether or not they are advances in representing the nature and behaviour of the physical and material universe. HMRC dates it to accounting periods beginning after 31 March 2023; anything still calling pure mathematics excluded is quoting the 2004 Guidelines, kept in HMRC’s manual for earlier periods. Commercial innovation is not an advance Paragraph 8 states that nothing becomes an advance simply because science or technology was used to create it: work which does not advance scientific or technological capability as a whole is not an advance. HMRC puts the trap in a sentence — innovation does not necessarily show that you are seeking an advance in science or technology. So a product first of its kind in your market but built from established technology fails, while a commercially dull project resolving a real technological uncertainty passes. Problems your professionals could readily resolve Paragraph 14 excludes uncertainties a competent professional in the field can readily resolve, together with improvements, optimisations and fine-tuning that do not materially affect the underlying science or technology. Paragraph 35 sets routine fault fixing against genuinely new problems emerging after a product goes into use, which can require fresh R&D; debugging usually falls the wrong side of that line. Hence the weight on who counts as a competent professional. Work either side of the uncertainty Paragraph 33 sets both ends: R&D begins when work to resolve the uncertainty starts and ends when it is resolved or work to resolve it ceases, so identifying requirements where no scientific or technological questions arise falls outside. Paragraph 34 closes the period when the knowledge is codified in a form usable by a competent professional, or a prototype with all the final product’s functional characteristics exists; paragraph 39 puts later work outside once that prototype has been retested satisfactorily. The R&D project usually sits inside a wider commercial project, and most of that wider project is not R&D. Market research into what would appeal to buyers, a project’s financial, marketing and legal aspects, production and distribution appear in paragraphs 28 and 37 as activities that do not directly contribute, which paragraph 5 puts outside R&D. Paragraph 31 is the exception: administration, clerical, finance, personnel work and training do count when undertaken for R&D. Paragraph 32 closes that list, and a scheme’s own cost rules then govern what can be claimed. Where to go next Our guide to qualifying R&D holds the advance and uncertainty tests together, and what a scientific or technological uncertainty is takes the harder of the two further. If a project sits near one of these lines, settle it before a claim is prepared, not during a check: HMRC checked around one in six claims in 2023-24, its latest published figure. Send us the work and we will tell you which side of the line we think it falls on. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 8 on using science without advancing it; 9(c) and 23 on appreciable improvement; 12 and 22 on routine analysis, copying and adaptation; 14 on what a competent professional can readily resolve; 15A on the arts, humanities and social sciences; 15B on mathematical advances from April 2023; 28, 31, 32 and 37 on activities that do not directly contribute and the closed list of qualifying indirect activities; 33, 34, 35 and 39 on when R&D starts and ends; 42 on cosmetic and aesthetic effects. Help to see if your work qualifies as R&D for tax purposes (GfC3), part 4 — HMRC on innovation not showing an advance, routine adaptation in a well planned project, and mathematical advances qualifying for accounting periods beginning after 31 March 2023. CIRD81900 — the 2004 Guidelines text, which HMRC retains for accounting periods that began before 1 April 2023 and which carries the superseded position on mathematics. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against around 61,000 claims received, the source of the one-in-six check rate. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How long does an HMRC R&D enquiry take? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-long-does-an-hmrc-enquiry-take/ Description: No statute sets a deadline for finishing an enquiry. What decides the length is what HMRC disputes — the stages, the routes out, and the remedy for delay. Questions •5 min read How long does an HMRC enquiry into an R&D claim take? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards As long as the disagreement lasts. The legislation fixes a deadline for opening an enquiry and sets none for closing one, so the length turns on what HMRC is questioning and how quickly the answer can be evidenced. The stages are fixed. The intervals between them are not. How it opens With a letter, and only with a letter. Paragraph 24 of Schedule 18 to the Finance Act 1998 lets an officer enquire into a company tax return “if he gives notice to the company of his intention to do so”. Where HMRC withholds payment because it thinks a claim may be incorrect, its published aim is to open an enquiry within 60 days of receiving the claim — the one stage with a target attached. The middle, where the months go Rounds. HMRC writes, you answer, documents follow, HMRC writes again. Each round carries two waiting periods, theirs and yours, and the number of rounds, not the size of the claim, fills the calendar. The material itself is on our page on what HMRC asks for. Where a request goes unanswered, HMRC can formalise it. Schedule 36 to the Finance Act 2008 lets an officer require information or documents by written notice, where reasonably required to check the taxpayer’s tax position. There is a right of appeal against such a notice, though not for statutory records or where the tribunal approved it. Meetings work differently: getting a working engineer and an HMRC officer into the same hour is often the slowest booking in the file. The routes out Agreement, then closure. Completion is a notice too: paragraph 32 gives a partial closure notice where one matter is finished, a final closure notice where the enquiry as a whole is. Partial closure matters here — one contested project need not hold the rest of the claim hostage. Paragraph 34 carries the amendments giving effect to HMRC’s conclusions, and an appeal against one runs 30 days from notification. Where an enquiry has stopped moving, paragraph 33 lets the company ask the tribunal to direct HMRC to close it within a specified period. The tribunal must give that direction unless satisfied the officer has reasonable grounds for not closing. Alternative Dispute Resolution runs alongside all of it. While an enquiry is open you can apply at any stage, and applying gives up no right to appeal or to ask for a review. An HMRC officer trained in mediation acts as a neutral and impartial mediator who “will not suggest or impose solutions”. Once HMRC has made a decision the order changes: for corporation tax, where a review has been offered, the appeal has to be notified to the tribunal and acknowledged first, and paper and basic cases are excluded — how do I appeal an HMRC decision on an R&D claim? sets that out. Then the formal track: 30 days from a decision letter to appeal or accept a review; a review officer from another team, uninvolved in the original decision, who upholds, varies or cancels it, usually within 45 days on HMRC’s own account; then 30 days from the review letter to appeal to the First-tier Tribunal, which is independent of HMRC. What that means in months From practice rather than published data: a check where the records exist and answer the questions asked can close in weeks. Where HMRC contests whether the work met the definition of R&D, or whether a cost head qualifies, expect months. A case that runs through statutory review to the tribunal is measured in years. No one can hand you a date — not us, and not the officer holding the file. None of this is unusual now. HMRC checked around one in six claims in 2023-24, its latest published figure. What shortens an enquiry in practice Records made while the work was happening, rather than assembled afterwards. First responses that answer the whole question instead of inviting the follow-up. The competent professional taking the technical points directly, because an adviser paraphrasing an engineer produces the answer that needs another letter. Every partial answer buys another round, and rounds are what the calendar is made of. What has to be repaid at the end, if anything, is a separate question. Where to go next Our HMRC enquiries guide walks the process stage by stage, and enquiry support is included as standard for claims we prepare. If an enquiry into a claim someone else filed has landed on your desk, HMRC enquiry defence sets out how we take that on as a standalone engagement, and where our role ends. Talk to us — we will give you an honest read on where it stands. Sources FA 1998 Sch 18 para 24 — an enquiry begins with notice of enquiry given to the company. FA 1998 Sch 18 para 32, para 33 and para 34 — completion by partial or final closure notice; the company’s right to apply to the tribunal for a direction to close, which the tribunal must give unless the officer has reasonable grounds not to; amendment of the return to give effect to the conclusions, and the 30-day appeal window against that amendment. FA 2008 Sch 36 para 1 and para 29 — the power to require information or documents reasonably required for checking a taxpayer’s tax position, and the right of appeal against a taxpayer notice, excluding statutory records and tribunal-approved notices. CIRD80525: practice note for ISBC and WMBC — the aim to open an enquiry within 60 days of receiving the claim where HMRC decides not to pay. Use alternative dispute resolution to settle a tax dispute and CC/FS21 — availability at any stage while a compliance check is open, and at the end of one where an appealable decision has been made; the mediator as a neutral and impartial HMRC officer who will not suggest or impose solutions; that ADR does not affect the right to appeal or to ask for a review; and that for direct tax, where a review was offered, the appeal must be notified to the tribunal and acknowledged before applying, with paper and basic cases excluded. Disagree with a tax decision: appeal against an HMRC decision and get a review — the 30 days to appeal or accept a review, the review officer from a different team, reviews usually taking 45 days, and 30 days from the review result letter to appeal to the tribunal. Tax tribunal — the tribunal’s independence of government and HMRC. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against 61,000 claims received, 17% coverage. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Is there a maximum R&D tax relief claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/is-there-a-maximum-rd-claim/ Description: No. The merged scheme and ERIS set no ceiling on qualifying expenditure or the credit. Three mechanisms limit the cash, and one old SME cap still applies. Questions •5 min read Is there a maximum amount I can claim in R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards No. Neither the merged scheme nor ERIS puts a ceiling on qualifying R&D expenditure, and neither caps the credit that expenditure produces. What exists instead is a set of mechanisms limiting how much of the credit reaches the bank — and one genuine cap under the old SME scheme, still relevant to periods you can amend. The current schemes are built from percentages, not amounts CTA 2009 s1042G turns qualifying expenditure into merged scheme credit at 20%. No monetary figure appears anywhere in that calculation. ERIS is constructed the same way: an additional deduction of 86% under s1044(8), then a payable credit set at 14.5% of the surrenderable loss. £40,000 of qualifying spend and £40m run through identical arithmetic. HMRC’s guidance on the two schemes sets out the restrictions that do apply: the PAYE cap, and the 30% intensity condition for ERIS. A limit on qualifying expenditure is not among them, because there is none. Three things limit the cash The PAYE cap is the one that bites in practice. Section 1112B restricts a payable credit to £20,000 plus 300% of the company’s relevant PAYE and NIC, and a company meeting both statutory conditions is exempt altogether. Which scheme you are in decides what happens to the excess. Under the merged scheme it carries forward into the following accounting period without a fresh claim, so the value is deferred rather than lost. Under ERIS there is no equivalent route for the credit: s1058(1) fixes it at the lesser of 14.5% of the surrenderable loss and the cap itself. The loss behind it can be kept, but only by surrendering less: a claim sized to the cap leaves the balance to carry forward for relief against future profits, while a full surrender against a capped credit gives that balance away for nothing. The third mechanism is not a cap, though it is often described as one. The merged scheme credit is taxable, and step 2 of the payment sequence withholds a notional tax deduction. That amount is not forfeited: it carries forward against future corporation tax or can be surrendered to a group company. It reduces what arrives without reducing the claim, and the arithmetic is set out here. The old SME scheme did have a ceiling For accounting periods beginning before 1 April 2024, still amendable into 2027, SME relief was capped by reference to total aid going to a single project. Section 1113 as it then stood gave relief only so far as total aid for expenditure attributable to one project did not exceed 7.5 million euros. Aid was measured more widely than the relief claimed: s1114 set the formula, and HMRC’s manual describes the figure as the benefit of the SME scheme less the relief the company would have had as a large company. Two features are easy to miss. The cap ran per project rather than per company or per period, so aid well beyond €7.5m across a programme of separate projects fell outside it — and it belonged to the SME scheme alone. Finance Act 2024 replaced the entire chapter containing it for periods beginning on or after 1 April 2024, and nothing equivalent carried into the merged scheme. A backdated claim has to be tested against the rules of its own period. Large claims are not capped, but they are read closely HMRC checked around one in six claims in 2023-24, its latest published figure. Its published approach also confirms that every claim from a Large Business customer is reviewed, with checks opened where risk assessment points to one. Size does not restrict what you can claim. It changes how much you should expect to stand behind. Where to go next The only real ceiling is the qualifying expenditure you can properly identify — neither understated through caution nor inflated through optimism. That figure starts with the qualifying cost categories. If your claim is large enough that the cap or the intensity condition might be in play, talk to us before the return goes in rather than after. Sources Section 1042G, Corporation Tax Act 2009 — the merged scheme credit as a percentage of qualifying expenditure, with no monetary limit. Section 1044, Corporation Tax Act 2009 — subsection (8), the additional deduction of 86% of qualifying Chapter 2 expenditure. R&D tax relief: the merged scheme and ERIS — the restrictions HMRC states for the current schemes: the PAYE cap, the 30% intensity condition, and the credit’s taxable status. No limit on qualifying expenditure appears. Section 1112B, Corporation Tax Act 2009 — £20,000 plus three times relevant PAYE and NIC, proportionately reduced at subsection (3) for periods shorter than twelve months. Section 1058, Corporation Tax Act 2009 — subsection (1), setting the Chapter 2 credit at the lesser of 14.5% of the surrenderable loss and the cap. CIRD112100: merged scheme payment steps — the payment sequence, including the step 2 notional tax deduction and its carry-forward or surrender to a group company, and the step 3 amount restricted by the PAYE cap, which carries into the next accounting period without a further claim. Section 1113, Corporation Tax Act 2009, as it stood before 1 April 2024 — relief given only so far as total aid for expenditure attributable to a project would not exceed 7.5 million euros, applying to Chapter 2 SME relief. CIRD81160: total aid to project €7.5m or less — the cap from 1 August 2008, the SME and vaccines schemes only, and aid measured net of large company relief. Finance Act 2024, Schedule 1, Part 1 — paragraph 8, substituting the whole of Chapter 8 of Part 13 (previously headed “cap on aid for R&D”), with effect for accounting periods beginning on or after 1 April 2024. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks on around 61,000 claims, the source of the one-in-six check rate, and the review of all Large Business claims. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How do I calculate staff costs for an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-do-i-calculate-staff-costs-for-an-rd-claim/ Description: Earnings, employer's NIC and pension contributions, apportioned to R&D time. What counts, why dividends cannot be claimed, and how to evidence the split. Questions •6 min read How do I calculate staff costs for an R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Take each person’s earnings, the employer’s secondary Class 1 National Insurance and the pension contributions the company paid, then include the proportion of that total matching the time they were directly and actively engaged in the R&D. The difficulty is in the detail: what counts as earnings, what the proportion rests on, and who belongs under a different cost head. What the statute lets you include CTA 2009 s1123 lists what counts: earnings consisting of money paid to a director or employee because of their employment; amounts paid in respect of expenses they paid, again because of the employment, but nothing in respect of benefits in kind; secondary Class 1 National Insurance contributions paid by the company; and contributions the company paid to a pension fund operated for directors or employees. “Earnings consisting of money” does the exclusion work. HMRC reads the measure as salaries, wages, perquisites and profits whatsoever other than benefits in kind: cars, fuel, living accommodation and vouchers stay out, while cash reimbursements are not excluded. A reimbursed expense qualifies where the employee paid it to fulfil the requirements of the employment — travelling to a test site, yes; home-to-work travel, no. Redundancy payments are out. And only the claimant company’s own directors and employees sit in this head. Dividends are the owner-manager trap Everything s1123 reaches is paid because of an employment. A dividend is paid on shares: not earnings, and not paid because of the employment, so it cannot enter this head at all. A director on a modest salary who draws the rest of the year’s reward as dividends contributes very little here, however much of the year they spent solving the technical problem. In owner-managed companies that is the commonest reason a claim lands far below what the founder expected, and changing the mix is a personal tax question as much as an R&D one. The proportion, and how to stand behind it Section 1124 supplies the apportionment. Attributable staffing costs are those paid to, or in respect of, directors and employees directly and actively engaged in relevant R&D; where someone is only partly so engaged, the appropriate proportion of their staffing costs is treated as attributable. No method is prescribed, and no threshold applies at either end: a tenth of somebody’s year is as claimable as nine tenths. Timesheets settle the question where they exist. Where they do not, HMRC’s guidelines for compliance accept that R&D costs are often an estimated proportion of known expenditure, and ask that the estimate is arrived at using evidence and reason and shown to be based on facts, with the methodology and the apportionment basis recorded. Our records page sets out what to keep. Staff costs are usually the largest head in a claim, and the apportionment behind them is among the first things a check tests: HMRC checked around one in six claims in 2023-24, its latest published figure. Round numbers, illustrative rather than representative. An engineer on a £60,000 salary generates £8,250 of employer’s secondary Class 1 National Insurance — 15% above the £5,000 secondary threshold in 2026-27 — plus £3,000 of pension contributions at 5% of salary. Total £71,250. At 40% of their time directly and actively engaged, £28,500 enters the claim as staffing costs. Supporting staff and the QIA figure Time on qualifying indirect activities counts as well. The DSIT Guidelines list them exhaustively, in seven categories: scientific and technical information services insofar as conducted for the purpose of R&D support, such as preparing the original report of R&D findings; indirect supporting activities — maintenance, security, administration and clerical work, finance and personnel activities — insofar as undertaken for R&D; ancillary activities essential to the undertaking of R&D; training required to directly support an R&D project; research by students and researchers carried out at universities; research to devise new scientific or technological testing, survey or sampling methods, where that research is not R&D in its own right; and feasibility studies to inform the strategic direction of a specific R&D activity. Nothing outside that list qualifies, and each category is set out in full on our qualifying indirect activities page. Clerical or maintenance work that would have been done anyway, running the payroll for instance, is not claimable, and s1124 says secretarial or administrative services in support of activities carried on by others are not themselves direct and active engagement. Keep the figure separate as you build it: the Additional Information Form requires the amount attributable to qualifying indirect activities for each project. Who sits outside this head Agency and contract people are counted elsewhere. Workers supplied through a staff provider are externally provided workers: where the company, staff provider and staff controller are not all connected, s1131 puts 65% of the staff provision payment attributable to their qualifying earnings into that separate head. A contractor engaged directly to carry out R&D gives a contractor payment under the contracted-out rules. Our subcontracted R&D page covers both. Where to go next The qualifying costs guide covers every cost head together. If the technical people are paid largely in dividends, or nobody has yet put a percentage against a name, talk to us before the figures reach the form. Sources CTA 2009 s1123 — the staffing cost heads: earnings consisting of money paid because of the employment, amounts paid in respect of expenses other than benefits in kind, secondary Class 1 NICs paid by the company, and pension fund contributions paid by the company. CTA 2009 s1124 — costs attributable to directors and employees directly and actively engaged in relevant R&D, the appropriate proportion where engagement is partial, and secretarial or administrative support of others’ activities not amounting to direct and active engagement. CIRD83000, CIRD83200 and CIRD133100 — the claimant company’s own directors and employees only; the measure of staffing costs as salaries, wages, perquisites and profits whatsoever other than benefits in kind; the benefits in kind examples; the reimbursed expenses test; and redundancy payments. CIRD83800 — the appropriate proportion for an employee partly engaged on R&D, and the pre-2003 80/20 rule abandoned after representations from companies. Check what R&D costs you can claim — salaries, wages, pension fund contributions and secondary Class 1 NICs; the 90%-of-time, 90%-of-cost illustration; staff on supporting activities; and the exclusions for redundancy payments and clerical or maintenance work that would have been done anyway. GfC3: Recommended approach to claims and record keeping (part 5) — estimated proportions of known expenditure, estimates arrived at using evidence and reason and based on facts, and recording the claim methodology, sampling and apportionment basis. DSIT Guidelines (2023), paragraphs 31 and 32 — the exhaustive list of qualifying indirect activities, and that activities not described in paragraph 31 are not qualifying indirect activities. SI 2023/813, Schedule 2 — the Additional Information Form requirements, including in-house staffing costs as a separate category and the amount attributable to qualifying indirect activities. CTA 2009 s1131 — 65% of the staff provision payment attributable to qualifying earnings where the company, staff provider and staff controller are not all connected. Rates and thresholds for employers 2026 to 2027 — the 15% secondary Class 1 rate and the £5,000 annual secondary threshold used in the illustration. Approach to R&D tax reliefs 2023 to 2024 — compliance coverage of 17% of claims in 2023-24, up from 10% the year before. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How long until an R&D tax credit is paid? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-long-does-it-take-to-receive-rd-tax-credit/ Description: HMRC's published aim is to pay 85% of payable tax credits within 40 days, or make contact within that time. No adviser can promise a payment date. Questions •4 min read How long does it take to receive an R&D tax credit payment? MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards HMRC’s published aim is to pay 85% of payable tax credits within 40 days of receiving the claim, or to make contact about the claim within that time. On its own published figures it processed 92% of claims within 40 days in 2023-24, above the 85% aim. Those are HMRC’s aims and HMRC’s numbers. Neither we nor any other adviser can promise you a payment date: the processing is HMRC’s, and nobody outside it controls the queue. What the 40 days covers The aim has two limbs, and only one of them is money: pay, or make contact. A letter asking questions inside 40 days meets the standard as fully as a payment does. HMRC also states that the aim does not apply to claims which, in exceptional circumstances, are not made electronically, or to claims without accurate BACS details. The bank details on the return matter. Where adviser marketing quotes a payment speed, it is describing HMRC’s processing, which no adviser performs. What has to be in place first Nothing starts until the claim is valid. HMRC requires it in the company tax return or an amendment to it, with computations that reflect the claim, a completed CT600, and a CT600L where the claim includes the merged scheme R&D expenditure credit or a payable ERIS credit. The amount must be quantified. HMRC’s manual is blunt about the alternative: where an incomplete return is received, or the relief is not quantified, there is no valid claim. The Additional Information Form comes first. HMRC’s guidance requires it before or on the same day as the CT600, and ahead of the return if both go the same day. Without it the claim is not accepted: where the return arrives first, HMRC writes to confirm it is removing the R&D claim from the return. Companies have lost whole periods that way. What arrives may not be cash For a profitable company, a payment date is the wrong thing to watch. The merged-scheme credit runs through a fixed sequence of steps. The first discharges the company’s corporation tax for the period, whether or not that tax is still outstanding. Later steps set it against corporation tax for other periods, allow surrender to another group company, and discharge other liabilities to HMRC such as VAT or PAYE. Only what survives is paid out. Our page on how much a claim is worth has the arithmetic. A company paying corporation tax by instalments should also know that the credit does not reduce those: instalments are estimated gross of it, and the benefit lands at the claim. What stops or slows payment HMRC deciding not to pay. Where it thinks a claim may be incorrect it withholds the money, and its published aim is to open an enquiry within 60 days of receiving the claim. A payment that has not arrived is not necessarily lost — it may be a claim under examination. Then the conditions on the final step. The credit is payable only if the company met the going concern condition when it claimed, and HMRC need not pay while the return is under enquiry or while the company’s PAYE or national insurance for the period is unpaid. VAT arrears work differently and end the same way: at an earlier step the credit is applied against the company’s other debts to HMRC, VAT among them, so what reaches the bank is only what survives that. Arrears anywhere on the tax account leave less to pay out. Errors do the rest. Figures that disagree across the CT600, the computation and the Additional Information Form invite the contact rather than the payment. Filing one complete claim, reconciling those documents first, and answering promptly when HMRC writes is the whole of what a company controls. Payment is processing, not approval HMRC pays most claims and checks afterwards. In its own words, post-payment checks let customers receive payment quickly but can leave uncertainty about whether a claim might later be found non-compliant and recovered. A decision to pay does not stop it enquiring within the statutory time limit. Money in the bank is not a decision in your favour — see can HMRC make me pay back an R&D tax credit. Where to go next If cash timing bears on a decision, plan on the claim being examined rather than paid quickly. Our free claim review is a confidential read on a claim already filed. Sources CIRD80525: practice note for ISBC and WMBC — HMRC’s aim to pay 85% of payable tax credits or make contact within 40 days, the exclusion of non-electronic claims and claims without accurate BACS details, the 60-day aim for opening an enquiry where it decides not to pay, and its ability to enquire after paying. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 92% of claims processed within 40 days in 2023-24 against the published 85% aim, and the trade-off HMRC describes in post-payment checks. CIRD181000: reformed reliefs, claims process — what a valid claim must contain, including computations reflecting the claim, the CT600 and CT600L, and the requirement that the amount be quantified. Additional information you must submit before you claim R&D tax relief — the form must be submitted before or on the same day as the Company Tax Return, and the removal of the claim from the return where it is not. CIRD112100: merged scheme payment steps — the order the credit is applied in, from discharging the period’s corporation tax through to the amount payable, the application at step 6 against other HMRC debts including VAT, and the going concern, open enquiry and PAYE conditions on the final step. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How do I claim R&D tax credits? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-do-i-claim-rd-tax-credits/ Description: Four steps: notify HMRC if required, prepare the technical and cost analysis, submit the Additional Information Form, then claim the relief in the CT600. Questions •5 min read How do I claim R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards A claim is four steps you take and one HMRC takes. First, check whether your company has to submit a claim notification, because that deadline can end the question before it starts. Second, prepare the technical and cost analysis behind the claim. Third, submit the Additional Information Form before or on the same day as the company tax return — a claim made without it is invalid. Fourth, claim the relief in the return itself, quantified, with computations that agree. HMRC then processes the claim: its published aim is to pay 85% of payable tax credits within 40 days or to make contact within that time. Step 1: check whether a claim notification is required For accounting periods beginning on or after 1 April 2023, some companies have to tell HMRC they intend to claim, months before the claim itself. The requirement applies where you are claiming R&D tax relief for the first time, or where you have not claimed in the three years ending with the notification deadline. One trap sits inside that test: a claim for a pre-April 2023 period made by amending a return, where the amendment reached HMRC on or after 1 April 2023, does not count as a previous claim. Companies that think of themselves as established claimants are caught by it. That window opens on the first day of the period of account and closes six months after the end of it. HMRC’s guidance is short about the consequence: if you do not notify, the claim is invalid. There is no late route. The one alternative HMRC offers is to file the R&D claim itself, on the return or as an amendment, so that it is received by the last date of the claim notification period — which for most companies means preparing the whole claim inside six months of the year end. Our guide to the claim notification requirement works through who is caught and who is exempt, and the claim notification deadline checker gives you your own date in seconds. Settle this before anything else. Every later step is wasted if the notification was needed and missed. Step 2: prepare the technical and cost analysis Two strands of work, and they run together. The technical strand identifies each project that sought an advance in science or technology, states what was scientifically or technologically uncertain, and describes how the work set about resolving it. This is the competent professional’s account, not the finance team’s: the Additional Information Form asks for the baseline knowledge in the field, the uncertainties faced and the methods used to overcome them, project by project. The cost strand traces qualifying expenditure back to payroll records, ledgers and invoices, with each apportionment recorded at the time rather than reconstructed later. What records you need sets out the evidence that holds up when a claim is examined. Step 3: submit the Additional Information Form The Additional Information Form has been required for claims made on or after 1 August 2023 — in practice 8 August 2023 — and a claim made without one is invalid. It must be submitted before or on the same day as the Company Tax Return, and where both go on the same day, the form has to go first. The accounting period dates on the form have to match the dates on the return. Order matters more than people expect. Where the return arrives first, HMRC writes to confirm that it is removing the R&D claim from the return, and if that happens close to the last date for amending the return, there may be no time left to make a valid claim. Companies have lost whole periods this way. What goes in the Additional Information Form covers the fields and the detail HMRC expects in each. Step 4: claim in the company tax return Claims are made in the Company Tax Return or by amending it. HMRC expects a completed CT600, computations that reflect the claim, and a CT600L where the claim includes the merged scheme R&D expenditure credit or a payable ERIS credit — box by box, that is worked through here. The amount of relief or credit has to be quantified when the claim is made. An incomplete return, or a claim where the relief is not quantified, is not a valid claim at all. Reconcile the three documents before filing. Figures that disagree across the return, the computations and the Additional Information Form are among the easiest things for HMRC to spot. What happens after you file That 40-day aim is HMRC’s, not any adviser’s, and it does not apply to claims made without accurate BACS details or, in exceptional circumstances, made outside the electronic route. Where HMRC thinks a claim may be incorrect, it withholds payment and aims to open an enquiry within 60 days of receiving it. How long it takes to receive an R&D tax credit covers the timing, and what can hold a payment up, in full. Payment is not approval. HMRC checked around one in six claims in 2023-24, its latest published figure, and it can enquire after paying as well as before. That is the argument for filing a claim built to be read by an inspector: see HMRC R&D enquiries for what a check involves. If you want the procedure settled properly for your own period, talk it through with us. Sources Tell HMRC that you’re planning to claim R&D tax relief — who must submit a claim notification, the three-year test measured to the last date of the claim notification period, the window running from the first day of the period of account to six months after its end, the invalidity of a claim where no notification was made, and the alternative of filing the claim itself by that date. Additional information you must submit before you claim R&D tax relief — the form must be submitted before or on the same day as the Company Tax Return, the project information required including baseline knowledge, uncertainties and the methods used to overcome them, and HMRC’s removal of the claim from the return where the return is filed first. CIRD182000: additional information requirement — the form is required for claims made on or after 1 August 2023, in practice 8 August 2023, the accounting period dates must match the return, and a claim without it is invalid. CIRD181000: reformed reliefs, claims process — claims are made in the Company Tax Return or an amendment to it, with a completed CT600, computations reflecting the claim and a CT600L for a payable credit; the amount must be quantified, and an incomplete or unquantified claim is not valid. CIRD80525: practice note for ISBC and WMBC — HMRC’s aim to pay 85% of payable tax credits or make contact within 40 days, the exclusion of claims without accurate BACS details and non-electronic claims, and the aim to open an enquiry within 60 days where it decides not to pay. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against around 61,000 claims received, the source of the one-in-six check rate. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Are R&D tax credits State aid? The de minimis position URL: https://www.limestonegrey.com/rd-tax-relief/questions/is-rd-tax-relief-state-aid/ Description: No notified State aid machinery survives in the current schemes. The one live limit is the de minimis cap on ERIS for SMEs registered in Northern Ireland. Questions •8 min read Is R&D tax relief state aid? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards For current claims the answer is no for almost everyone: the merged scheme carries none of the notified State aid machinery the old SME scheme depended on, and the one place State aid still reaches a live claim is the de minimis cap on the extra benefit ERIS gives an SME registered in Northern Ireland. The old SME scheme was a State aid — HMRC’s own guidance records that changes to it had to be notified to and approved by the EU — which is why a grant that was itself a notified State aid could stop a company claiming SME relief on that project. The old RDEC was treated differently, as a general measure rather than a notified State aid, so the same grant did not block it. Neither idea carries into current claims. The UK has run its own subsidy control regime since 4 January 2023, and for accounting periods beginning on or after 1 April 2024 the subsidised-expenditure restriction is abolished, so grant funding no longer reduces or blocks a claim. Why the old SME scheme made grants a problem One definition, two very different effects, and they are often confused with each other. The first was the notified State aid rule. A notified State aid, in this context, means an aid notified to and approved by the European Commission. Where a company received one for an R&D project, it could not claim SME relief for that project at all, because the SME scheme was itself a State aid and the cumulation rules would otherwise have been breached. That is a project-level bar, not a pound-for-pound reduction: a modest notified aid could take a much larger project out of SME relief entirely. It also depended on the character of the particular award, because not every government grant was a notified State aid. The second was the wider subsidised-expenditure rule, which removed subsidised costs from SME relief whatever their source, and which applied from the scheme’s introduction in 2000. Where subsidy was the only obstacle, accounting periods beginning on or after 9 April 2003 let an SME claim instead under the large company scheme, and from 1 April 2013 under RDEC. That rule is the one the First-tier Tribunal engaged with in the commercial-contract cases, and it is the one most old advice is really describing. Why the old RDEC was not notified State aid HMRC’s position on the old RDEC was that general measures not restricted to a specific group are not notified State aid, and it named RDEC as an example. The consequences followed: a company holding a notified State aid grant could still claim RDEC for that project, and could claim RDEC on qualifying costs the grant had funded. This is the origin of the planning that dominated the old world. Grant-funded spend was pushed out of the generous SME scheme and into RDEC at a lower rate of benefit, with the project split and tracked accordingly. It worked, but it cost the company real money, and it is the reason so many grant recipients still assume a grant and an R&D claim are in tension. What replaced State aid in Great Britain The Subsidy Control Act 2022 received Royal Assent on 28 April 2022 and the UK subsidy control regime began on 4 January 2023. Subsidies given by public authorities across the UK are now assessed under that Act rather than under EU State aid rules, subject to the Windsor Framework carve-out below. For R&D tax relief the practical point is narrower and more useful. The merged scheme sits in Chapter 1A of Part 13 of the Corporation Tax Act 2009, inserted by Finance Act 2024, and neither that legislation nor HMRC’s guidance on it carries the notified State aid machinery the old SME scheme depended on. There is no notified-aid bar to work around and no subsidised proportion to strip out. Asking whether a grant is a notified State aid before making a current-period claim is asking a question the current rules do not put. Are R&D tax credits de minimis State aid? In one place only. Relief under the merged scheme is not aid given under a de minimis regulation, and nothing in the current rules counts a merged-scheme credit against a de minimis ceiling. The exception is ERIS claimed by an SME registered in Northern Ireland, and it is worth knowing about if it applies to you. Under Article 10 of the Windsor Framework, EU State aid rules continue to apply to measures affecting trade in goods, or the electricity market, between Northern Ireland and the EU. Where the Framework applies, those rules apply instead of the Subsidy Control Act. That reaches into R&D relief in a specific and limited way, and it is not a grants rule: the limit applies to every NI-registered ERIS claimant whether or not it has ever held a grant, because the extra benefit ERIS gives over the merged scheme is itself the aid being counted. The provisions were substituted by section 29 of the Finance Act 2025 and have effect for claims made on or after 30 October 2024, not on the accounting-period clock the rest of the current rules run on. An SME whose registered office is in Northern Ireland and which claims ERIS is subject to a de minimis State aid limit on that extra benefit, counted alongside the company’s and its group’s other de minimis aid over the three years ending with the day the R&D claim is submitted. As the ceilings stood at 19 March 2025, that is €300,000 for most businesses, and lower where the main activity sits in particular sectors — €50,000 in agriculture, €30,000 in aquaculture and fisheries. Relief above the ceiling is not lost: expenditure the company cannot claim ERIS for on that account can generally be claimed under the merged scheme instead. In exchange, those companies sit outside the restrictions on overseas contracted-out R&D and externally provided workers that claimants elsewhere in the UK have to work within. And an NI-registered SME whose business involves no trade in goods, and no trade with an element of relevant activities in relation to electricity, can notify HMRC in writing under section 1112J to be treated under the standard ERIS rules instead, which takes the de minimis limit away — though it gives up the overseas exemption at the same time, so the choice has to be worked out on the company’s own numbers. Companies registered in Great Britain have nothing here to manage, wherever in the UK they trade. What this means if you hold a grant For accounting periods beginning on or after 1 April 2024, take the grant and claim the relief. Our guide to grant funding and R&D tax relief works the numbers through, and the short answer to the question people usually mean sits at does grant funding stop me claiming R&D tax relief. For periods that began before 1 April 2024 and are still within the amendment window, the old analysis still has to be run properly, including whether a particular award actually was a notified State aid. Two points decide it in practice. HMRC treats all aid given under the General Block Exemption Regulations as notified State aid for these purposes, which catches more awards than people expect. Against that, HMRC’s own guidance records that following the UK’s departure from the EU, government grants will only be State aid in very limited circumstances — so a post-Brexit award is far less likely to be a notified State aid than the folklore assumes. Companies that under-claimed on grant-funded projects under the old rules are exactly the ones worth revisiting: see backdated R&D claims, or read how the current rules work in our guide to the merged scheme. Sources CIRD81670: effect of notified State aid — a notified State aid is one notified to and approved by the European Commission; a company receiving one for an R&D project cannot also claim SME relief for that project; general measures not restricted to a specific group, including RDEC, are not notified State aid. CIRD90050: SME scheme overview — the SME R&D regime’s own status as a State aid, and the requirement to notify changes to it to the EU. CIRD81650: subsidies, SME scheme only — SME relief unavailable for subsidised expenditure; where subsidy is the only bar, an SME may claim under the large company scheme for accounting periods beginning on or after 9 April 2003, or under RDEC since 1 April 2013. Subsidy Control Act 2022 (2022 c. 23) — Royal Assent 28 April 2022, and the subsidy control regime collection recording that the regime began on 4 January 2023. Subsidy control: a guide for beneficiaries and guidance on Article 10 of the Windsor Framework — where the Framework applies, EU State aid rules apply instead of the Subsidy Control Act, covering measures affecting trade in goods or the electricity market between Northern Ireland and the EU. CIRD125000: ERIS and companies registered in Northern Ireland — the limit applying to the additional benefit amount of all claims made under NI ERIS, the sector ceilings, merged scheme RDEC as the route for expenditure above the limit, and the written opt-out. Finance Act 2025, section 29 — the Northern Ireland provisions substituted into CTA 2009, with effect under section 29(9) “in relation to claims made on or after 30 October 2024”. CTA 2009 s1112J — additional relief for a Northern Ireland company only to the extent it would be exempted from notification under Article 108(3) TFEU by a de minimis aid regulation listed in paragraph 3.4 of Annex 5 to the Windsor Framework. CIRD111000: new RDEC overview — the merged scheme in Chapter 1A of Part 13 CTA 2009, for accounting periods beginning on or after 1 April 2024. Merged scheme RDEC reform (policy paper) — the subsidised-expenditure rules not carried forward into the merged scheme, for accounting periods beginning on or after 1 April 2024. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What qualifies for R&D tax credits? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-qualifies-for-rd-tax-credits/ Description: R&D qualifies where a project seeks an advance in science or technology by resolving uncertainty. Costs: staff, contractors, consumables, software, cloud. Questions •6 min read What qualifies for R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Two things have to qualify: the work, and the money spent on it. Work qualifies where it is part of a project seeking an advance in science or technology through the resolution of scientific or technological uncertainty — uncertainty a competent professional working in the field could not readily resolve. Spending qualifies where it falls into one of the categories the legislation allows: staff costs, externally provided workers, subcontracted R&D, consumables, software with data licences and cloud computing, and payments to clinical trial volunteers. Both tests apply to the same expenditure. Qualifying costs spent on work that is not R&D give you nothing, and neither does genuine R&D paid for in a category the rules exclude. What makes the activity qualify The definition sits in guidelines issued by the Department for Science, Innovation and Technology, which HMRC applies. R&D takes place for tax purposes when a project seeks to achieve an advance in science or technology, and the activities that qualify are those directly contributing to that advance through the resolution of scientific or technological uncertainty. Uncertainty has a specific meaning here. It exists where knowledge of whether something is scientifically possible or technologically feasible, or of how to achieve it in practice, is not readily available or deducible by a competent professional working in the field. Where such a professional could readily resolve the question, there is no scientific or technological uncertainty, and no qualifying R&D. Commercial risk, budget pressure and a tight deadline are not uncertainties of this kind. What a scientific or technological uncertainty is takes the harder of the two tests further. New to your company is not enough This is the distinction borderline claims turn on. An advance in science or technology means an advance in overall knowledge or capability in a field, not in a company’s own state of knowledge or capability alone. Overall knowledge or capability means what is publicly available, or readily deducible from what is publicly available, by a competent professional in the field. So the routine analysis, copying or adaptation of an existing process, material, device, product or service does not advance overall knowledge or capability, even where it is completely new to the company or the company’s trade. A first-in-house build of something the field already knows how to do is not R&D, however hard the team found it. The reverse holds too: work can qualify where a competitor has already solved the same problem but keeps the solution as a trade secret. What doesn’t count as R&D works through the exclusions one by one, and qualifying R&D holds the advance and uncertainty tests together. Which costs qualify Six categories, fixed by legislation: Staff costs — salaries, wages, bonuses, employer pension contributions and employer National Insurance for the people doing the qualifying work, apportioned to the time they spent on it Externally provided workers — agency and staff-provider workers under your direction, at 65% of the payment where the provider is unconnected; where every party is connected a different measure applies, set out in which costs qualify Subcontracted R&D — work you contract out, at 65% of the payment to an unconnected contractor Consumables — materials, chemicals and ingredients used up or transformed in the R&D, plus the fuel, power and water it consumes Software, data licences and cloud computing — licence fees for software used for R&D; data licences and cloud computing qualify for accounting periods beginning on or after 1 April 2023, which covers every current-scheme claim Clinical trial volunteers — payments to the subjects of clinical trials Two location conditions bite for accounting periods beginning on or after 1 April 2024. Subcontracted R&D qualifies only where the work is undertaken in the UK, and externally provided workers only to the extent their earnings are subject to UK PAYE and Class 1 National Insurance. The exception is narrower than it sounds. It applies only where conditions the R&D needs — geographical, environmental or social conditions, or legal and regulatory requirements — are not present in the UK, are present where the work is done, and would be wholly unreasonable for the company to replicate here. All three have to hold. The cost of doing the work abroad, and the availability of workers there, are expressly excluded as reasons. Which costs qualify has the full treatment, category by category. Which costs fall outside a claim The rule runs the other way round: only the listed categories go into an R&D claim, and nothing else does. HMRC gives examples of what falls outside — the production and distribution of goods and services capital expenditure, including equipment and buildings the cost of land the cost of patents and trademarks rent, rates and leasing costs Capital expenditure is excluded from R&D tax relief rather than from tax relief altogether: capital spending on R&D can attract R&D allowances instead, a 100% capital allowance. The cost of the land is excluded there, but a building is not — including an R&D facility you build from scratch, where the construction cost qualifies in full. Cost categories and activity boundaries are separate tests, and spend has to clear both. A developer’s salary is a qualifying cost, but not for the months after the technological uncertainty was resolved and the work turned to production. Consumables drop out too where you sell or transfer ownership of the items used up in the R&D, which catches trial batches that reach a customer. Settling the question before you claim Most of the argument in an R&D enquiry is about the first test, not the second. HMRC checked around one in six claims in 2023-24, its latest published figure, and the question it asks is usually whether the project sought an advance in the field at all. That is a technical judgement, made by the competent professional who did the work and tested against what the field already knew. Settle it before a claim is prepared, not during a check. If you want a straight view on which of your projects and costs qualify, send us the work and we will tell you which side of the line we think it falls on. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 3 on a project seeking an advance in science or technology; paragraph 4 on activities directly contributing through the resolution of uncertainty; paragraph 6 on an advance being in overall knowledge or capability in a field rather than the company’s own; paragraphs 13 and 14 on what a scientific or technological uncertainty is and what a competent professional can readily resolve; paragraph 20 on publicly available or readily deducible knowledge; paragraphs 21 and 22 on trade secrets and on routine analysis, copying or adaptation being new to the company but not to the field. Check what R&D costs you can claim — the qualifying categories of staff costs, externally provided workers, contracted-out R&D, consumables, software, data licences and cloud computing and clinical trial volunteer payments; the 65% restriction on payments to unconnected providers and contractors; the apportionment of staff costs to time spent on R&D; the exclusion of consumable items whose ownership you sell or transfer; and the list of costs that cannot be claimed. CIRD150500: overseas restrictions, overview — the general rule excluding EPW spend outside UK PAYE and contractor payments for R&D undertaken overseas, and the three conditions of the qualifying overseas expenditure exception. CIRD151100: excluded conditions — cost of the R&D and availability of workers expressly excluded as conditions. CTA 2009 s.1138A — the statutory exception, in force for accounting periods beginning on or after 1 April 2024. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against around 61,000 claims received, the source of the one-in-six check rate. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Who can claim R&D tax relief? URL: https://www.limestonegrey.com/rd-tax-relief/questions/who-can-claim-rd-tax-relief/ Description: Companies within the charge to UK corporation tax, carrying on a trade the R&D relates to. Not sole traders, and not ordinary partnerships. Questions •6 min read Who can claim R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Companies within the charge to UK corporation tax, carrying on a trade to which the R&D relates. Both current schemes put it the same way: only companies with a trade chargeable to UK corporation tax can claim the merged R&D expenditure credit or ERIS. That rules out sole traders and ordinary partnerships, whose members pay income tax. A company that has not yet started trading is not automatically shut out, but its only route runs through ERIS. Nor does it rule out an overseas company with a UK permanent establishment. A handful of bodies are excluded by name; a going concern condition sits on top, and it bites differently under each scheme. The company condition “Company” here takes its ordinary corporation tax meaning: any body corporate or unincorporated association, but not a partnership, a local authority or a local authority association. The relief is available to companies within the charge to corporation tax, in respect of profits charged to corporation tax. This decides most eligibility questions before any technical one arises. R&D tax relief is delivered through the corporation tax computation, so an entity that never files a CT600 has nowhere to put it, and there is no income tax equivalent. A sole trader doing work that would qualify without argument if a company did it still claims nothing: the position is set out in full at can a sole trader claim R&D tax credits. Some bodies are excluded whatever else they satisfy: a charity, an institution of higher education, a scientific research association and a health service body. The Treasury can add to that list by order. Two further routes can make an otherwise ordinary company ineligible — a group election covering contracted-out R&D, and the transitional rules in Finance Act 2024. The trade condition, including companies that do not trade yet The R&D must be relevant R&D: research and development related to a trade the company carries on, or from which it is intended that a trade to be carried on by the company will be derived. The second limb decides whether the R&D is the right kind. It does not, by itself, give a company that has not started trading anything to claim. Entitlement to the merged scheme requires the company to carry on a trade in the period and the expenditure to be allowable as a deduction in computing the profits of that trade. HMRC states the consequence directly: the credit cannot be claimed until the trade has commenced. A genuinely pre-trading company has one route, and it sits in the ERIS chapter — an election to treat 186% of the qualifying expenditure as a trading loss for the pre-trading period, available since April 2024 only to an SME that also meets the 30% R&D intensity condition or is within its grace year. A pre-revenue biotech or deep tech company usually clears that test comfortably. One that does not, or that is not an SME, has no relief until it starts to trade. Trading is not the same as selling, and the distinction does more work here than people expect: a company can be trading well before its first sale. HMRC is explicit that carrying out R&D is not necessarily a trade in itself, so the question is whether a trade has begun, not whether revenue has arrived. Relevant R&D also extends to work that may lead to or facilitate an extension of an existing trade, which covers a trading company developing something adjacent to what it already sells. Going concern: the cash under the merged scheme, the claim itself under ERIS Both current schemes carry a going concern requirement. Under the merged scheme it bites on the cash; under ERIS it bites on the claim itself. A company is a going concern if its latest published accounts were prepared on a going concern basis, nothing in those accounts indicates that basis was adopted only because of an entitlement or expected entitlement to R&D relief, and the company is not in liquidation or administration. Where a company was not a going concern when it made a merged scheme claim, no amount is payable at the final step of the calculation. If the company becomes a going concern again on or before the last day it could amend the claim, the payment is reinstated. Under ERIS, neither the additional deduction, the pre-trading election nor the payable tax credit can be claimed at all if the company is not a going concern, and a company that makes a valid claim and then ceases to be a going concern before payment has its claim treated as never made. Companies in genuine distress therefore need to watch the sequencing rather than assume the credit will arrive. R&D tax relief when a company is in trouble sets out that sequencing and what an administrator or liquidator can still claim. Overseas companies with a UK permanent establishment A non-UK resident company is within the charge to corporation tax if it carries on a trade in the UK through a UK permanent establishment, and is chargeable on the profits attributable to that establishment. HMRC’s guidance accepts that the R&D relief principles extend, with the necessary modifications, to UK permanent establishments of foreign companies. The permanent establishment has to be within the charge to corporation tax and the R&D has to be relevant to a trade within that charge. Which company holds the claim when a UK subsidiary does the work for that parent is a separate question: can a UK subsidiary doing cost-plus R&D for an overseas parent claim? The reverse case has a restriction attached. Expenditure attributable to an exempt foreign permanent establishment of a UK company cannot qualify, so a group that has made the exemption election needs to know where its development work actually sits before it counts on the spend. What to check next Meeting these conditions establishes that a company can claim in principle. Which scheme, and what the claim is worth, is separate: which R&D scheme applies to your company walks through it, and a loss-making SME spending heavily on development should look at ERIS, worth up to 26.97p per £1 of qualifying spend against 14.7p to 16.2p under the merged scheme. The project itself then has to meet the definition of R&D, covered in what your company needs to qualify. If your structure is unusual — a group, a joint venture, a partnership with a corporate member, a UK establishment of an overseas parent — settle the entity question before any work goes into the claim. Ask us and we will tell you where you stand. Sources CIRD111000: new RDEC overview and CIRD121000: ERIS overview — only companies with a trade chargeable to UK corporation tax can claim either scheme; ineligible companies cannot claim; expenditure attributable to exempt foreign permanent establishments cannot qualify. CIRD81200: company subject to CT — the meaning of company, relief available only to companies within the charge to CT in respect of profits charged to CT, and the extension of the principle to UK permanent establishments of foreign companies. Section 1042, Corporation Tax Act 2009 and CIRD81400: relevant R&D — the meaning of relevant R&D: research and development related to a trade carried on, or from which it is intended a trade to be carried on will be derived. Section 1042B, Corporation Tax Act 2009 — the merged scheme entitlement conditions: the company must carry on a trade in the period (Condition A), and the expenditure must be allowable as a deduction in calculating the profits of that trade (Condition B(a)). Section 1045, Corporation Tax Act 2009 — the ERIS election to treat qualifying pre-trading expenditure as a trading loss at 186%, available to an SME meeting the R&D intensity condition or its grace year. CIRD81450: allowable as a deduction in computing the profit — “RDEC cannot be claimed until the trade has commenced and the expenditure is allowed as a deduction in computing the profits of the trade.” CIRD191000: going concern — the going concern definition under CTA09/S1112F and S1112G, and its effect on the payable amounts under both schemes. CIRD163000: ineligible companies — charities, institutions of higher education, scientific research organisations and health service bodies, under CTA09/S1142. Section 5, Corporation Tax Act 2009 — a non-UK resident company is within the charge to corporation tax where it trades in the UK through a UK permanent establishment. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can an LLP or partnership claim R&D tax credits? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-a-partnership-or-llp-claim-rd-tax-credits/ Description: Not in its own right. Where a member is a company, relief can reach it through its profit share, but HMRC's view is that no payable credit follows. Questions •5 min read Can a partnership or LLP claim R&D tax credits? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Not in its own right. A partnership is not a company for corporation tax, so it cannot hold an R&D claim, and an ordinary partnership of individuals has no route to the relief at all because its members pay income tax. The position changes where a member is a company within the charge to corporation tax. Relief can then reach that member through its share of the partnership’s profits, provided the R&D relates to a trade the partnership carries on or intends to carry on. What does not follow is cash: HMRC’s stated view is that the payable tax credit cannot be claimed on relief reaching a corporate member this way. Why the partnership itself is never the claimant The definition of “company” for these purposes is any body corporate or unincorporated association, but expressly not a partnership. That excludes the firm from the relief as an entity, whatever it does and however it is constituted. A limited liability partnership (LLP) is in the same position despite its corporate personality, because it is treated as a partnership for tax and its profits are taxed on its members. So the question is never really “can the LLP claim”. It is “is there a member who can”, and that depends entirely on who the members are. A firm whose members are all individuals — an ordinary partnership, or an LLP of individual members — reaches the same dead end as a sole trader: income tax, no corporation tax computation, no relief. Where a corporate member changes the answer Section 1259 of the Corporation Tax Act 2009 applies where a firm carries on a trade and a partner in it is a company within the charge to corporation tax. For any accounting period of the firm, the amount of the trade’s profits is determined, in relation to that partner, by working out what the profits chargeable to corporation tax would be if a company carried on the trade. HMRC puts it plainly: the partnership profit is calculated according to corporation tax rules, as though the partnership were itself a company. That computational fiction is what lets R&D relief in. The additional deduction is taken in arriving at the firm’s profits computed on corporation tax principles, and the corporate member’s share of those reduced profits is what enters its own corporation tax computation. For the expenditure credit, HMRC’s guidance describes the credit being claimed by the individual corporate partner in its CT600, on its share of the R&D expenditure incurred and brought in as a taxable receipt in the company accounts. Two conditions sit alongside. The R&D has to be relevant R&D by reference to the partnership: HMRC requires it to be related to a trade carried on, or intended to be carried on, by the partnership itself, not by the corporate member in some separate capacity. And the ordinary requirements still apply on top — qualifying R&D, qualifying costs, claim notification and the Additional Information Form. The payable credit does not follow This is the point that catches people out, and it is worth stating precisely. HMRC reads section 1259 as applying only for the purpose of calculating the profit attributable to the corporate member. On that reading the rules do not extend to the payable tax credit, and HMRC’s guidance states that payable tax credit cannot therefore be claimed in respect of this R&D tax relief. The practical effect is that relief reaching a corporate member through a partnership arrives as reduced taxable profits, not as a cash credit. Under the merged scheme the mechanics differ — the credit is brought into the corporate partner’s CT600 as a taxable receipt rather than reducing its profit share — but the destination is the same: value against tax, not cash out. For a profitable corporate member with tax to pay, that is worth real money. For a loss-making corporate member hoping to surrender losses for cash — often the whole point of the exercise for an early-stage venture — it is not the outcome the structure was expected to deliver. This turns on the computation rule rather than on which scheme is in point, so it is not solved by choosing the merged scheme over ERIS. It is also HMRC’s reading rather than an explicit statutory bar, and it sits in guidance written around the pre-reform schemes. HMRC’s own manual directs difficult cases in this area to its specialists. Where the amounts are material, that is a position to take advice on and document, not one to assume either way. What this means for how you structure things If genuine development work is being done through an LLP or partnership and the people behind it want R&D relief to work properly, the entity question deserves attention before the spending, not after. A company that carries on the development trade directly, incurs the costs and claims in the ordinary way avoids all of this. Where a partnership structure exists for good commercial reasons — a joint venture between corporate partners, a professional firm with a corporate member — the relief can still be reached, but the cash element usually cannot, and that changes the arithmetic. The wider entity test is set out at who can claim R&D tax relief. If your structure involves a partnership with corporate members and you want to know what is actually available, talk it through with us before you commit to an approach. Sources CIRD81220: company as member of partnership — partnership profit calculated according to CT rules as though the partnership were itself a company; the R&D must be related to a trade carried on, or intended to be carried on, by the partnership; these rules do not extend to payable tax credit, which cannot therefore be claimed in respect of this R&D tax relief. Section 1259, Corporation Tax Act 2009 — calculation of a firm’s profits and losses where a partner is a company within the charge to corporation tax. Section 1273, Corporation Tax Act 2009 — an LLP carrying on a trade with a view to profit has its activities treated as carried on in partnership by its members, and references to a company do not include it. CIRD89850: company as a member of a partnership — the expenditure credit claimed by the individual corporate partner in the CT600 on its share of the R&D expenditure, accounted for as a taxable receipt. CIRD81200: company subject to CT — “company” means any body corporate or unincorporated association but does not include a partnership. R&D tax relief: the merged scheme and ERIS — relief claimed through corporation tax by companies chargeable to corporation tax. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What are qualifying indirect activities? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-are-qualifying-indirect-activities/ Description: Support work forming part of an R&D project — maintenance, admin, recruitment — is R&D under paragraph 31, so apportioned staff costs can be claimed. Questions •5 min read What are qualifying indirect activities? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Qualifying indirect activities are the supporting tasks that form part of an R&D project without themselves resolving the scientific or technological uncertainty: maintaining the equipment, keeping the records, recruiting onto the team. The Guidelines that define R&D for tax purposes treat them as R&D. Paragraph 5 says it in terms: certain qualifying indirect activities related to the project are also R&D. Staff time spent on them can therefore enter a claim, apportioned, alongside the technical work. The paragraph 31 list Paragraph 31 defines them as activities which form part of a project but do not directly contribute to the resolution of the scientific or technological uncertainty. They are: scientific and technical information services, insofar as they are conducted for the purpose of R&D support (such as the preparation of the original report of R&D findings) indirect supporting activities such as maintenance, security, administration and clerical activities, and finance and personnel activities, insofar as undertaken for R&D ancillary activities essential to the undertaking of R&D (e.g. taking on and paying staff, leasing laboratories and maintaining research and development equipment including computers used for R&D purposes) training required to directly support an R&D project research by students and researchers carried out at universities research (including related data collection) to devise new scientific or technological testing, survey, or sampling methods, where this research is not R&D in its own right feasibility studies to inform the strategic direction of a specific R&D activity Paragraph 32 shuts the door behind it: activities not described in paragraph 31 are not qualifying indirect activities. HMRC’s manual calls it “the exhaustive list at Para. 31”. There is no residual category for supporting work that felt essential but is not on it. Two conditions carry most of the weight The first is that the activity has to form part of a project seeking an advance in science or technology. HMRC’s manual is direct: for every category, “only such activity that is specifically identifiable as a particular part of the activity of an R&D project can qualify. The costs of other supporting activities undertaken by the company outside the R&D project itself are therefore not included.” Its own example makes the boundary concrete. A maintenance engineer’s time repairing equipment used specifically and solely for the R&D project can qualify. Time spent maintaining other equipment on the same site cannot, and nor can secretarial work in the company’s maintenance department, because it is not part of the project. The second is that support of support does not count. Under s.1124(5) and (6) of the Corporation Tax Act 2009, people supplying services, such as secretarial or administrative services, in support of activities carried on by others are not, for that reason, treated as directly and actively engaged in those activities. A technical lead’s time interviewing to recruit a scientist onto the project can be a qualifying indirect activity; the corporate HR department’s support of that interviewing is not. Managing the project budget can qualify; the finance department preparing accounts or auditing project expenditure does not. What this means for staff costs HMRC’s costs guidance is plain: you can claim a proportion of the staff cost for anyone who carries out work to support the project but does not directly contribute towards the resolution. Its examples are human resources used to recruit a specific person to work on the project, and specialist cleaning staff. The limits matter more than the permission. Where a staff member has other duties, only the time spent on the task that supported the R&D work can be claimed; HMRC says in terms that you cannot claim 100% of the staff cost. Clerical or maintenance work that would have been done anyway is excluded outright, with managing payroll as the example — which catches most of what companies instinctively want to add. Whether someone is directly and actively engaged, and how far, is a question of fact based on the duties performed rather than the job title. So this time needs the same recorded apportionment basis as technical time, arguably a firmer one. How much difference does it make? Less than “you can claim your admin staff” suggests. Qualifying indirect activities widen a claim at the margins: a slice of a maintenance engineer, part of a technical lead’s recruitment and line-management time, the preparation of the original report of findings. Every hour added needs tracing to a specific project and evidencing like any other apportionment. Claims that add a flat percentage of the finance and HR functions are the ones that come apart under an HMRC check. One piece of confusion is worth clearing: it is sometimes said that qualifying indirect activities are R&D but attract no relief. The Guidelines’ revised footnote records that the original footnotes saying exactly that were removed, because whether expenditure on them qualifies depends on a number of factors, “but there is no blanket exclusion”. One targeted exclusion does exist, and it is the exception that proves the point: data licence and cloud computing costs attributable to qualifying indirect activities cannot be claimed. Staffing, software, consumables and externally provided workers all can, and our page on which software and cloud costs qualify covers the carve-out in detail. For which supporting staff belong in a claim, and at what proportion, talk it through with a chartered adviser. See also what counts as qualifying R&D and which costs qualify. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 5 (certain qualifying indirect activities related to the project are also R&D), paragraph 31 (the list), paragraph 32 (activities not described in paragraph 31 are not qualifying indirect activities), and the revised footnote on the removal of the original footnotes 2 and 3. Check what R&D costs you can claim — HMRC’s condensed list of qualifying indirect activities, the proportion of staff cost claimable for supporting staff, and the exclusion of clerical or maintenance work that would have been done anyway. CIRD133000: staffing costs under the reformed reliefs — the exhaustive list at paragraph 31, the requirement that the activity form part of an R&D project, the support-of-support restriction, and the maintenance engineer, HR and finance examples. CTA 2009 s.1124 — subsections (4), (5) and (6) on the appropriate proportion of staffing costs and on services provided in support of activities carried on by others. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What happens if my R&D claim is rejected? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-happens-if-my-rd-claim-is-rejected/ Description: Rejected on procedure, cut back after a check, or still under enquiry: the routes differ. Appeal within 30 days, ask for a review, or refile in time. Questions •7 min read What happens if my R&D claim is rejected? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Three different things get called a rejected claim, and the way out depends on which. A claim can be rejected on procedure — the Additional Information Form filed after the return, accounting period dates that do not match, no claim notification where one was needed — and HMRC then writes to confirm it is removing the R&D claim from the return. A claim can be cut back or refused at the end of a compliance check, which ends in a closure notice whose amendments you have 30 days to appeal in writing. Or nothing has been decided and the enquiry is still running. Only the second carries a right of appeal, so establish which you are in, and check on what basis HMRC says it has removed the claim, before replying to anything. Procedural rejection is not a decision about your R&D It is a door closing on the paperwork, and HMRC’s guidance names the two commonest versions. Where the Company Tax Return is submitted before the Additional Information Form, the claim is rejected: HMRC writes to confirm it is removing the R&D claim from the return, and where that lands close to the last date for amending the return, there may be no time left to make a valid claim at all. Where the accounting period dates on the form do not match the return, the form is rejected and the claim removed the same way. The claim notification requirement has no late route at all: a company that had to notify and did not has no claim for the period. None of that is a view on your projects. The only live question is whether a window is still open. What a closure notice says, and what to do about it An enquiry ends when an officer issues a closure notice stating the officer’s conclusions and either recording that no amendment is needed or making the amendments required to give effect to them. Cutting a claim back and refusing it outright are the same procedure at different sizes: the officer amends the return, and the amendment is the dispute. The appeal lies against the amendment: notice in writing, within 30 days after the amendment was notified to the company, to the officer who issued the closure notice. Corporation tax is a direct tax, so the appeal goes to HMRC first — you cannot start at the tribunal. One rescue route in the legislation is easy to miss. Where the relief removed was claimed under Chapter 2 of Part 13 of the Corporation Tax Act 2009 — Enhanced R&D Intensive Support — and the company was not entitled to it, it may still claim R&D expenditure credit on the eligible expenditure, up to whichever is later: 30 days after notice of the amendment is issued, or, if an appeal is brought against it, 30 days after that appeal is finally determined. A company that concedes it was never intensive enough is not left with nothing. Review, tribunal and mediation HMRC will offer a review, or you can ask for one: a review officer in a different team, who was not involved in the original decision, looks at it again, and it usually takes 45 days. If it goes against you, the appeal can be notified to the First-tier Tribunal. Alternative dispute resolution runs alongside all of it, though for corporation tax the order of events matters — where HMRC has offered a review, the appeal has to be notified to the tribunal and acknowledged before an ADR application can be made. How do I appeal an HMRC decision on an R&D claim? sets out each route, the deadline on it, and what happens to the tax while the appeal runs. Correcting and refiling, where a window is still open An R&D claim can be made, amended or withdrawn for two years from the end of the period of account, and that guide works through the windows period by period. Inside that window, a claim rejected on procedure can usually just be made again properly, with its own Additional Information Form filed before or on the same day as the amended return. Outside it, an officer may allow a late claim, but that discretion is exercised only in accordance with Statement of Practice 5 (2001). What an amendment cannot do is end an enquiry: made while an enquiry is in progress, it neither restricts the scope of the enquiry nor takes effect while the enquiry continues; it is taken into account in the enquiry, and takes effect as part of the amendments made by the closure notice. Correcting a claim under enquiry is still worth doing — it is how a careless error becomes a disclosed one — but it is a step inside the enquiry, not a way out. When to get a second opinion Two moments justify one. The first is the week the closure notice or removal letter arrives, when what matters is what HMRC has decided, what is still open and which deadline is nearest. The second is quieter: a claim has been filed and you are no longer confident in it. Our free claim review is a confidential read on a filed claim, including one prepared by another adviser. We take on enquiries into claims other firms prepared, and we say what we find: some should be defended, and some conceded and disclosed, because what HMRC can recover, and any penalty on top, turns on behaviour. What an HMRC R&D enquiry involves sets out the process from the opening letter onwards. No adviser can promise you an outcome with HMRC. Sources Additional information you must submit before you claim R&D tax relief — the form must be submitted before or on the same day as the CT600, and first where both go the same day; where the return goes first the claim is rejected and HMRC writes to confirm it is removing the R&D claim from the return, and close to the last date for amending the return a valid claim for the period may no longer be possible; where the accounting period dates do not match, the form is rejected and the claim removed. FA 1998 Sch 18 para 32 — an enquiry is completed by a partial or final closure notice, which takes effect when it is issued. FA 1998 Sch 18 para 34 — the closure notice must state the officer’s conclusions and make any amendments required to give effect to them; an appeal may be brought against that amendment, by notice in writing, within 30 days after the amendment was notified, to the officer who gave the notice. FA 1998 Sch 18 para 83E — a claim may be made, amended or withdrawn within two years from the end of the period of account, where that period is not longer than 18 months; where an officer removes a claim for relief under Chapter 2 of Part 13 CTA 2009 to which the company was not entitled, an R&D expenditure credit claim on the eligible expenditure may be made up to whichever is later of 30 days after notice of the amendment is issued, or 30 days after an appeal against it is finally determined; and a claim may be made outside the period if an officer allows it. CIRD81800: time limits for claims — the two-year limit, and HMRC’s discretion to accept late claims exercised only in accordance with Statement of Practice 5 (2001). FA 1998 Sch 18 para 31 — an amendment made while an enquiry is in progress does not restrict the scope of the enquiry and does not take effect while the enquiry continues. Disagree with a tax decision or penalty: appeal against a tax decision — 30 days from the date of the decision letter to appeal or accept a review. Disagree with a tax decision or penalty: get a review — the review officer is in a different team and was not involved in the original decision; reviews usually take 45 days; 30 days from the date on the review result letter to appeal to the tax tribunal. TMA 1970 s49E and s49G — the 45-day review period beginning with the relevant day or such other period as agreed, the review treated as upholding HMRC’s view where no notice is given in time, and the 30-day post-review period for notifying the appeal to the tribunal. Appeal to the tax tribunal — direct tax decisions must be appealed to HMRC before the First-tier Tribunal. Alternative dispute resolution — an HMRC mediator who will not take over responsibility for the dispute; available during a compliance check where progress has stalled, and at the end of one where a decision has been made that you can appeal against. Tell HMRC that you’re planning to claim R&D tax relief — the claim notification period and who must submit one. CTA 2009 Part 13 Chapter 2 — headed “Relief for loss-making, R&D-intensive SMEs” for accounting periods beginning on or after 1 April 2024. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How long does an R&D claim take to prepare? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-long-does-an-rd-claim-take-to-prepare/ Description: Preparation time turns on your records, how many projects must be described and when your competent professionals are free. Work back from the deadlines. Questions •5 min read How long does an R&D claim take to prepare? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards There is no standard answer, and an adviser who quotes you one is describing their own process rather than your claim. Three things set the calendar: the state of your cost records, the number of projects that have to be described on the Additional Information Form, and how quickly the competent professionals who did the work can give their account of it. What is fixed are the statutory dates around all that — a claim notification window that closes six months after the end of the period of account, and a claim that can be made up to two years after the last day of it. Work back from those, and start earlier than feels necessary. The three things that consume the time The state of the records. Where staff time, project boundaries and cost data were captured as the work happened, the finance side of a claim is reconciliation. Where nothing was written down, it is reconstruction. HMRC accepts that R&D costs are often an estimated proportion of known expenditure, provided the estimate is arrived at using evidence and reason — but building an estimate that meets that description takes considerably longer than reading a timesheet. What records you need sets out what to keep, and why keeping it makes the next claim shorter. The number of projects. The Additional Information Form’s coverage rules mean the writing scales with the count. With one to three projects, all of them are described. With four or more, at least three have to be selected that together account for at least half the qualifying expenditure. Where reaching half would take more than ten, the ten with the highest qualifying expenditure are described. Selecting them still means costing every project claimed, described or not — you cannot identify which projects make up half the qualifying expenditure without pricing all of them. Access to the competent professionals. The technical account can only come from the people who did the work — HMRC’s own guidance is to get the opinion of a competent professional in the field, often someone already working on the project. The interview hours are modest. Finding them in an engineering director’s diary, twice, is usually the constraint that decides the elapsed time, and it is the one part of the exercise nobody can compress on your behalf. What adds a step Some circumstances add work before any number can be written down: a first claim, where the claim notification has to be filed before anything else; contracts to read, where R&D was contracted out or externally provided workers were used; grant funding; a group structure; the intensity computation for Enhanced R&D Intensive Support, which needs relevant costs for connected companies as well as your own; and a PAYE cap exemption, where the reasons for relying on it are disclosed on the form rather than filed away. Each is a question that has to be answered before the arithmetic can start. The deadlines that actually bind Two dates decide whether a claim is possible at all, and they are not negotiable. The claim notification window closes six months after the end of the period of account. It bites on accounting periods beginning on or after 1 April 2023, where you are claiming for the first time or have not claimed in the three years ending with the notification deadline. Miss it and the claim is invalid; there is no late route. The claim itself can be made, amended or withdrawn for two years from the end of the period of account. The Additional Information Form has to reach HMRC before the Company Tax Return, or on the same day and ahead of it; how to claim R&D tax credits sets out the sequence in full. Read those together and the planning rule follows. If a notification is needed, the whole exercise sits inside six months of the period end, not two years. Why we do not quote a turnaround Because the parts an adviser controls are not the parts that take the time. We can hold our own work to a timetable; we cannot conjure a technical director’s afternoon or invent a cost record nobody made. We would rather agree a realistic timeline at the start of the engagement, say which steps are waiting on whom, and revise it honestly when information is slow. There is a quality argument underneath the scheduling one. HMRC checked around one in six claims in 2023-24, its latest published figure, so a claim now has to be built to be read by an inspector rather than merely filed. That version takes longer, and it is the only version worth preparing. Preparation time is not payment time The two halves of the question are often merged and should not be. Once a valid claim is filed, what happens next is HMRC’s: how long it takes to receive an R&D tax credit covers HMRC’s published aims and what can hold a payment up. Nobody outside HMRC controls that queue, so marketing that promises a payment date is describing work the adviser does not perform. If a year end is approaching, talk it through with us before the notification window closes rather than after. Sources Tell HMRC that you’re planning to claim R&D tax relief — the claim notification period runs from the first day of the period of account to six months after the end of it, and applies to first-time claimants and to companies whose last claim was made more than three years before the last date of the claim notification period. Additional information you must submit before you claim R&D tax relief — the project coverage rules for 1 to 3, 4 to 10 and more than 10 projects; the requirement to submit the form before the CT600, or on the same day and ahead of it. CIRD182000: additional information requirement — the AIF asks whether the business is exempt from the PAYE cap and, if so, to explain why. FA 1998 Sch 18 para 83E — a claim may be made, amended or withdrawn within two years from the end of the period of account, where that period is not longer than 18 months. GfC3: recommended approach to claims and record keeping — get the opinion of a competent professional in the field, often someone already working on the project; claims are more likely to be correct where the company knew at the time that the work might qualify; it is not unusual for R&D costs to be an estimated proportion of known expenditure, and an estimate should be arrived at using evidence and reason and shown to be based on facts; records should be proportionate to the project. Check what R&D costs you can claim — the cost categories and the apportionment basis behind the cost work. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against around 61,000 claims received, the source of the one-in-six check rate. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Do I need a technical report for an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/do-i-need-a-technical-report-for-an-rd-claim/ Description: Not as a separate document. The Additional Information Form makes project descriptions compulsory; a fuller R&D report is optional, and sometimes worth it. Questions •5 min read Do I need a technical report for an R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Not as a separate document — but the technical content is compulsory, and it now lives on a form. Every R&D claim made on or after 1 August 2023 — in practice 8 August 2023 — needs an Additional Information Form, which demands, project by project, the field of science or technology, the baseline level of knowledge or capability, the advance sought, the scientific or technological uncertainties and how the project set about overcoming them. Without that information the claim is invalid. A separate R&D report is optional: HMRC’s guidance says you can send further supporting details in one, and names the claim methodology, the use of sampling and details of the competent professionals. So the question is not whether to write a report, but whether yours would carry anything the form does not. What the form already makes compulsory The requirement is statutory, in paragraph 83EA of Schedule 18 to the Finance Act 1998, inserted by Finance (No. 2) Act 2023. It applies to claims made on or after 1 August 2023 — in practice 8 August 2023 — and the trigger is the date the claim is made, not the accounting period, so a backdated claim filed now needs a form of its own. How many projects have to be described depends on how many you are claiming for. With one to three, all of them. With four or more, at least three that together account for at least half the qualifying expenditure you are claiming. Where reaching half would take more than ten, the ten with the highest qualifying expenditure. Alongside the descriptions the form carries the qualifying cost breakdown, the senior internal contact responsible for the R&D, and the details of every agent involved in the claim. What goes in the Additional Information Form covers each field in turn. The practical effect is that the old model — a long narrative document attached to a return, with the return itself saying little — no longer works. The statutory answers belong on the form, in the form’s own words. What an optional report is actually for Look at the three things HMRC names as fitting in a separate report and a pattern appears: none of them is the technical narrative. The claim methodology, the use of sampling and details of the competent professionals are what the form has no field for. A report is the place for the reasoning behind the claim rather than a second telling of the claim itself, and it goes to HMRC by email or online with the Company Tax Return. That reframes the decision. A report earns its place when it carries material an officer would otherwise have to ask for, and not when it restates the form at greater length. When a report earns its keep Five situations, in our experience, justify one. Sampling. Where costs were sampled across many staff, cost centres or projects rather than built from the ground up, the method needs setting out — how the sample was chosen, why it is representative, how it was extrapolated. The coverage gap. Where the description thresholds mean only some projects are described but the claim covers all of them, a report is the only place the remaining projects appear at all. The competent professionals. Who they are, their qualifications and years in the field, what they were asked and how they reached their view. HMRC’s guidance frames the advance by what a competent professional working in the field would recognise, so naming yours removes an obvious first question. Apportionment that is not self-evident. A staff-time basis derived from something other than timesheets, or a cost allocation that needs an explanation, is better explained now than reconstructed under enquiry. A position you would rather HMRC read early. Contracted-out R&D, externally provided workers, overseas expenditure or reliance on a PAYE cap exemption — points where the analysis is arguable and the reasoning is worth showing. Against that, a report that repeats the form in different words adds cost and reading time and nothing else. So does one written by someone who never spoke to the engineers, which reads exactly as it was made. What a report does not replace Two obligations sit outside it. The form’s questions have to be answered on the form: a claim is not saved by a report that answers them elsewhere. And record-keeping is a separate duty again. There is no R&D-specific statutory format, but a company must keep and preserve the records needed to deliver a correct and complete return until the sixth anniversary of the end of the period the return covers, and longer while an enquiry is open or can still be opened. What records you need sets out what that means in practice. HMRC’s own guidance asks for proportion rather than volume: there is no need to write a ten-page plan for a project where a page of bullet points covers all the steps. HMRC checked around one in six claims in 2023-24, its latest published figure, and the form is the first thing an officer reads. Getting it right matters more than the length of anything attached to it. Our Additional Information Form guide explains what a well-prepared form contains section by section, and if a claim was filed for you and you have never seen the form that went with it, our free claim review will tell you what it says about the work behind it. Sources Additional information you must submit before you claim R&D tax relief — the required project information (field of science or technology, baseline level of knowledge or capability, the advance, the uncertainties and how the project sought to overcome them); the project coverage rules for 1 to 3, 4 to 10 and more than 10 projects; the contact and agent details; and, under “if you want to send us more information”, that further supporting details may be sent in a separate R&D report covering the claim methodology, use of sampling and details of the competent professionals, by email or online with the Company Tax Return. CIRD182000: additional information requirement — paragraph 83EA of Schedule 18 to the Finance Act 1998, inserted by Finance (No. 2) Act 2023; applying to claims made on or after 1 August 2023, in practice 8 August 2023; that the claim is invalid where the required information is not provided; and that it is not acceptable to refer to documents or information held outside the AIF, for example “see R&D report”, even where HMRC already holds them. FA 1998 Sch 18 para 21 — the duty to keep and preserve records needed for a correct and complete return until the sixth anniversary of the end of the return period, extended while an enquiry is open or can still be opened. GfC3: recommended approach to claims and record keeping — records proportionate to the project, and no need for a ten-page plan where a page of bullet points covers all the steps. HMRC’s approach to R&D tax reliefs 2023 to 2024 — 9,700 compliance checks against around 61,000 claims received, the source of the one-in-six check rate. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can I claim Patent Box and R&D tax relief together? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-i-claim-patent-box-and-rd-tax-relief-together/ Description: Yes. R&D relief works on what you spend; Patent Box taxes profits from qualifying patents at 10%. Patent Box is an election, and the deadline is real. Questions •6 min read Can I claim Patent Box and R&D tax relief together? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Yes. The two reliefs sit in different parts of the corporation tax computation and neither shuts the other out. R&D tax relief works on what you spend on the research: the merged scheme credit is worth 14.7p to 16.2p per £1 of qualifying expenditure, and ERIS up to 26.97p. The Patent Box works on what you earn from the result, applying an effective 10% rate of corporation tax to profits attributable to qualifying patents. A company that develops a patented invention, claims R&D relief on the spend, then elects into the Patent Box on the profits, is doing what both regimes were written for: HMRC states the aim of the Patent Box as an additional incentive for UK companies to retain and commercialise existing patents and to develop new innovative patented products. Two things decide whether it is worth having — the election carries a deadline, and the profit that gets the 10% is scaled by how much of the underlying R&D you did yourself. The two reliefs tax different things R&D relief is expenditure-based. It attaches to qualifying costs in the period they are incurred, and does not care whether the work produced anything patentable, or anything at all. The Patent Box is profit-based, and it needs a patent. To qualify a company must be liable to corporation tax, make a profit from exploiting patented inventions, own or hold an exclusive licence over the patents, and have undertaken qualifying development on them. A group company also has to actively own the invention, taking a significant role in managing its whole portfolio of eligible patents. The qualifying development test asks whether the company, or another group company, made a significant contribution to the creation or development of the patented invention, or of a product incorporating it. That last condition is where the two regimes meet. The work behind an R&D claim is often the same work that satisfies the development condition years later — neither relief depends on the other, but the evidence overlaps. The timing does not: spending happens now, grant and commercialisation later. The R&D fraction ties the 10% rate to your own R&D HMRC puts it directly: the R&D fraction links the beneficial rate on income from a qualifying IP right to the research and development expenditure incurred by the company. It scales each income sub-stream by the share of the underlying research the company did itself or paid an unconnected party to do, and how R&D tax relief affects the Patent Box nexus fraction works through the four terms and the arithmetic. The design reads off the formula. Spend on your own R&D, or subcontract it to unconnected parties, and the fraction is 1 — the full relevant IP profit gets the reduced rate. Buy the patents in, or pay connected companies to do the research, and the fraction falls, though the 30% uplift on the numerator means roughly that proportion can go to acquisition or connected-party R&D before it is affected at all. This applies to companies electing in after 30 June 2016: HMRC’s guidance is explicit that benefit is restricted where a company incurred expenditure acquiring the patents, or paid connected parties for their R&D. The election, and how it is lost The Patent Box is not automatic. A company elects in by giving notice in writing, and the deadline is the last day on which it could amend its tax return for the first accounting period the election applies to — in HMRC’s published terms, within two years after the end of the accounting period in which the relevant profits and income arose. There is no late election. HMRC’s position is that an election is made whenever it is made, and because it is an election rather than an annual claim there is no relief for lateness. Once made, it applies to all the company’s trades and every later accounting period until revoked. Where the two computations touch Three interactions matter before anyone models a number. R&D expenses are not routine deductions. The calculation removes a routine return — 10% of certain deductions — before the reduced rate reaches anything, and R&D expenditure is excluded from those routine deductions, as are R&D allowances and patent allowances under Parts 6 and 8 of the Capital Allowances Act 2001. The merged scheme credit does not inflate Patent Box income. HMRC’s calculation flowchart directs that the R&D expenditure credit, like finance income, is excluded from relevant IP income sub-streams. Tracking is the real work. The R&D fraction has to be built from expenditure traced to the development of a particular qualifying IP right, a record easier to keep while the R&D claim is prepared than to reconstruct once the patent is granted. Where to start The two regimes are decided on different facts, and an election made without the patent position settled is worth less than one made with it. HMRC’s Patent Box guidance sets out the qualifying conditions, and a patent attorney is the right person on whether the rights themselves hold up. The R&D side is where we work, and getting it right is what makes the expenditure record good enough to be used twice: which R&D scheme applies, then what your company needs to qualify. If the Patent Box question is live for you, talk it through with us. Sources Corporation Tax: the Patent Box — the 10% rate; that companies must elect in; the election within two years after the end of the accounting period in which the relevant profits and income arose; the conditions of liability to corporation tax, ownership or exclusive licence, qualifying development and active ownership; and the restriction, for companies electing after 30 June 2016, where the company acquired the patents or paid connected parties for their R&D. CIRD200110: aim of the Patent Box — “The aim of the Patent Box is to provide an additional incentive for UK companies to retain and commercialise existing patents and to develop new innovative patented products.” CIRD201010: reduced CT rate for profits from patents — the 10% rate from 1 April 2013 on profits attributable to qualifying patents, delivered as an additional deduction in the corporation tax computation under Part 8A CTA 2010, with elections made under CTA10/s357A(1). CIRD210110: qualifying development — the claimant company or another group company must have made a significant contribution to the creation or development of the patented invention, or of a product incorporating it. CIRD274100: R&D fraction overview — “The R&D fraction links the beneficial rate on income from a qualifying IP right to the research and development expenditure incurred by the company”; the 30% uplift to the numerator; the cap at 1. CIRD275000: Patent Box calculation flowchart — the formula (D+S1)x1.3/(D+S1+A+S2) capped at 1, the meaning of D, S1, S2 and A, and step 17, requiring that RDEC and finance income are excluded from relevant IP income sub-streams. CIRD272000: tracking and tracing R&D expenditure — the requirement to identify R&D expenditure, trace it to the development of a particular qualifying IP right and monitor the link going forward, under CTA10/s357BLB. CIRD220450: deductions that are not routine deductions — under CTA10/s357BJB, R&D expenses (the amounts on which R&D relief is given plus the additional deduction) are not routine deductions, and “Research and development allowances and patent allowances under CAA01/ Part 6 and Part 8 are not routine deductions”. CIRD220100: relevant IP profits overview — the calculation stages: streaming income, removing the 10% routine return to give qualifying residual profit, removing the marketing assets return, then applying the R&D fraction. CIRD260100: how to make a Patent Box election — notice in writing under CTA10/S1119; the latest time being the last day the company could amend its return under FA98/SCH18/PARA15 for the first accounting period the election applies to; that there is no provision for a late election; and that an election applies to all trades and all subsequent accounting periods until revoked. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What are R&D allowances (RDAs)? URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-are-rd-allowances/ Description: A 100% capital allowance for capital spending on R&D, under Part 6 of the Capital Allowances Act 2001. It reaches what the R&D tax credit cannot touch. Questions •7 min read What are R&D allowances? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Research and development allowances, usually shortened to RDAs, are a 100% capital allowance for capital expenditure on R&D. They sit in Part 6 of the Capital Allowances Act 2001, entirely separate from the merged R&D expenditure credit and ERIS, and they exist because those reliefs only reach revenue spending. HMRC’s manual states the boundary in one line: capital expenditure is excluded from R&D tax relief, but it may qualify for R&D allowances. So the rig, the test equipment, the pilot plant and the laboratory building are outside your R&D credit claim, and inside a code that writes the whole cost off against profits in the period it is incurred rather than over decades. What RDAs cover Two kinds of spending qualify: capital expenditure incurred for carrying out research and development, and capital expenditure incurred for providing facilities for carrying out research and development. The second limb is wider than it reads — it takes in the assets and buildings used by the people doing the work. Section 439 of the Capital Allowances Act 2001 sets the conditions. The spend must be capital expenditure incurred by a person on R&D directly undertaken by that person or on their behalf, and either the person carries on a trade when it is incurred and the R&D relates to that trade, or, after incurring it, the person sets up and commences a trade connected with the R&D. The same expenditure cannot be taken into account for more than one trade, and where only part qualifies it is apportioned on a just and reasonable basis. R&D means the same thing here as for the credit. Section 437 defines it by reference to normal accounting practice and the Secretary of State’s Guidelines — the same Guidelines that decide whether a project qualifies for R&D tax relief. One addition: oil and gas exploration and appraisal is expressly within the RDA definition. RDAs go to traders. HMRC states the limit the other way round: a person carrying on a profession or vocation is not entitled to them. What RDAs do not cover Land is out. No allowances are due for expenditure on the acquisition of, or of rights in or over, land, so buying a site with a research building on it means apportioning the price between land and building. The building is not out, and how you come by it does not matter: build a new R&D facility and the construction cost qualifies in full. Rights are out. Expenditure on acquiring rights in research and development, or rights arising out of research and development, is not expenditure on research and development. Buying in a patent or a licence is not an RDA — patent rights have their own allowances under Part 8. Dwellings are out, with one relieving rule. Where part of a building is a dwelling and the rest is used for R&D, and no more than a quarter of the capital expenditure on the whole building is referable to the dwelling, the whole building is treated as used for R&D. Other mixed-use buildings are apportioned between R&D and other uses in a just and reasonable manner. The 100%, and what happens afterwards The allowance is normally 100% of the qualifying expenditure, reduced by any disposal value that has to be brought into account for the period. It is given for the chargeable period in which the expenditure is incurred, or, where the spend came before the trade began, for the period in which the trade begins. You can take less. Section 441 lets a person claiming the allowance require it to be reduced to a specified amount — but HMRC is blunt about the consequence: if a reduced amount is claimed, the balance cannot be claimed later. It is gone, not deferred, so the disclaimer is a decision to take deliberately rather than a default when profits are low. There are no balancing allowances for RDAs. There are balancing charges, and the disclaimer above changes how they bite. Any part of the 100% allowance you did not claim shelters the proceeds first: on a sale, demolition or destruction, a charge arises only to the extent the disposal value exceeds that unclaimed amount, and it is then capped at the allowance you actually claimed. HMRC’s own example: £1 million spent on a laboratory, £750,000 claimed and £250,000 left unclaimed; a sale three years later for £1.25 million exceeds the unclaimed amount by £1 million, but the charge is £750,000, because it cannot exceed the allowance made. A change in the use of the asset does not trigger one. Set that against the alternative. Structures and buildings allowance runs at 3% a year over an allowance period of 33 and one-third years, and cannot be claimed on costs already used for another allowance. A building relieved in full in year one is a different cash position from the same building written down at 3%. Where RDAs sit against an R&D tax credit claim The dividing line is capital or revenue for tax purposes, and HMRC is clear that the accounting treatment is not conclusive — expenditure written off immediately, or capitalised on the balance sheet, can still be characterised the other way for tax. The two claims run on separate tracks and the same pound cannot do both jobs. What qualifies for R&D tax credits sets out the six revenue categories the credit allows, and which costs qualify goes through them one by one, including the capital exclusion. Everything the credit turns away for being capital is worth testing against Part 6 before it is written off as unrelieved. RDAs are claimed as a capital allowance through the company tax return, and the claim can be made, amended or withdrawn up to twelve months after the filing date for that return — about two years after the period end. Where we prepare an R&D claim, we tell you what we have had to exclude as capital, so it can be picked up on the capital allowances side rather than dropped between two advisers. If you want that boundary looked at for your own period, ask us. Sources CIRD81700: capital expenditure — “Capital expenditure is therefore excluded; it may however qualify for R&D allowances”, with the cross-reference to the Capital Allowances Manual at CA60000 onwards, and the point that the accounts treatment is not conclusive of whether expenditure is revenue or capital for tax purposes. CA60100: RDA outline — “The allowances are very generous because the rate is 100%”; “RDA is only available to traders. A person carrying on a profession or vocation is not entitled to them”; and the balancing charge on sale, demolition or destruction but not on a change of use. CA60200: meaning of research and development — the definition at CAA01/s437(2) and (3), by reference to normal accounting practice and the Secretary of State’s Guidelines, and the express inclusion of oil and gas exploration and appraisal. CA60300: expenditure on research and development — expenditure incurred for carrying out R&D and for providing facilities for carrying out R&D; “expenditure incurred on acquiring rights in research and development or rights arising out of research and development is not expenditure on research and development”; the rule treating the whole building as used for R&D where no more than a quarter of the capital expenditure on it is referable to a dwelling; and just and reasonable apportionment of mixed-use buildings. CA60400: qualifying expenditure — “No allowances are due for expenditure on the acquisition of, or of rights in or over, land”, and the requirement that the expenditure relates to a trade carried on or a trade set up and commenced after the expenditure. Section 439, Capital Allowances Act 2001 — capital expenditure on R&D directly undertaken by the person or on their behalf; the trade condition and the setting-up condition; that the same expenditure may not be taken into account for more than one trade; and just and reasonable apportionment. CA60500: allowances and charges — “Normally RDA is 100% of the qualifying expenditure”, reduced by any disposal value; the chargeable period for which it is given, including pre-trading expenditure relieved in the period the trade begins; “A person does not need to claim the full 100% RDA but if a reduced amount is claimed the balance cannot be claimed later”; and that there are no balancing allowances for RDA. Section 441, Capital Allowances Act 2001 — the allowance equal to the qualifying expenditure, or the excess of that expenditure over any disposal value; the chargeable period in which the expenditure is incurred, or in which the trade begins; and that a person claiming the allowance may require it to be reduced to a specified amount. Claiming capital allowances for structures and buildings — the 3% rate from April 2020, the allowance period of 33 and one-third years, and that you cannot claim on costs already used to claim another allowance. CA11140: claims — time limits — “A capital allowance claim for an accounting period may be made, amended or withdrawn at any time up to 12 months after the filing date for the company tax return for the accounting period”, under FA98/SCH18/PARA82. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Can a charity claim R&D tax relief? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-a-charity-claim-rd-tax-relief/ Description: No. A charity is an ineligible company under CTA 2009 s1142. A charity's trading subsidiary is not a charity, and that is a different question entirely. Questions •6 min read Can a charity claim R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards No. A charity cannot claim R&D tax relief, however much it spends and however clearly the work meets the definition of R&D. Section 1142 of the Corporation Tax Act 2009 makes a charity an ineligible company, alongside an institution of higher education, a scientific research association and a health service body, and the Treasury can add to that list by order. It is a test of what the body is, not of what it does. Two routes remain open around it. A charity’s non-charitable trading subsidiary is not itself a charity and is taxed like any other company, so it can claim on its own R&D if it meets the ordinary conditions. And where a charity contracts R&D out, the contractor can claim for the work — a rule written for exactly this situation. Why the exclusion is absolute The ineligible company rule bites before any question about the work arises. It is not a restriction on the type of expenditure, on how the project is funded, or on whether the research is charitable in purpose. A charity carrying out development that would qualify without argument in a commercial company still claims nothing, because it is on the list. That places charities inside the wider entity test set out in who can claim R&D tax relief: relief runs through the corporation tax computation, and only companies within the charge to corporation tax, carrying on a trade the R&D relates to, get near it. Note what the rule does not do: it disqualifies the claimant, not the people it deals with. A charity that funds work in a company, or buys development from one, does not make that company ineligible. What the charity’s own status does change is who holds the claim where it contracts R&D out, and that is dealt with below. The trading subsidiary is a different company Charity law limits what a charity can trade in, and the tax exemptions for charitable trading only go so far, which is why so many charities put non-charitable trading into a wholly owned subsidiary. HMRC’s guidance is unambiguous about that subsidiary’s status: a charity’s trading subsidiary company is not a charity, and companies owned by charities are liable to pay tax on trading profits in the same way as other non-charitable companies. That answers the first condition. The subsidiary is a company within the charge to corporation tax, so section 1142 does not touch it, and it claims or fails on the ordinary tests — a trade in the period, expenditure allowable in computing the profits of that trade, going concern, the PAYE and NIC cap, claim notification where required, and the Additional Information Form. One structural point deserves modelling rather than assuming. A trading subsidiary that donates its profits to its parent under the company Gift Aid scheme gets a deduction for those payments, and may be left with little or no corporation tax for a claim to reduce. That does not make the claim pointless: the merged scheme credit is taxable and above the line, and for a company with no tax to pay it works through the calculation steps towards cash rather than a smaller bill — see the merged R&D expenditure credit. Work the claim out before the Gift Aid payment is fixed, not after. R&D a charity contracts out For accounting periods beginning on or after 1 April 2024, the general rule is that the party who takes the decision to undertake or initiate the R&D is the one who claims. A charity cannot, so without more, relief on work it commissions would disappear. The legislation deals with it. Section 1042F of the Corporation Tax Act 2009 — with section 1053A doing the same job for ERIS — allows a contractor to claim where the R&D is contracted out to it by an irrelievable client. Three conditions apply: the expenditure is attributable to relevant R&D contracted out to the company; every person contracting the R&D out is either an ineligible company or a person not acting in the course of a trade, profession or vocation within the charge to tax in relation to the contracting out; and the expenditure would have qualified under the in-house or contracted-out provisions but for the contracting out. A charity is an ineligible company under section 1142, so a company doing R&D for a charity is in the frame — including a charity’s own trading subsidiary developing something the charity has commissioned. Who claims when work is contracted out is worked through in contracted-out R&D, worth reading before the contract is signed rather than after. What still has to be established Settling the entity question does not settle the claim. The work itself has to meet the definition of R&D — a project seeking an advance in science or technology through the resolution of scientific or technological uncertainty — set out in what your company needs to qualify. Which scheme applies is separate again, and a charity-owned company should not answer it from headcount alone: the SME thresholds take account of linked and partner enterprises, so the ownership structure has to be tested rather than assumed. Which R&D scheme applies to your company covers those tests. If you are looking at a charity group and want to know where a claim can sit, if anywhere, tell us the structure and we will give you a straight answer before work goes into it. Sources Section 1142, Corporation Tax Act 2009 — the meaning of ineligible company: a charity, an institution of higher education, a scientific research association within section 469(1)(a) CTA 2010, and a health service body within the meaning of section 986 CTA 2010, with power for the Treasury to prescribe others. CIRD163000: ineligible companies — “Any of the following is an ineligible company: a charity; an institution of higher education such as a university; a scientific research organisation; a health service body”, under CTA09/S1142. Annex iv: trading and business activities — basic principles — “It’s important to remember that a charity’s trading subsidiary company is not a charity”; “Companies owned by charities are liable to pay tax on trading profits in the same way as other non-charitable companies”; and that the company can get tax relief for charitable payments to a charity under the company Gift Aid scheme. Section 1042F, Corporation Tax Act 2009 — qualifying expenditure on activity as contractor for an irrelievable client: Condition A, that the expenditure is attributable to relevant R&D contracted out to the company; Condition B, that each person contracting out the R&D is an ineligible company or not acting in the course of a trade, profession or vocation within the charge to tax; and Condition C, that the expenditure would qualify under section 1042D or 1042E but for the contracting out. In force for accounting periods beginning on or after 1 April 2024. CIRD161000: contracted out R&D overview — “The general rule is that only the party who takes the decision to undertake or initiate R&D will be able to claim”, and the exception for activity as contractor for an irrelievable client under CTA09/s1053A and s1042F, an irrelievable client being an ineligible company or any person not acting in the course of a trade, profession or vocation within the charge to tax in relation to the contracting out. CIRD111000: new RDEC overview — only companies with a trade chargeable to UK corporation tax can claim, and ineligible companies cannot claim. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Does my R&D adviser have to be registered with HMRC? URL: https://www.limestonegrey.com/rd-tax-relief/questions/does-my-rd-adviser-have-to-be-registered-with-hmrc/ Description: Yes, if they deal with HMRC for you, phased from 18 August 2026 to 1 April 2027. There is no public register to check, so you have to ask them directly. Questions •5 min read Does my R&D adviser have to be registered with HMRC? MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Yes, if they deal with HMRC for you. Part 7 of the Finance Act 2026 stops a tax adviser interacting with HMRC about a client’s tax affairs unless the adviser is registered with HMRC or an exception applies. Interacting is drawn widely: a telephone call, a letter, an email, a message through a portal, and the filing of any return, claim, notice or other document. An adviser who submits your Additional Information Form or your amended return is inside the rule, and so is one who only picks up the phone about your claim. When it applies The requirement arrives cohort by cohort rather than all at once. Regulations made in July 2026 set four appointed days, and the prohibition does nothing to an adviser until theirs arrives. 18 August 2026 — the first tranche, which is every adviser not in a later one. Firms holding an Agent Services Account are all in it, because each later tranche is defined by not holding one immediately before that date. 18 November 2026 — the second tranche. 18 February 2027 — the third. 1 April 2027 — the fourth, which is where HMRC placed financial services organisations. Registration opens earlier for each group, in a window running roughly three months ahead of its appointed day. HMRC’s stated practice is that an adviser who applies within their own window may carry on acting while the application is considered. Established firms do not apply at all A firm holding an Agent Services Account immediately before 18 August 2026 is treated by the regulations as having applied, been approved and been notified, with registration taking effect from that date. No form, no fee, nothing to renew. HMRC expects to contact those firms in early 2027 to collect the names of their relevant individuals and evidence of anti-money-laundering supervision. So a long-standing adviser who tells you they did not have to do anything may be describing the rule correctly rather than dodging the question. You cannot look it up Part 7 creates no register. There is no list and no lookup: HMRC notifies the adviser, and that is the whole of it. The publication powers in the Act point the other way. Chapter 1 lets HMRC publish penalties and ineligibility orders; Chapter 2 lets it publish refusals to deal with an adviser and suspensions of online access. The Act can name the delinquent and has no power to name the compliant. What is left is asking — and asking about the right company. Registration attaches to the adviser business itself, not to a brand, and HMRC’s guidance on groups and complex structures is still settling: its manual now asks businesses to consider how their structures operate in practice, and says it is working with the sector on the harder cases. The safe question is whether the company that signs your engagement letter is registered. Registration is not a quality mark HMRC says so itself. Its fact sheet on the regime states that registration “is not a form of regulation and does not reflect your competency or authorise you to advise on tax matters”. The conditions are about conduct and standing rather than skill: no overdue tax or outstanding returns, no disqualified directors, no unspent conviction for a relevant offence, no current suspension, and anti-money-laundering supervision in place. Nothing in the process tests whether an adviser understands R&D. “Tax adviser” remains an unprotected title, and no exam stands behind it. The adviser who never contacts HMRC Some R&D firms write the report, hand it over and leave your accountant to file. Such an adviser never interacts with HMRC, so this part of the Finance Act 2026 does not reach them at all. The older requirement still does. Under the Money Laundering Regulations 2017 a tax adviser is a firm or sole practitioner giving material aid, assistance or advice on another person’s tax affairs, whether directly or through a third party, with no contact with HMRC needed. Supervision has been compulsory since 2017, and trading without it is a criminal offence carrying up to two years’ imprisonment. Two registers, different nets, and the older one bites harder. What you can actually check The verifiable signals are the ones that were there before any of this. ICAEW publishes a register of chartered accountants and CIOT a directory of Chartered Tax Advisers, both searchable against the named person who will prepare your claim. AML supervision can be put as a direct question, and a supervised firm answers it in a sentence. How to choose an R&D tax adviser sets out the rest of what is worth checking before you appoint anyone. For our own answers: LimestoneGrey holds an Agent Services Account, so it is registered under the transitional rule with effect from 18 August 2026, and ICAEW supervises the firm for anti-money-laundering purposes. What we do and how we work covers the engagement itself, and regulation and professional standards sets out each layer and the complaints route behind it. Sources Finance Act 2026, section 223 — “A tax adviser may not interact with HMRC in relation to the tax affairs of a client” unless registered or within a Schedule 20 exception, and the definition of interacting, which includes telephone, post, email, portal messages and the filing of a return, claim, notice or other document. Finance Act 2026, section 224 — who counts as a tax adviser, including a person who “provides assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position”. Finance Act 2026, section 227 — the registration conditions, including anti-money-laundering supervision and the conduct and standing tests. Finance Act 2026, section 246 — the Chapter 1 publication power, which reaches penalties and ineligibility orders. SI 2026/807, the commencement regulations for Part 7 of the Finance Act 2026 — regulation 4, setting the appointed days of 18 August 2026, 18 November 2026, 18 February 2027 and 1 April 2027; and regulation 5, deeming advisers who hold an Agent Services Account immediately before 18 August 2026 to have applied, been approved and been notified. Check if and when you need to register as a tax adviser with HMRC — the registration windows, HMRC’s statement that a firm with an agent services account “will not need to register again”, and its practice of allowing advisers to continue acting while an application made in their window is considered. Mandatory tax adviser registration communications resources: fact sheet — HMRC, 14 May 2026: registration is free and “is not a form of regulation and does not reflect your competency or authorise you to advise on tax matters”. Anti-money laundering registration — supervision as a legal requirement for tax advisers: “You’re breaking the law if you carry on a business activity covered by the regulations but do not register with a supervisory authority.” The Money Laundering Regulations 2017, regulation 86 — trading without required registration as a criminal offence, with imprisonment of up to two years on conviction on indictment. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Linked and partner enterprises and the R&D SME test URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-do-linked-and-partner-enterprises-affect-an-rd-claim/ Description: How group structure changes a claim: linked enterprises counted in full, partner enterprises in proportion, and connected companies aggregated for ERIS. Questions •4 min read How do linked and partner enterprises affect an R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Linked and partner enterprises decide whose figures the SME test is run on. The thresholds — fewer than 500 staff, and either turnover of €100m or less or a balance sheet total of €86m or less — apply to your wider group rather than to the claimant company by itself. A linked enterprise’s headcount, turnover and assets are added to yours in full; a partner enterprise’s are added in proportion to the holding. So a company whose own accounts look modest may already be outside the definition, on figures it never reports. The wider group rules — surrender, connected-party costs and who claims — are in R&D tax relief in groups. Under the current schemes this bites in one place. The merged scheme applies to companies of every size at the same credit rate, so aggregation changes nothing there. ERIS is the exception: only SMEs can claim it, and the difference between 26.97p and 16.2p per £1 of qualifying spend turns on the answer. Linked or partner: where the line sits A linked enterprise is one that controls you or that you control, typically through more than 50% of the voting rights. Everything it has counts, whole: staff, turnover, balance sheet total. A partner enterprise holds between 25% and 50%, and comes in proportionately. Where a partner holds 40%, four-tenths of that partner’s own headcount, turnover and balance sheet total comes into your figures — the fraction applies to the partner’s numbers, not yours. Below 25%, nothing is added. The two halves of the definition behave differently. Headcount is a hard gate: at 500 staff or more the company is out, whatever the financial figures show. The financial limits are alternatives: only one of the two needs to hold, so a company over the turnover ceiling still qualifies if its balance sheet is within the limit, and the other way round. Both financial limits are set in euros while UK accounts are usually prepared in sterling, so close to either figure the exchange rate stops being a rounding question and starts deciding the answer. ERIS aggregates a second time, on a different test Passing the size test does not settle the group question for an ERIS claim. The 30% intensity condition brings connected companies into both sides of its ratio, and connection is not the same concept as a linked or partner enterprise. Its window is the whole accounting period rather than a snapshot at either end: one day of connection brings a company in for the whole period, so a subsidiary acquired or sold mid-year does not drop out of the arithmetic. Amounts moving between connected companies are taken out of the count — the statute reaches a payment or other transfer of value, a phrase that catches more than money changing hands — so a recharge inside a group is not counted at both ends. The practical effect is that a group can pass the size test and fail the intensity one. A development company sitting far above the threshold on its own figures can be pulled under it by a trading sister carrying heavy non-R&D costs. The ERIS intensity calculator works the ratio out on a basis that includes your connected companies. Who stays out of the aggregation Not every holder above 25% creates a partner enterprise. A defined group is carved out: universities, institutional investors, regional development funds, venture capital companies, and business angels investing below €1.25m in aggregate. Two conditions attach. The holding must stay at or below 50%, and there must be no other route by which the two enterprises are linked. That carve-out keeps many venture-backed companies inside the SME definition, and it stops applying the moment a stake crosses 50% — at which point the investor is a linked enterprise and its figures come in whole. Where an incoming stake does take a company over the limits, the usual grace year may not be there to absorb it: see what happens if my company outgrows the SME definition. Where to go next The aggregation runs on figures that sit outside your own statutory accounts, which is why it tends to surface during an HMRC check rather than before one. If a funding round is in progress, or the group has changed shape since the last claim, that is a case to take advice on before the year end — while the workings can still be documented as they stood. Sources Section 1119, Corporation Tax Act 2009 — the SME definition, taken from Commission Recommendation 2003/361/EC and qualified by sections 1120 to 1120B. Section 1120, Corporation Tax Act 2009 — the staff, turnover and balance sheet thresholds for the R&D SME definition. CIRD91800: staff headcount, turnover and balance sheet total — how the limits are measured, and the euro conversion. Section 1045ZA, Corporation Tax Act 2009 — the intensity ratio, the exclusion of a payment or other transfer of value to a connected company, and connection on any day in the period. CIRD123000: ERIS — HMRC’s manual on the intensity calculation, including connected companies. CIRD91900 — the R&D SME thresholds: fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # HMRC paid my R&D claim: does that mean it was approved? URL: https://www.limestonegrey.com/rd-tax-relief/questions/does-hmrc-paying-my-claim-mean-it-was-approved/ Description: No. HMRC processes most R&D claims when they are filed and asks its questions afterwards. What payment proves, how long the exposure lasts, and what to do. Questions •3 min read HMRC paid my R&D claim — does that mean it was approved? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards No. Payment means your return was processed, not that your claim was examined and agreed. HMRC works on a process-now, check-later basis: most R&D claims are paid when they are filed, and the questions come afterwards, if they come at all. Why HMRC pays first and checks later The sequence is deliberate, and HMRC describes it itself. Its published account of its approach to the R&D reliefs records that it opens some compliance checks after payment — which gets money to companies quickly, while leaving open the possibility that a claim is later found non-compliant and the payment recovered. So the payment run and the compliance work are two separate processes running on two different timescales. Around one in six claims was checked in 2023-24, the most recent year HMRC has published, and those checks are not all made before the money goes out. A claim can be paid in weeks and read properly a long time afterwards. What payment does and does not tell you It tells you the return reached HMRC’s systems and the figures were processed. That is the whole of it. It does not tell you that anyone tested whether the work meets the statutory definition of R&D, whether the advance was framed at the level of the field rather than of your own company, whether the costs sit in the categories they were put in, whether the Additional Information Form answered the questions an officer would actually ask, or whether the procedure was right — a missed notification or a missing AIF invalidates a claim whatever its technical merit. The expensive version of the misunderstanding is the run of paid claims. Several years of payments feel like several years of confirmation. They are several years of processing, and where the same defect sits under each claim, it is not one problem waiting to be found. Silence is not evidence that the claims were sound; it is evidence that nobody has read them. How long the exposure lasts Longer than most companies assume, and measured in years rather than weeks. How far back HMRC can reach depends on the return, the period and — where an error was careless or deliberate — on behaviour. The enquiry and discovery windows are set out in can HMRC make me pay back an R&D tax credit?, and the amendment windows that run alongside them in backdated R&D claims. What a check involves once one is opened is in our HMRC enquiries guide. The consequence is what makes the timing matter. If the claim contained errors, relief can be repaid with interest, and in some cases with penalties, years after the money was received and spent. What a company that wants certainty can do Keep the evidence while it still exists. Records made at the time — who worked on which project, what was not known and why, cost workings that reconcile to the accounts — are what separates a claim that holds up under a check from one reconstructed under pressure two years later. They are also far easier to keep than to recreate. Then get an independent view of what has already been filed. If your claims have always been paid without questions and nobody outside the process has read them, our free claim review is a confidential second opinion on your most recent claim, under a mutual NDA, including claims prepared by another adviser. Where a problem does surface, finding it yourself is the cheaper outcome: an unprompted disclosure materially reduces any penalty, and HMRC runs a route for making one. For claims we prepare, enquiry support is included as standard. Sources HMRC’s approach to R&D tax reliefs 2023 to 2024 — compliance checks opened after payment, the recovery of payments on claims later found non-compliant, and 9,700 checks against 61,000 claims received in 2023-24. Tell HMRC if you’ve claimed too much R&D tax relief — the disclosure route for an overclaim a company finds itself. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Subsidised expenditure and R&D tax relief URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-is-subsidised-expenditure-for-rd-tax-relief/ Description: Subsidised expenditure is R&D spending someone else paid for. The rules were abolished for periods beginning on or after 1 April 2024. Questions •6 min read What is subsidised expenditure for R&D tax relief? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Subsidised expenditure is R&D spending that somebody else paid for — a restriction in the old SME scheme that has now gone. For accounting periods beginning on or after 1 April 2024, the subsidised expenditure rules have been abolished, and grant funding no longer reduces what a company can claim. It still matters for accounting periods that began before 1 April 2024. Some of those can still be claimed or amended, with the final old-scheme deadlines falling around 30 and 31 March 2027. So the answer for your company turns on one date: when its accounting period began. Does subsidised expenditure reduce a claim now? No, not for current periods. Under the merged R&D scheme and ERIS, relief is worked out on the qualifying expenditure whatever funded the project. Under the merged scheme a £100,000 spend part-funded by a £60,000 Innovate UK grant still generates the full £20,000 gross credit, with nothing to strip out and no project to ring-fence; ERIS computes its 86% additional deduction, and the payable credit that follows from it, on the same full £100,000. Grant funding and R&D tax relief works that through in full. Everything below is about periods that began before 1 April 2024. What did the old rules say? For accounting periods beginning before 1 April 2024, section 1138 CTA 2009 set out three separate ways expenditure could be subsidised. They did not work the same way, and the difference decided how much of a claim was affected. A notified State aid, meaning a State aid notified to and approved by the European Commission. Where one was obtained in respect of any expenditure attributable to the same R&D project, all the expenditure on that project was subsidised, not only the funded part. Many Innovate UK awards were notified State aids, which is where the idea of a grant tainting a whole project comes from. A grant or subsidy that was not a notified State aid. Here the restriction reached only as far as the money went. Expenditure was subsidised to the extent that the grant or subsidy was obtained in respect of it, so £60,000 of grant against £100,000 of spend subsidised £60,000 and left the other £40,000 alone. Expenditure otherwise met, directly or indirectly, by a person other than the company. The catch-all, and like the second limb it bit only to the extent someone else met the cost. This is the limb HMRC relied on in the enquiries that reached the tribunal. Subsidised expenditure did not lose R&D relief altogether. It lost the SME scheme. It could then be claimed under the old RDEC scheme instead, at a lower benefit, provided the RDEC conditions were met — which they usually were for in-house costs, but not where the work had itself been contracted to the company. Take the same £100,000 under the old rules. A profitable SME with a period beginning 1 January 2024 spends it on qualifying R&D, with a £60,000 grant that is not a notified State aid. The unsubsidised £40,000 stays in the SME scheme. The 86% additional deduction is worth up to 21.5p per £1 at the 25% main rate: £8,600. The subsidised £60,000 goes into old RDEC at 20%, worth 15p per £1 after corporation tax: £9,000. In the SME scheme that same £60,000 would have been worth £12,900, so the subsidy rules cost £3,900. Had the grant been a notified State aid, all £100,000 would have moved to old RDEC. Subsidised expenditure and contracted-out R&D are different tests These are two separate restrictions, and they are constantly run together. The subsidised expenditure rules asked who paid for the spending. The contracted-out rules asked who commissioned the work. A company could be caught by one and not the other. HMRC often ran both arguments against the same old-scheme claim, which is much of why the two get confused; our guide to contracted-out R&D covers the second question. A commercial price for a job is not automatically a subsidy In Collins Construction and Stage One Creative Services, the First-tier Tribunal held that the third limb did not catch this spending: there was no clear link between the price the client paid and what the company spent on R&D. Neither decision was appealed, and HMRC updated its guidance in February 2025. Its position now is that where the R&D was not contracted to the company, a customer’s payment does not subsidise it unless the payment was specifically linked to the R&D. So a grant towards your R&D costs and a price for delivering a job are not the same thing — but the contract wording decides it, and a payment that does reimburse the R&D specifically can still be caught. Who does this still matter for? Companies with pre-April 2024 periods still open to amendment. Where a grant, a customer payment or a cautious adviser kept costs out of a claim at the time, that claim can often still be made or amended now. The window generally runs about two years from the end of the period of account; backdated R&D claims sets out the runway and the claim-notification rule that can close it early. It also matters in an open HMRC enquiry into an old-scheme claim, where that reasoning belongs at the centre of the response: see HMRC R&D enquiries and the tribunal verdicts. For a current period, the short answer is in grant funding and R&D tax relief, and does grant funding stop me claiming? puts it in a line. For a period that began before April 2024, talk it through with a chartered adviser. Sources CTA 2009 s1138 (as enacted) — the three limbs: notified State aid obtained in respect of “any other expenditure (whenever incurred) attributable to the same research and development project”, a grant or subsidy other than a notified State aid, and expenditure “otherwise met directly or indirectly by a person other than the company”. The section is omitted for accounting periods beginning on or after 1 April 2024. CTA 2009 s1052 (as enacted) — the old SME condition that “the expenditure is not subsidised (see section 1138)”. CTA 2009 s104G, as it stood at 31 March 2024 — subsidised qualifying expenditure on in-house direct R&D, the route by which subsidised SME spending was claimed under the old RDEC scheme; s104H did the same for subsidised payments to a subcontractor, but only where the subcontractor was a qualifying body, an individual, or a firm of individuals. Chapter 6A is omitted for accounting periods beginning on or after 1 April 2024. Merged scheme RDEC reform (policy paper) — “the rules relating to subsidised expenditure in the SME scheme were not carried forward into the new merged scheme”, for accounting periods beginning on or after 1 April 2024. CIRD81650: subsidised expenditure, post-tribunal — commercial contract payments are not, in themselves, subsidies, and the notified State aid position that no expenditure on the project can qualify under the SME scheme. Collins Construction Ltd v HMRC — [2024] UKFTT 951 (TC), 21 October 2024: the expenditure was not subsidised under section 1138, there being no clear link between the price paid by the client and the expenditure on R&D. Stage One Creative Services Ltd v HMRC — [2024] UKFTT 1059 (TC), 25 November 2024: the same conclusion on section 1138. R&D tax relief rates by year — the 86% additional deduction worth up to 21.5p per £1 at the 25% main rate, and old RDEC at 20% worth 15p per £1 net. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Changing your accounting date and your R&D claim URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-happens-to-my-rd-claim-if-i-change-my-accounting-date/ Description: A claim is made per accounting period, so a long set of accounts means two claims and two AIFs, under one notification deadline set by the accounts. Questions •8 min read What happens to my R&D claim if I change my accounting date? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Changing your year end changes how many R&D claims you make and when they are due. A claim is made for an accounting period, and a set of accounts covering more than twelve months is split into two accounting periods for corporation tax: two company tax returns, two claims, two Additional Information Forms and two computations from one set of accounts. The claim notification deadline behaves differently. It is fixed by the period of account rather than the accounting period, so both periods share a single deadline six months after the accounts end — and shortening the accounts moves that deadline earlier, in some cases to a date that has already gone. Why does a long set of accounts produce two R&D claims? Because an accounting period cannot run for more than twelve months. It ends on whichever comes first: twelve months from its start, or the date the company makes its accounts up to — and that second date is what a change of year end moves. A set of accounts drawn up for eighteen months therefore contains an accounting period of twelve months and a second of six, and HMRC’s notice to file requires a separate return for each. Company law caps a lengthened set of accounts at eighteen months outside administration, so a long period of account ordinarily produces two accounting periods rather than three. Lengthening also has a cooling-off period: a company that has already extended cannot extend again within five years of the end of the extended period, unless it is aligning with a parent or subsidiary undertaking, or is in administration. Entitlement to the merged-scheme credit and to ERIS is worked out separately for each. Qualifying expenditure belongs to the period it falls in for tax, so costs have to be cut at the twelve-month line rather than apportioned across the whole eighteen months. Where a project ran through year one and stopped in month fourteen, an even split understates the first claim and inflates the second. Staff time, subcontractor invoices, consumables and cloud costs each need splitting at that line. The Additional Information Form follows the same rule: one form per accounting period, and HMRC’s guidance is explicit that each form carries only information applying to its own period. Where one accounting period carries both an ERIS claim and a merged-scheme claim on different parts of the spend — the two reliefs can share a period but never the same pound of expenditure — it is still one form, but the expenditure and project sections inside it are completed for each claim separately. When is the notification deadline for a long or short period? Six months from the end of the period of account — the period the accounts cover — whatever the accounting periods inside it look like. The window opens on the first day of the period of account and closes six months after it ends. Count the six months from the day after the accounts end, and take the last day: accounts to 30 September give 31 March, not 30 March. Our guide to claim notification sets out the rule and the deadline checker gives you the date; the accounts, not the tax computation, set it. So a long period of account carries one deadline for both accounting periods, and one notification: a claim for either is protected where the company has already notified, or claimed, for the other. HMRC’s guidance says the same — the form only has to be submitted once. The three-year test that exempts established claimants runs to that same date: the question is whether the company has claimed in the three years ending with the notification deadline, as do I need to tell HMRC before I claim? explains. Shortening a period of account moves the deadline earlier with it. A company with a 31 December 2026 year end has until 30 June 2027 to notify; shorten that year to 30 September 2026 and the deadline becomes 31 March 2027. Nothing about the R&D work has changed, but the date in everyone’s diary is now three months too late. Company law also lets a company change the date of a period that has already ended, while its filing deadline is still open — so a shortening decided months afterwards can create a notification deadline that has already passed. There is no late notification and no appeal, so this belongs in the decision, before the notice goes to Companies House. What does a short period do to the intensity test and the PAYE cap? The 30% R&D intensity condition that opens ERIS compares the period’s relevant R&D expenditure with its total relevant expenditure. There is no annualising or smoothing, and R&D spending is lumpier than overheads. A six-month stub in a quiet development spell puts light R&D against a normal run-rate of everything else, and the ratio can fall below 30% while the twelve-month picture sits well above it. A stub that fails the test can still be carried by the grace period. It applies where the company obtained relief for its most recent prior accounting period of twelve months’ duration, having met the intensity condition in that period — ERIS, or SME scheme relief for an earlier period, tested on the threshold that then applied. Note where that points: to the last full year, not simply the period before, so a short period in between is stepped over rather than breaking the chain. What a short period cannot do is bank a grace year for the future: the period looked back to has to be twelve months long. The PAYE cap on payable credits is £20,000 plus three times the company’s relevant PAYE and National Insurance. In a period shorter than twelve months the £20,000 is proportionately reduced, and the PAYE element shrinks by itself because fewer payroll months fall inside the period. A company with a small payroll and a lot of subcontracted work therefore loses headroom at both ends. The credit rate itself is not scaled — the proportionate reduction applies to the £20,000 alone. What should be settled before the date changes? Confirm whether the company is inside the notification requirement, then recompute the deadline from the new accounts. Model the intensity ratio for the stub period separately from the twelve-month one. Where a group is aligning year ends, connected companies’ expenditure enters each member’s ratio, so one alignment moves the answer for several companies at once; R&D tax relief in groups covers that. The window for amending a return moves with the period too; backdated R&D claims sets out that runway. R&D tax relief deadlines works a long period and a shortened one through every date they produce. A change of accounting date is a commercial decision. But the deadlines it moves cannot be moved back. Sources CTA 2009 s9 and s10 — an accounting period begins immediately after the previous one ends, and ends on the first occurrence of twelve months from its beginning, an accounting date of the company, the company starting or ceasing to trade, entering administration and the other listed events. Companies Act 2006 s392 — altering the accounting reference date: a notice may shorten or extend the current or the previous accounting reference period, may not be given for a previous period once the filing deadline has expired, may not extend a period beyond 18 months, and is ineffective if given less than five years after the end of an earlier accounting reference period that was extended, unless the new date coincides with that of a UK parent or subsidiary undertaking or the company is in administration; the eighteen-month ceiling is itself disapplied in administration. CTA 2010 s1119 — “period of account” means any period for which the person draws up accounts. FA 1998 Sch 18 para 5 — where more than one accounting period ends in the period specified in the notice to file, “a separate company tax return is required for each of them”. FA 1998 Sch 18 para 83B — a claim must be made by being included in the company tax return for the accounting period for which it is made. CTA 2009 s1042B and s1044 — entitlement to the expenditure credit, and to the ERIS additional deduction, arises for an accounting period, on expenditure allowable as a deduction in calculating the profits of the trade for that period. CTA 2009 s1142A — the claim notification period begins with the first day of the period of account which is the same as, or within which falls, the accounting period claimed for, and ends with the last day of the period of six months beginning with the first day after that period of account. CTA 2009 s1042C and s1045A — the three-year test measured to the last day of the claim notification period, and the exemption where the accounting period claimed for “falls within the same period of account as another accounting period in respect of which the company has made an R&D claim or a claim notification”. Tell HMRC that you’re planning to claim R&D tax relief — a period of account longer than twelve months includes two or more accounting periods, “the claim notification period is the same for all accounting periods”, and the form need only be submitted for one of them; with HMRC’s worked example of accounts running 1 January 2024 to 30 June 2025 and a deadline of 31 December 2025. Submit detailed information before you claim R&D tax relief — a form for each accounting period claimed; for a period longer than twelve months, one for the first twelve-month period and a further one for the short period; and each form “should only include information that applies to that accounting period”. FA 1998 Sch 18 para 83EA — a claim is invalid unless the required information has been provided no later than the date the claim is made or amended. CTA 2009 s1045ZA — the intensity condition is determined for an accounting period on that period’s relevant R&D expenditure as a proportion of its total relevant expenditure, aggregating connected companies, with no provision annualising a short period. CTA 2009 s1044(2A) — the grace route requires relief to have been obtained for “its most recent prior accounting period of 12 months’ duration”, the condition having been met in that period. CTA 2009 s1112B — the cap of £20,000 plus three times relevant PAYE and NIC liabilities for payment periods ending in the accounting period, with the £20,000 proportionately reduced where the period is less than twelve months. CIRD183000 — HMRC’s manual on pre-notification, including the same-period-of-account exemption and the definition of the claim notification period. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # R&D tax relief and the Patent Box nexus fraction URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-does-rd-tax-relief-affect-the-patent-box-nexus-fraction/ Description: The R&D fraction scales Patent Box profit by who did the research: (D+S1) x 1.3 over (D+S1+S2+A), capped at 1. Claiming R&D relief does not change it. Questions •9 min read How does R&D tax relief affect the Patent Box nexus fraction? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Claiming R&D tax relief does not change the nexus fraction. What changes it is who did the research, not who claimed relief on it. The R&D fraction, as the legislation calls it, scales each sub-stream of patent profit by the share of the underlying research the company did itself or paid an unconnected party to do. It is the lesser of 1 and (D + S1) × 1.3 ÷ (D + S1 + S2 + A), where D is in-house R&D spending, S1 R&D contracted out to unconnected persons, S2 R&D contracted out to connected persons, and A the cost of acquiring the rights. Do the work yourself and the fraction is 1: the whole relevant IP profit reaches the effective 10% rate. Buy the patent in, or pay a fellow group company to do the research, and part of it goes back to the main rate. What counts in each of the four terms? D is the company’s own spending on research relating to the right: staffing costs, software, consumable items, externally provided workers and payments to the subjects of clinical trials, with data licences and cloud computing services added for periods beginning on or after 1 April 2023. They are the same cost categories as an R&D claim, set out in qualifying costs, but the spending need not have been in an R&D claim to count. What matters is that the accounts treat it as R&D and that it relates to the right — research that created the invention, or was done to develop it, the ways it can be used or applied, or something that incorporates it. S1 and S2 divide payments for contracted-out research by whether the recipient is connected, wherever that person is resident. Neither term is cut to 65% the way a contracted-out payment is in an R&D claim, nor capped at the contractor’s own costs the way a connected-party payment is: what the company paid is what goes in. A covers a payment for an assignment, for the grant or transfer of an exclusive licence, or for a disclosure the company then patents. One divergence is widening. The Patent Box has not followed the April 2024 changes to contracted-out R&D or the restriction on overseas R&D: HMRC says the pre-April 2024 rules still apply for Patent Box purposes. So the analysis behind the R&D claim cannot be lifted across unchanged. What does connected-party research or bought-in IP actually cost? The 30% uplift on the numerator buys headroom: the fraction stays at 1 while connected-party subcontracting and acquisition costs together come to no more than 30% of in-house and unconnected spending. A company with £1m of in-house research and £300,000 paid to a connected company sits exactly at that limit: £1m uplifted to £1.3m, over £1.3m of total spend, is 1. Take the connected spending to £600,000 and it becomes £1.3m over £1.6m, or 0.8125. On a sub-stream of £1m reaching that step, £187,500 of profit is then taxed at the 25% main rate instead of the 10% Patent Box rate — about £28,000 more tax. Group structures throw up most of the arguments about which term a cost lands in. Staff supplied by a connected company can count in D rather than S2 where they meet the externally provided worker conditions. A payment routed through a connected intermediary that only administers the contract passes through to the third party, which puts it in S1. Where the intermediary controls the research, it is S2. Royalties and annual fees under an exclusive licence build up in A, so a licensee’s fraction erodes year by year unless its own or unconnected research keeps the numerator moving. There is one large exception. Where the payments run under a single grant made before tracking began, they count as part of that original series and stay out of A. A later variation, or a second right added to the agreement, goes into A as normal. Does the expenditure credit itself change the Patent Box numbers? No. Under the merged scheme the credit is brought into account as a receipt of the trade, so the Patent Box calculation picks it up at its first step. There, credits are sorted into two streams: patent income, split into a sub-stream for each right or product, and everything else. Relevant IP income is a defined list — sales of patented items, licence fees and royalties, proceeds of selling the right, infringement receipts and compensation — and a tax credit is none of them. It falls into the standard income stream, never a relevant IP income sub-stream. HMRC’s manual arrives at the same place, listing income from RDEC credits among income excluded from the regime. The sources stop short of saying so expressly. The manual is written in the older scheme’s language and does not name the merged scheme credit, and no provision in the Patent Box legislation excludes the credit the way finance income is. The exclusion follows from the definition of relevant IP income rather than from any rule aimed at the credit, so set the reasoning out in the corporation tax computation rather than leave it to be inferred. A payable ERIS credit is not income for any tax purposes, so it never enters the streaming, and the ERIS additional deduction is an excluded debit, never set against IP income. Under both schemes R&D expenditure is also kept out of routine deductions, a rule amended in 2024 to cover the merged scheme credit. That leaves more profit in the sub-stream, since the routine return stripped out beforehand is 10% of routine deductions. Why does the tracking have to start years before the patent? Because the fraction is cumulative, not annual. It is built from expenditure across a period ending with the accounting period and beginning on 1 July 2016 for most companies, with an election to reach back as far as 20 years. Each year’s return recalculates it: new development and acquisition costs go in, and expenditure drops out once a right has expired and no longer brings income into that sub-stream, or once the spending dates back more than 20 years. Building that record is the work: expenditure identified, traced to a particular right, then monitored. HMRC will accept clear evidence instead of tracking where a fraction cannot be other than 1, but warns that one later acquisition in the same sub-stream sends the company back to reconstruct years of history. Capturing it while the R&D claim is prepared costs little. Rebuilding it after the patent is granted costs a great deal. Where exceptional circumstances leave the fraction understating the company’s contribution, an election can substitute a higher value fraction — but only where it stands at 0.325 or more. Can I claim Patent Box and R&D tax relief together? covers the entry conditions and the election deadline. The expenditure record behind the fraction is built on the R&D side, which is where we work: talk it through with us. Sources CTA 2010 s357BLA — the R&D fraction is “the lesser of 1 and” (D + S1) × 1.3 ÷ (D + S1 + S2 + A), with D, S1, S2 and A as defined in the following sections. CTA 2010 s357BLB — D: staffing costs, software, data licences and cloud computing services, consumable items, externally provided workers and payments to the subjects of clinical trials, attributable to research undertaken by the company itself; and what it means for research to “relate” to a qualifying IP right. CTA 2010 s357BLC and s357BLD — S1 and S2, split by whether the company and the recipient are connected within CTA 2010 s1122, with apportionment where a payment covers other matters, and the foreign permanent establishment reattribution to S2. CTA 2010 s357BLE — A: payments for an assignment, for the grant or transfer of an exclusive licence, or for a disclosure the company subsequently patents. CTA 2010 s357BLF — the relevant period: relevant day of 1 July 2016, or 1 July 2013 for a new entrant with an accounting period beginning before 1 July 2021; an election for a day up to 20 years earlier; a rolling 20-year period once the accounting period ends on or after 1 July 2036. CTA 2010 s357BLH — the election to increase the fraction to the value fraction in exceptional circumstances, available only where the fraction is not less than 0.325. CTA 2010 s357BF — the steps: Step 1 divides the credits brought into account in calculating trade profits into relevant IP income and everything else; Step 6 multiplies each sub-stream by its R&D fraction. CTA 2010 s357BH — relevant IP income means income within the five Heads: sales income, licence fees, proceeds of sale, damages for infringement and other compensation; s357BHA adds the notional royalty for IP-derived income. CTA 2010 s357BI — excluded debits include any additional deduction obtained under Part 13 of CTA 2009 for expenditure on research and development. CTA 2010 s357BJB — Head 2 of the deductions that are not routine deductions: R&D expenditure attracting an additional deduction, the additional deduction itself, and (as substituted by FA 2024 for accounting periods beginning on or after 1 April 2024) expenditure in respect of which the company is entitled to an R&D expenditure credit under Chapter 1A of Part 13 of CTA 2009. CTA 2009 s1042H — a company entitled to and claiming the merged scheme credit “must bring the amount of the credit into account as a receipt in calculating for corporation tax purposes the profits for the period of the trade concerned”. CTA 2009 s1061 — a payment in respect of an R&D tax credit under Chapter 2, which now carries ERIS, “is not income of the company for any tax purposes”. CIRD274100: R&D fraction overview — the 30% uplift means up to 30% of R&D expenditure can be outsourced to a connected company, or spent on acquisition costs, without reducing the fraction; and the fraction is calculated cumulatively and reviewed annually, removing expenditure on expired patents or expenditure more than 20 years old. CIRD274300: the D term — the company does not have to have made an R&D tax credit claim, and “Patent Box has not followed the rule changes to Overseas Expenditure Provisions and Contracted Out Expenditure that have effect to the R&D Tax Relief Schemes from 1 April 2024”. CIRD274400: the S1 and S2 terms — connection applies whether the person is resident overseas or in the UK; there is no 65% restriction as in the old SME scheme; externally provided workers supplied by a connected company are classed as direct qualifying expenditure rather than connected subcontractor payments; and the pass-through treatment where a connected intermediary performs only minimal administrative functions. CIRD274500: the A term — royalties and annual fees under an exclusive licence are treated as acquisition costs and cumulatively increase A, reducing the fraction unless in-house or unconnected R&D continues. CIRD272000: tracking and tracing — expenditure must be identified, traced to a particular qualifying IP right and monitored; it need not have been in an R&D or RDEC claim; and HMRC’s acceptance of clear evidence in place of tracking where the fraction cannot be other than 1, with the warning about later acquisitions. CIRD275000: Patent Box calculation flowchart — step 17 directs that excluded income and items such as finance income and RDEC are kept out of relevant IP income sub-streams, and step 23 states the formula (D+S1)x1.3/(D+S1+A+S2), capped at 1. CIRD220130: finance income and excluded income — “Income arising from RDEC credits” is listed among income excluded from the Patent Box regime. CIRD275500: the value fraction — the alternative fraction in exceptional circumstances, the 0.325 floor, and examples such as a write-down of acquired IP. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # UK subsidiary, overseas parent: who claims the R&D relief? URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-a-uk-subsidiary-doing-cost-plus-rd-for-an-overseas-parent-claim/ Description: Usually yes. Where the overseas parent is not trading within the charge to UK tax, the UK subsidiary claims in its own right on its own costs. Questions •8 min read Can a UK subsidiary doing cost-plus R&D for an overseas parent claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Usually yes. Under the merged scheme, R&D a customer contracts out belongs to the customer rather than the company doing the work — unless the customer sits outside the UK tax net. Where the person contracting the work out is not acting in the course of a trade within the charge to UK tax, the claim stays with the company that did the R&D. An overseas parent with no UK trade sits inside that exception: the subsidiary claims on its own qualifying costs — and the cost-plus recharge neither creates the claim nor limits it. Why does an overseas parent change the answer? Contracted-out R&D is claimed by the customer where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Had a UK parent commissioned this work, the parent would hold the claim and the subsidiary none. The exception exists so relief is not lost where the customer could never have claimed it: a charity, a university or a health service body, or any person not trading within the charge to UK tax. HMRC calls them irrelievable clients. Two things about persons not trading within the charge to UK tax catch groups out. The test is the parent’s tax position, not its address. And “within the charge to tax” is wider than corporation tax: a UK sole-trader customer falls inside it, and so, on the face of the legislation, may an overseas parent that trades here through a UK permanent establishment, where it contracts the work out in the course of that UK trade. HMRC’s contracted-out guidance does not address permanent establishments, so this is a reading of the statute rather than a settled position — and it is a question to answer before the return goes in, not a reason to assume the claim is lost. Where the parent is within the charge through a UK establishment, the relief does not disappear; it moves to the company that contracted the work out, as who can claim R&D tax relief sets out. And a group has one option unrelated parties do not: the two companies can jointly elect that the one contracting the work out is treated as ineligible, which puts the claim back with the company doing the work. Groups and connected companies sets out how that election is made and when. A simpler route reaches the same place. Where the parent funds the subsidiary without contracting for activities to be carried out for it, nothing has been contracted out and the subsidiary is doing in-house R&D. Funding is not commissioning, and the paperwork behind a transfer decides which it is. The irrelievable-client condition is the same under ERIS, though a captive’s claim normally runs through the merged scheme. Does cost-plus pricing reduce the claim? No. The claim is built from what the subsidiary spent, not what it invoiced. Take a £4m cost base recharged at cost plus 8%. The claim is worked out on the qualifying costs inside that £4m — staff, externally provided workers, consumables, software, data and cloud computing — and the £320,000 mark-up changes none of it. The instinct that a recharge must shrink the claim comes from the old subsidised-expenditure rule, abolished for accounting periods beginning on or after 1 April 2024. It still decides the answer for earlier periods: what subsidised expenditure means sets out how it worked. Pricing the recharge at arm’s length does not rewrite the connected-party rules. HMRC’s manual is direct about it: transfer pricing rules do not displace the limits on expenditure for subcontracted R&D between connected persons. Where the subsidiary pays a connected company for part of the work, that cost is capped at the lower of the payment and the other company’s relevant expenditure, as the group rules set out. One point deserves a decision rather than a default. The credit is a receipt of the subsidiary’s trade, so it increases the same trading profit the cost-plus arrangement was designed to produce. Whether the group’s intercompany pricing policy treats the credit as reducing the cost base the mark-up is struck on, or leaves it in the subsidiary’s profit, is a transfer pricing question for the group to settle — and it decides which company ends up holding the benefit. When can the UK subsidiary still not claim? The most common failure is a chain. Every person who contracted the R&D out to the subsidiary has to satisfy the exception, including the customer at the top — not just the party that signed the immediate contract. HMRC’s own example: a UK company contracts development to a US company, which passes the work to its own UK subsidiary. The UK customer can claim. The US company cannot, having no UK trade. Nor can the UK subsidiary, because the customer above it is within the charge to UK tax. A captive that also serves external customers needs to know what sits above it. The subsidiary must also carry on a trade of its own and deduct the costs in computing its profits, and the R&D must relate to that trade. A company that is a cost centre in substance rather than a trader has nothing to claim. A service agreement priced at cost plus a margin is usually evidence of a trade; the case to worry about is a subsidiary carrying costs with no agreement and no margin. Where the work happens matters: payments to subcontractors and externally provided workers qualify only on the UK terms set out in overseas R&D costs. A subsidiary claiming for the first time must file a claim notification within six months of the end of its period of account; the parent’s claim history counts for nothing. Who owns the intellectual property is not the test. HMRC treats IP ownership as one of the surrounding circumstances that show what the customer intended, alongside financial risk and autonomy over the work — evidence of intention, not the rule itself. A group that treats the parent’s ownership of the results as settling the question — in either direction — has assumed something the legislation does not say. What should the intercompany arrangement show? Four things, on paper: the parent’s UK tax position, whether the parent is fulfilling somebody else’s contract, what work is done where, and what the subsidiary spent. A transfer pricing report and a monthly journal record the price and nothing else; the claim turns on the arrangement behind it. If a UK company in your group does R&D for an overseas parent and nobody has tested where the claim sits, talk it through with a chartered adviser. Sources CTA 2009 s1042F — qualifying expenditure on activity as contractor for an irrelievable client: condition B requires that each person by whom the R&D is contracted out to the company either is an ineligible company or “is not, in relation to the contracting out of the research and development by that person, acting in the course of a trade, profession or vocation within the charge to tax”. CTA 2009 s1053A — the identical condition for ERIS. CTA 2009 s1133 — contracted-out R&D: the intended-or-contemplated test at subsection (2)(c), and subsection (4), under which R&D is contracted out to a sub-contractor as well as to the immediate contracting party. CTA 2009 s1142 and CIRD163000 — ineligible companies: a charity, an institution of higher education, a scientific research association and a health service body; subsections (5) and (6) let two companies in the same group jointly elect that the one contracting R&D out to the other is treated as ineligible, by written notice, revocable, and ending once they are no longer in the same group. CTA 2009 s1042B — entitlement requires the company to carry on a trade in the period and the expenditure to be allowable as a deduction in calculating the profits of that trade. CTA 2009 s5 — subsections (2)(b) and (3): a non-UK resident company carrying on a trade in the UK through a permanent establishment is within the charge to corporation tax on the profits attributable to it. CTA 2009 s1042D — the in-house route, available where the R&D is not contracted out to the company; s1042 — “relevant research and development” means R&D related to a trade carried on by the company, or from which it is intended that a trade to be carried on by the company will be derived. CTA 2009 s1042H — the credit is brought into account as a receipt in calculating the profits of the trade. CIRD161000 — irrelievable clients under s1042F and s1053A; the general rule that only the party taking the decision to undertake or initiate R&D can claim; IP ownership, financial risk and autonomy listed among the surrounding circumstances rather than as the test. CIRD162000, example 5 — a UK customer contracting to a US company which passes the work to its UK subsidiary: the subsidiary cannot claim, because the condition is not met by the customer at the top of the chain. CIRD162100, example 10 — a UK contract research organisation running trials for overseas pharmaceutical companies not within the charge to corporation tax satisfies s1042F or s1053A and can claim for its expenditure. CIRD164000 — the group election is made by notice in writing before or at the same time as any claim that depends on it, there is no limit on the number, and “An overseas member of the group will in any case be ineligible so this election would not be necessary for a claim to be possible in principle”. CIRD81200 — relief is available only to companies within the charge to corporation tax in respect of profits charged to it, and the permanent-establishment principle “extends (with necessary modifications) to UK permanent establishments of foreign companies”. CIRD192000 — connection takes its meaning from CTA 2010 s1122, and “transfer pricing rules do not displace the limits on expenditure for subcontracted R&D between connected persons”. CTA 2009 s1134 — where the parties are connected, the qualifying element of a contractor payment is the lower of the payment and the contractor’s own relevant expenditure. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Does the R&D credit reduce quarterly instalments? URL: https://www.limestonegrey.com/rd-tax-relief/questions/does-the-rd-expenditure-credit-reduce-quarterly-instalment-payments/ Description: No — it adds to them, by the tax on the credit and nothing more. Instalments are worked out gross of it; the credit comes back at the claim. Questions •8 min read Does the R&D expenditure credit reduce quarterly instalment payments? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards No — it adds to them, by the tax on the credit and nothing more. Instalments are worked out on the corporation tax payable for the accounting period, and the expenditure credit is not part of that calculation, so nothing comes off for it. Being taxable income, the credit raises the profit corporation tax is charged on, and the instalments with it: at the 25% main rate a quarter of the credit goes out in instalments before the whole of it comes back at the claim. Nothing is lost. What moves is the timing, and it moves the wrong way for cash. Take £1m of qualifying spend by a company at that main rate. The credit is £200,000 and the tax on it £50,000, so the estimate of the total liability for that period should be £50,000 higher than with no claim at all, spread across the instalments. The £200,000 credit reduces no instalment. It discharges the period’s corporation tax later, at the claim. Which companies pay corporation tax by instalments? A company is large, and pays in four instalments over a twelve-month period, where its profits exceed £1.5m but do not exceed £20m. Above £20m it is very large and pays earlier. Profits here means the profits chargeable to corporation tax plus exempt ABGH distributions — broadly, dividends from companies outside the group. That is close to the augmented profits figure used for the small profits rate, but the instalment regulations carry their own definition and it is theirs that sets the threshold. A company with no corporation tax to pay has nothing to pay by instalments, so the question arises where profits clear the threshold — and the credit itself can be what takes them there. Both thresholds are divided by the number of associated companies, the company itself included, for accounting periods beginning on or after 1 April 2023, and every figure here is reduced proportionately for a period shorter than twelve months. A company with five associated companies is therefore tested against £250,000, not £1.5m. Two exceptions sit underneath. A company whose total liability for the period is £10,000 or less does not pay by instalments. And a company whose profits do not exceed £10m, and which was not large in the preceding twelve months, gets a year of grace — but that £10m is divided by associated companies in the same way, so the same five associates bring it down to £1.67m. There is no year of grace for a very large company. The dates are what make it bite. For a large company with a twelve-month period, the first instalment falls six months and thirteen days after the period starts and the last three months and fourteen days after it ends — usually well before the return carrying the claim is filed. A very large company pays four months earlier, on the fourteenth day of months three, six, nine and twelve, so every instalment falls due before the accounting period has finished. Does the credit push a company into the instalment regime? It can. The credit is brought into account as a receipt of the trade, so it forms part of the profits the threshold is measured against. A company forecasting £1.4m of profits with £2m of qualifying R&D spend adds £400,000 of credit and lands above £1.5m. Where associated companies divide the threshold, a smaller claim does the same. Any forecast used to decide whether instalments apply should carry the expected credit as income. The year of grace can absorb the first period it happens in, but only the first. Can the expected credit be taken into account when estimating instalments? Instalments run on the company’s own estimate, which HMRC expects reviewed at each due date, with a top-up where too little has been paid and a reduction or repayment claim where too much has. But what is being estimated is the total liability: the tax payable for the period as the return calculates it, after the reliefs and set-offs that computation gives effect to. The expenditure credit is not one of them. HMRC’s guidance on the point says so directly: the credit is a stand-alone credit and not a deduction in calculating the corporation tax liability, so it “cannot come into the calculation of quarterly instalment payments”. That guidance addresses the old RDEC, not the merged scheme, but the merged-scheme credit is built the same way in the two respects that matter: it is a taxable receipt, and it is applied to the period’s corporation tax by a separate step sitting outside the liability computation. On the sources as they stand, a company should add the tax on the credit to its estimate and deduct nothing for the credit itself. Netting the credit off is a mistake repeated at every instalment date. Instalments that prove too low carry interest on the shortfall from each due date until the normal due date nine months and a day after the period ends. That interest runs at a lower rate than ordinary late-payment interest and is deductible, so an honest under-estimate is a cash cost rather than a penalty. Where the under-payment is deliberate or reckless, by the company or by anyone acting on its behalf, HMRC can charge a penalty of up to twice that interest. When does the credit actually reach the cash? At the claim, not at the instalments. The first step of the payment sequence applies the credit against the company’s liability to corporation tax for the period, and on HMRC’s reading that liability need not still be outstanding. Where the instalments have already been paid, the set-off leaves the period overpaid and the excess is repaid — but the set-off carries the date it is made as its effective date of payment, so repayment interest generally does not run. The company has funded that tax in the meantime without compensation. The lever is the filing date, not the instalment estimate. Filing the return and the Additional Information Form earlier brings the discharge forward. Where instalments for another period are due when the claim is made, a later step in the sequence reaches them; and once a valid claim is in, HMRC accepts that a credit with nothing left to discharge can go against instalments still to fall due — in practice, the following period’s. How long an R&D tax credit takes to arrive sets out what has to be in place first, groups and connected companies covers surrender of the remainder to a group member, and accounting treatment covers where the credit sits in the accounts. Sources The Corporation Tax (Instalment Payments) Regulations 1998, SI 1998/3175 (as made) — regulation 2(3) defines a company’s total liability as the tax payable for the period calculated under paragraph 8(1) of Schedule 18 to the Finance Act 1998, less deductions from payments to sub-contractors; regulation 5 sets the instalment dates, the first six months and thirteen days from the start of the period and the last three months and fourteen days from its end; regulation 13 sets the penalty, up to twice the interest, for a deliberate or reckless failure to pay. Legislation.gov.uk carries this instrument only in its original form, so the current thresholds are taken from the amending instrument and HMRC’s manual below. The Corporation Tax (Instalment Payments) (Amendment) Regulations 2017, SI 2017/1072 — substitutes regulation 3: a large company has profits exceeding £1.5 million but not £20 million, a very large company profits exceeding £20 million, with the £10,000 total-liability exception and the £10 million year of grace. New regulation 3(8) divides the £1.5 million, £20 million and £10 million figures by the number of group companies, and regulation 3(10) reduces all four figures proportionately for a period shorter than twelve months. CTM92520: large companies — profits means profits chargeable to corporation tax plus exempt ABGH distributions received other than from a company in the same group; the threshold is reduced proportionately for a short period and, for accounting periods beginning on or after 1 April 2023, divided by the number of associated companies including the company itself. CTM92530: special cases — the £10,000 total-liability exception and the year of grace for a company not large in the preceding twelve months, with the £10 million limit divided by associated companies in the same way as the profit threshold. CTM92800: very large companies — instalments four months earlier than a large company, and no period of grace. CTM92640: company procedure — companies review the estimate of total liability at each instalment date, top up a shortfall, and deduct or reclaim an excess. CTM92660: debit interest — interest on late or inadequate instalments runs at a lower rate than that generally chargeable on overdue corporation tax, up to the normal due date, and is deductible in computing profits. Pay Corporation Tax if you’re a large company — estimate the liability, deduct all reliefs and set-offs as when working out the tax due on the return, then revise the estimate as the period progresses. Pay Corporation Tax if you’re a very large company — the four instalments fall on the fourteenth day of months three, six, nine and twelve of a twelve-month period. FA 1998 Sch 18 para 8(1) — the calculation of tax payable for an accounting period. It contains no step for the R&D expenditure credit. CTA 2009 s1042H — a company claiming the credit “must bring the amount of the credit into account as a receipt in calculating for corporation tax purposes the profits for the period of the trade concerned”. CTA 2009 s1042I — the seven steps: step 1 applies the credit in discharging any liability to pay corporation tax for the accounting period, step 4 any other accounting period, step 5 surrender to a group member. CIRD89870: effect on quarterly instalment payments — the credit is a stand-alone credit and not a deduction in calculating the corporation tax liability, so it cannot come into the calculation of quarterly instalment payments; the step 1 liability need not be outstanding; the set-off carries a later effective date of payment, so repayment interest does not generally accrue; and once a return and a valid claim are in, with nothing left to discharge at the earlier steps, the company “could choose to use the credit to discharge future QIPs”, in practice those of the following accounting period. Written for the old RDEC scheme. CTA 2010 s18L — augmented profits, for comparison: a company’s taxable total profits plus exempt distributions of a qualifying kind that are not excluded. The instalment regulations set their own, near-identical, definition of profits. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # What HMRC's GfC3 guidelines expect from an R&D claim URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-do-hmrcs-guidelines-for-compliance-expect-from-an-rd-claim/ Description: GfC3 sets out how HMRC reads the R&D definition. It changes no law, but it states who counts as a competent professional and what a claim should record. Questions •7 min read What do HMRC's Guidelines for Compliance expect from an R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards HMRC’s Guidelines for Compliance on R&D expect a claim built in a particular order: a competent professional identifies the advance and the uncertainties first, the costs are found afterwards, and both are recorded well enough to be evidenced later. GfC3 — “Help to see if your work qualifies as research and development for tax purposes” — is HMRC’s own account of how it reads the definition of R&D. It changes nothing in law, and says so: the guidelines “do not change our view of the law”. Read GfC3 as HMRC’s marking scheme. The DSIT Guidelines remain the syllabus. GfC3 runs to six parts. Part 2 says HMRC expects you to take fourteen steps when you claim; part 5, which carries most of the record-keeping content, is a recommended approach rather than a required one. Neither part is law. They are HMRC’s own statement of what it looks for. The duty underneath them is not optional: a company must keep the records needed to deliver a correct and complete return, whatever approach it takes to them. What do the guidelines expect you to do before you claim? Fourteen steps, and their order carries the meaning. The first ten belong to the competent professional. They identify the projects that sought an advance, confirm the field each sits in, name the exact uncertainties, and explain why the answer to each was not readily deducible by a competent professional in that field. They set out what the field already knew when the project started, and why resolving the uncertainties would advance it. Two of the ten are dates: when each uncertainty was identified, and when it was resolved, abandoned, or is expected to be resolved. The rest is the shape of the work — why the approach to each uncertainty amounted to a project or sub-project, the plan for resolving it, and the steps actually taken. The last four fall to the company and its adviser, still supported by the competent professional where the judgement is technical: identify the activities that directly contributed to resolving each uncertainty, identify any qualifying indirect activities from the paragraph 31 list, find those activities’ costs in the records, and check whether accounting practice, the DSIT Guidelines or tax law restricts them. Costs come thirteenth; the fourteenth step only asks whether any of them are restricted. A claim assembled the other way round — the ledger first, a narrative written to fit the total — has no answer to the question the sequence forces: what did you not know, and when did you stop not knowing it? HMRC pairs the steps with responsibility: the facts of a claim remain the company’s even where an adviser prepared it, and a careless overclaim carries a penalty. The same fourteen steps produce what the Additional Information Form asks for. Where do the guidelines go beyond the DSIT Guidelines? Who the competent professional is. The DSIT Guidelines measure uncertainty, overall knowledge and appreciable improvement through this person’s eyes, and never say who qualifies. GfC3 does. It expects three attributes together: knowledge of the relevant principles, awareness of the state of knowledge in the field as a whole, and accumulated experience with a successful track record. It warns that having worked in a field, or an intelligent interest in it, is not enough. Who counts as a competent professional works through the test and the evidence that supports it. What that person’s opinion has to say. GfC3 asks it to cover the depth of their knowledge and experience, the state of knowledge in the field, what the advance is, why it is an advance, and whether it is one of knowledge, capability or both. A bare assertion that the project qualifies will not do. It also asks you to keep the opinion in writing, with the person’s qualifications attached — evidencing the claim gets harder if they are unavailable. Where a project starts, and what “readily deducible” means. There can be no qualifying project before a plan or method to resolve identified uncertainties existed. A discovery made outside a project is not claimable, though the work to develop it afterwards can be. GfC3 also tightens the phrase that claims lean on hardest: readily deducible does not mean straightforward or effortless, but able to be worked out from existing knowledge without significant effort. Where the edges fall. GfC3 draws lines that the DSIT Guidelines do not. Staff hired to maintain equipment used on qualifying work are doing a listed indirect activity; the HR team’s work in hiring them is too remote from the advance to be part of the project, even though the paragraph 31 list names taking on staff. Extra security guarding trial equipment qualifies; the general patrol covering the trial area does not. And certifying a product whose functionality is already proven is not R&D — unless the certification itself demands a further advance in science or technology to materially improve functionality. That boundary does most of its work in regulated sectors; medtech claims show where it falls in practice. Where do they only restate the DSIT Guidelines? Most of part 4. The advance is measured against the field rather than your own company; appreciable improvement, uncertainty and system uncertainty carry their DSIT meanings; work that independently repeats an undisclosed trade secret still counts; failure does not disqualify a project. All of it is the DSIT Guidelines in shorter sentences. Our guide to what counts as qualifying R&D applies the same tests. A claim that already gets those right is confirmed by GfC3 rather than caught by it. The twenty-seven worked examples across parts 3 and 4 show HMRC applying its own tests to facts. HMRC says they are not a template for your own project — write from your own facts rather than the example’s. What should you do differently because of it? Name the competent professional before drafting starts, and record their credentials against the three attributes. Get their opinion in writing while they are still there. Date both boundaries: when the uncertainty was identified, and when it was resolved or abandoned. GfC3 returns repeatedly to the closing boundary: testing after the answer was known, fine-tuning, certification and scale-up. Then write down the method. Where costs are apportioned or estimated, GfC3 sets the standard the estimate must meet and the workings it expects you to keep — our page on what records you need sets those out in full. None of this stops HMRC opening a check. What it changes is how the check goes: the evidence is already assembled, and the account is the one the work actually produced. See HMRC R&D enquiries. For a straight answer on whether your evidence would survive that reading, talk it through with a chartered adviser. Sources GfC3: purpose, scope and background (part 1) — the guidelines expand on HMRC’s existing guidance on the DSIT guidelines without changing HMRC’s view of the law; getting the claim right is the company’s responsibility even where a tax adviser is used, and carelessness leading to an inaccurately high claim carries a penalty. First published 31 October 2023, last updated 23 January 2025. GfC3: expectations of claimants (part 2) — the fourteen steps: ten for the competent professional, then four for the company or its agent, supported by a competent professional as needed, which find the qualifying costs in the records and then test them for restriction against generally accepted accounting practice, the DSIT guidelines and tax law; the facts of a claim always remain the company’s responsibility. GfC3: importance of a competent professional (part 3) — the three attributes HMRC expects, the examples of evidence of competence (any one of which may be good evidence), the warning that having worked in a field or having an intelligent interest does not suffice, and the five things the professional’s opinion should set out. GfC3: how to identify qualifying R&D activities (part 4) — there can be no qualifying project before a plan or method to resolve identified uncertainties existed; “readily deducible” means able to be worked out from existing knowledge without significant effort; the paragraph 31 applications on hiring, site security and IT updates, including that HR costs of hiring staff who undertake qualifying indirect activities are too remote; and that testing after the uncertainties are resolved, including regulatory certification of already-proven functionality, is not R&D unless certification requires a further advance. GfC3: recommended approach to claims and record keeping (part 5) — you do not have to follow the recommended approach; keep a written copy of the competent professional’s opinion with their qualifications and experience, since it may be hard to evidence the claim if that person is unavailable; estimates reached using evidence and reason; the recommendation to record the claim methodology, sampling and apportionment basis; large business customers agree sampling with their customer compliance manager first. FA 1998 Sch 18 para 21 — the statutory duty underneath the guidance: a company which may be required to deliver a company tax return must keep such records as may be needed to enable it to deliver a correct and complete return for the period, and preserve them. Guidelines on the meaning of R&D for tax purposes (DSIT) — the definition GfC3 expands on: the project at paragraph 19, overall knowledge or capability at 20, appreciable improvement at 23 to 25, system uncertainty at 29 to 30, the qualifying indirect activity list at 31 (including “taking on and paying staff” at 31(c)), the start and end of R&D at 33 to 34, technological versus commercial planning at 36 to 37, and abortive projects at 38. The term “competent professional” runs throughout without being defined. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How to enter an R&D claim on the CT600 and CT600L URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-do-i-enter-an-rd-claim-on-the-ct600-and-ct600l/ Description: Tick boxes 656 and 657, work the seven payment steps down the CT600L, then carry L210 to box 530, L125 to box 880 and L180 to box 875. Questions •8 min read How do I enter an R&D claim on the CT600 and CT600L? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The CT600 carries the flags and the totals; the CT600L does the arithmetic. Tick box 656 to confirm the claim notification and box 657 the Additional Information Form, work the credit down the CT600L, then copy three figures back: L210 to box 530, L125 to box 880, L180 to box 875. Which part of the CT600L you use turns on the scheme: the merged credit runs through the same boxes whatever the size of the claimant. Sequence first — it is the easiest way to lose a claim that is otherwise sound. The Additional Information Form has to reach HMRC before or on the same day as the return; the boxes confirm that the form and the notification were submitted, and ticking them does not submit anything. Box 650 flags an SME claimant, box 655 a large company — the company, not the scheme, so an SME on the merged credit ticks 650. How to claim R&D tax credits sets the order out. Which section of the CT600L does each scheme use? The boxes were laid out for the old two-scheme world and the labels still show it: L5 to L165 is expenditure credit. Boxes L166 to L190 sit under a heading naming both — “Small and medium-sized enterprise (SME) R&D and enhanced support for R&D intensive SME (ERIS)” — but for a period beginning on or after 1 April 2024 the SME half is dead, and the legacy boxes L185 and L190 with it. Only a company qualifying for enhanced R&D intensive support belongs there; an SME on the merged credit stays out. Claim the merged scheme and ERIS for the same period and the two sections talk to each other twice. The PAYE and National Insurance figures go in once, at L167 to L169A, and L71 to L73A stay blank. The two claims share one cap instead of getting one each: L75 becomes three times the sum of L168 and L169, plus £20,000, less the ERIS credit at L170. The PAYE cap on R&D tax credits works that arithmetic through. How do the seven payment steps run down the form? Show the gross credit as taxable income before the steps run, in the accounts or the computations. Qualifying expenditure goes in at L10, the gross credit at L15. Ahead of step 1 sits a pre-step: a notional tax restriction brought forward, or a credit surrendered by a group member, goes in at L5 and discharges this period’s corporation tax at L7. Step 1 discharges the corporation tax liability for the period itself. L30 carries it in — from L9 where the pre-step ran, otherwise from box 475 — L35 removes the income tax at box 515 set against it, leaving the maximum set-off at L40, and L45 is the lower of that and the total credit at L25. Step 2 is the notional tax deduction, at L50 to L65. It reduces the payable element by notional tax: at the 25% main rate where the company has profits chargeable at that rate, and at the 19% small profits rate in any other case, a loss-maker included. That is the difference between 15p and 16.2p of net credit per £1 of qualifying spend. The restricted amount is carried forward at L65, not lost. Step 3 is the PAYE and National Insurance cap, at L70 to L80. L71 is the exception: a company creating or managing its own intellectual property, with connected-party externally provided worker and subcontractor spend within 15% of qualifying expenditure, is outside the cap, and L71A must be completed with it. Otherwise L75, for a period beginning on or after 1 April 2024, is £20,000 plus 300% of relevant PAYE and National Insurance liabilities — less any ERIS credit where both schemes are claimed — the £20,000 proportionately reduced for a short period. What exceeds the cap drops out at L80, reaches the next period through L145, and comes back at L20 on next year’s form. Steps 4 to 6 discharge corporation tax for other periods at L90, surrender to a group member at L100, and settle anything else owed to HMRC — L110 for liabilities on this return, L115 for those outside corporation tax, such as PAYE or VAT. Step 7 is the remainder. L15 is completed gross, including any amount the going concern rules hold back; it comes out again at L123, where a current-period claim records what is not payable because the company was not a going concern. L125 is the payable credit; the condition is on who can claim R&D tax relief. How do a payable amount, an offset and a group surrender each appear? Paid out. L125 goes to box 880, with X in box 40 and the bank details at boxes 920 to 940, which HMRC asks for to avoid delays. Set against tax. Four boxes collect it: L194 for the pre-step discharge, L195 for step 1, L200 for step 6, L205 for an ERIS credit. Their total at L210 goes to box 530, which covers only liabilities on this return: L90 and the L115 half of step 6 both stay outside it. Surrendered to a group member. The step 5 amount goes in at L100 and again at L160; the step 2 restriction can be surrendered too, at L135 and L155, totalled at L165. No box names the recipient, so the computations must. The receiving company shows the credit at box 615 of its own return and may bring it in at L5, even with no R&D claim of its own — though not for a surrender made after its amendment window has closed. R&D tax relief in groups covers who claims what. What does an ERIS claim look like on the return? The CT600L only comes in where a payable credit is claimed: an ERIS claim taken as the additional deduction alone stops at box 660. Box 653 adds that the SME is R&D intensive, and can only be ticked where 650 is. Box 659 takes the qualifying expenditure, box 660 the enhanced expenditure — that figure plus the 86% additional deduction. On the CT600L, L166 repeats box 659 and must agree with it. L170 is the credit claimed: 14.5% of the surrenderable loss, subject to the cap. L175 is the part set against other liabilities on the return, and L180, the balance, goes to box 875 — “Payable Research and Development tax credit” on the form. Two traps. Merged-scheme expenditure goes in neither box 659 nor box 660 — both boxes say so — so it appears at L10 and nowhere else. And the loss surrendered for the credit is written off in the computations: it must not reappear in the losses carried forward. If the numbers do not tie across the return, computations and form, talk it through with us. Sources Completing the CT600L page for research and development — every box cited above, last updated 6 April 2026: the pre-step 1 boxes L5 to L9, the seven steps at L10 to L125, the carry-forward and surrender boxes L129 to L165, the intensive-support section L166 to L190 (for periods beginning on or after 1 April 2024, completed only where the company qualifies for ERIS), the set-off total L194 to L210, the instruction to leave L71 to L73A blank where both schemes are claimed, the two forms of the L75 cap — £20,000 plus 300% of relevant PAYE and NIC where only the expenditure credit is claimed, and that figure reduced by the L170 credit where both schemes are claimed — with the £20,000 proportionately reduced for a short period, the L71 exception and the L71A entry it obliges, the gross entry at L15 with going-concern amounts removed at L123, and the requirement that the computations name the group company a credit is surrendered to. Completing your Company Tax Return (CT600 guide) — last updated 2 June 2026: box 475 net corporation tax liability, box 515 income tax deducted, box 530 (from L210), box 615 credits surrendered to this company, boxes 650, 653, 655, 656 and 657, boxes 659 and 660 (both of which exclude expenditure qualifying for the expenditure credit), box 875 (from L180), box 880 (from L125), box 40 and the bank details at boxes 920 to 940, and the four conditions for box 943. Make a claim for R&D tax relief on your company tax return — the credit shown as taxable income in the profit and loss account or added to profit in the computations, the tick boxes, the seven steps in plain terms, and the CT600L requirement for each scheme — for ERIS, only “if you’re claiming a payable tax credit”, which the CT600L’s own “when to complete” section matches. CT600L supplementary page — the form itself, last updated 6 April 2026, carrying the printed heading over L166 to L190: “Small and medium-sized enterprise (SME) R&D and enhanced support for R&D intensive SME (ERIS)”. CTA 2009 s1042I — the seven steps the form follows, with s1042J adding any amount deducted at step 3 to the credit for the next accounting period even where that amount would otherwise be nil, s1042K the notional tax deduction at step 2, s1042L allowing that deducted amount to be surrendered to a group member or carried forward against a later period’s corporation tax, and s1042N the mechanics of a surrender. CTA 2009 s1112B — the cap of £20,000 plus three times the company’s relevant PAYE and NIC liabilities, proportionately reduced where the accounting period is less than twelve months; subsection (4) reduces the merged-scheme cap by any R&D tax credit obtained under Chapter 2, so a company claiming both schemes gets one cap and not two. s1112E is the exception flagged at L71: a company creating or managing its own relevant intellectual property, whose connected-party externally provided worker and subcontractor expenditure is within 15% of qualifying expenditure, has no cap at all. CTA 2009 s1112F — nothing is paid at step 7 where the company was not a going concern when it claimed; s1112H — payment is not required while the return is under enquiry, or where PAYE and NIC liabilities are outstanding. CTA 2009 s1055, s1058 and s1062 — the surrenderable loss capped at 186% of qualifying expenditure, the credit at 14.5% of it subject to the same PAYE and NIC cap, and the reduction of the loss carried forward by the amount surrendered. CIRD112100: the payment steps under the merged scheme — HMRC’s own walk-through, including that the steps run even where there is no new claim but an amount was carried forward from step 3. CIRD122000: ERIS calculation — the 86% additional deduction, the 14.5% credit, and the surrender effected by writing the losses off in the company’s tax computations. CIRD81805: restriction of nominations and assignments — for claims made on or after 1 April 2024 HMRC generally pays only the claimant company, which supplies its own payment details on the CT600. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Prototype sold to a customer: what still qualifies URL: https://www.limestonegrey.com/rd-tax-relief/questions/can-i-claim-rd-tax-relief-on-a-prototype-that-is-later-sold/ Description: Yes. Designing, building and testing the prototype qualifies, and a later sale does not undo it — but consumables that end up in the item sold drop out. Questions •7 min read Can I claim R&D tax relief on a prototype that is later sold? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Yes. Designing, building and testing a prototype to resolve a scientific or technological uncertainty is R&D, and selling it afterwards does not take that work back out of the claim. One category of cost does drop out: the consumable materials that ended up inside the item you sold. And where the item was always going to be sold — a first article built against a customer order — the boundary tightens across every cost category, because part of that build meets the customer’s order rather than resolving the uncertainty. Which costs survive the sale, and which do not? Where the unit was built for the R&D and sold afterwards, the restriction is a consumables rule and nothing wider. Expenditure on consumable items does not qualify where the R&D relates to an item produced in the course of it, the consumables form part of that item, and the item is transferred for money or money’s worth in the ordinary course of the transferor’s business. The same applies where the R&D is into a production process and the consumables end up in what that process makes. Staff costs, externally provided workers, subcontracted R&D and software sit outside the restriction entirely: an engineer’s time on the prototype is claimable whether or not it is later sold. Which costs qualify for R&D tax relief sets out the six categories and what each one excludes. Three details settle most cases. A sale is not the only trigger. Transfer covers possession as well as ownership, so letting the item out on hire counts, and it can be made by any “relevant person”: the company, the contractor it engaged, the customer that contracted the work out, or anyone connected with them. A unit sold on by a sister company is caught. Incorporating the item into something larger does not break the chain either: transferring the larger thing transfers the item inside it. Waste is not a sale in the ordinary course of business. The legislation says so. HMRC treats four further situations the same way: an inevitable by-product of the R&D, an unintended consequence of it, a fortuitous sale of something the company does not usually sell, and a sale at a price below the cost of the consumables inside the item. Falling outside the ordinary course is not enough on its own: the consumable must still have been employed directly in the R&D. Part sold, part kept. Where only some of the output is transferred, only that proportion of the consumable cost comes out. Material scrapped, held back for further testing or sold as scrap stays in. Handing a unit out for evaluation is different. Information obtained from testing an item is not consideration for transferring it, so lending or giving a prototype to a potential customer for trial data does not trip the rule. What if the item was always going to be sold? Then it is not a prototype in the sense the Guidelines use, and less of the build qualifies. The Guidelines treat work to create materials or equipment as directly contributing only where the thing is created solely for use in the R&D: a prototype, in that sense, is a single-purpose unit built for the project and not for sale. HMRC calls the alternative a first-of-class item: a build whose cost, in money or in time, makes it uncommercial to construct a separate unit purely for the R&D, so the company builds the article it will deliver and resolves the uncertainty along the way. HMRC’s position is that in most cases the total build cost of a first-of-class item is not expected to qualify, because the build meets a customer order as well as resolving uncertainty. What qualifies is the work directly contributing to that resolution — in HMRC’s example, the design, build and testing of the sub-assembly where the uncertainty sat. The rest falls within the production and distribution of goods and services, which the Guidelines put outside R&D. Consumables used in the qualifying work qualify too, apart from those that end up in the article finally handed to the customer — in that example, the materials in the sub-assembly as finally fitted. The split has to be demonstrated by the company rather than assumed. What makes that demonstrable is the baseline: the parts of the build the company could already deliver with existing technology, set against the parts where it could not. Services follow the same logic: a practice designing to a customer’s specification claims the advance-seeking work, not the whole job. This is the line manufacturing, engineering and agritech claims have to draw — for agritech, on pilot plots and the produce a field trial yields. When does R&D end and production begin? R&D ends when the uncertainty is resolved or the work to resolve it stops. The Guidelines give a second, harder marker: the knowledge codified in a form a competent professional could use, or a prototype or pilot plant with all the functional characteristics of the final product. Once the resulting modifications have been made and retesting is satisfactorily complete, later work is not R&D. Building and running a pilot plant follows the same rule: R&D while the uncertainty remains, and not after. What counts as qualifying R&D sets out the advance and uncertainty tests in full. Production trials sit in between and are apportioned. Where a trial run is needed to establish whether the advance has been achieved, its costs qualify up to the point the uncertainty is overcome and not beyond. A run performed only to validate a process that carries no remaining uncertainty does not qualify at all. The same reasoning applies to certification: obtaining regulatory approval for a product whose functionality is already proven is not R&D, though work to achieve a further advance the approval demands can be. What doesn’t count as R&D takes the exclusions further. What should a claim record? Track what happened to each item and when. HMRC’s worked examples turn on whether a transfer has taken place in the period: a unit kept back for further development keeps its consumable costs in that period’s claim, and they fall out in the period the sale happens. Record which units were sold, scrapped, loaned out for evaluation or still on site, and keep the bill of materials for each. For a first article, record the sub-assemblies the uncertainty sat in and what share of the build they represent. The records behind a claim sets out what that file needs to contain. If a prototype or first-article build sits in your claim, talk it through with a chartered adviser. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 27(a), activities to create materials or equipment directly contribute “provided that the software, material or equipment is created or adapted solely for use in R&D”; 28(c), the production and distribution of goods and services does not directly contribute; 33 and 34, when R&D begins and ends, including the prototype or pilot plant “with all the functional characteristics of the final process, material, device, product or service”; 39, the design, construction and testing of prototypes generally fall within R&D, and further work does not once retesting is satisfactorily completed; 40, pilot plants. CTA 2009 s1126A — subsections (1) and (2), consumable items forming part of an item produced in the course of the R&D, or by a process the R&D relates to, and transferred by a relevant person for consideration in money or money’s worth in the ordinary course of that person’s business; (3) and (4), apportionment where only a proportion is transferred; (6), what “forms part of” means; (7), transfer of ownership or possession, and the transfer of a larger item into which the item is incorporated; (8), information obtained in testing is not consideration; (9), waste; (10), the definition of “relevant person”, which extends to contractors and connected persons. CTA 2009 s1126 — subsection (7): the general attributable-expenditure rule is subject to sections 1126A and 1126B. Section 1126B is a Treasury regulation-making power over the same ground. Finance Act 2015 s28 — subsection (7): the amendments inserting sections 1126A and 1126B have effect in relation to expenditure incurred on or after 1 April 2015. CIRD81350: production and distribution of goods and services — HMRC on prototypes as single-purpose units not built for sale, including loan or gift for evaluation in exchange for information; first-of-class items intended for sale from the outset, where total build costs are not expected to qualify and the company must demonstrate which activities directly contributed; manufacturing trials apportioned to the point the uncertainty is overcome; consumables in output sold as scrap or a recyclable by-product remaining qualifying; and services considered in exactly the same way as goods. CIRD82300: consumable items — the Finance Act 2015 restriction, worked examples of a sold kiln and a soft-drink production process, projects spanning more than one period, and the four transactions HMRC treats as outside the ordinary course of business. CIRD82400: meaning of consumed or transformed — components integrated into a larger assembly are transformed into part of a prototype, and the Finance Act 2015 rules may then apply if the prototype is sold. Help to see if your work qualifies as R&D for tax purposes (GfC3), part 4 — testing after the uncertainties have been resolved does not qualify, and regulatory certification of a product with already proven functionality is not R&D unless it requires further advances. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # HMRC nudge letters about R&D: what to do URL: https://www.limestonegrey.com/rd-tax-relief/questions/what-is-an-hmrc-nudge-letter-about-rd-and-what-should-i-do/ Description: A nudge letter is a standard HMRC letter asking you to check an R&D claim. It is not an enquiry and no power sits behind it. Ignoring it is the worst move. Questions •7 min read What is an HMRC nudge letter about R&D, and what should I do? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards A nudge letter is a standard letter HMRC sends to many companies at once, asking directors to check that an R&D claim was complete and correct. HMRC calls the technique a one to many approach, and its guidance says that approach is not a compliance check. No power sits behind it, and not replying carries no penalty of its own; the penalty risk lives in the claim, not in the letter. What the letter tells you is that HMRC has put your company in a group it is watching, and that you have the cheapest opportunity you will get to check the claim yourself before HMRC’s compliance side does. How is a nudge letter different from an enquiry? An enquiry starts with a particular document: HMRC opens one by giving the company a notice of enquiry, and where it wants records it issues a written information notice. Both are made under named powers, and the letter says which. A nudge letter names none. HMRC’s January 2023 R&D letter is explicit on its face: it is not a compliance check into the company tax return, and it is there to help directors make sure their claims are complete and correct. So look at what the letter cites and what it demands. The three R&D letters HMRC has published set no deadline, attach no certificate to sign and require no reply, though the January 2023 letter tells a director who is unsure to contact HMRC. Other campaigns are not so mild: ICAEW’s tax faculty records that some nudge letters attach a certificate, and that some state HMRC will open a compliance check if no response arrives. A letter that quotes no legislation is not automatically a nudge letter either: HMRC also opens informal compliance checks, and those are about your return. What are the R&D letters actually asking? The January 2023 campaign went to 2,024 companies that had claimed before, with a seven-point checklist for the director: have you read HMRC’s guidance; is the project seeking an advance in the field of science and technology; do you understand what you are claiming for; who has helped with the supporting report and are they qualified to do so; have you read it and do you agree with it; has the third party answered your questions; does the claim seem too good to be true. The two sector campaigns are aimed at a sector rather than at a claim history. HMRC wrote to care homes and nursing homes in July 2023, around 7,500 of them, asking directors to review any R&D claims already made on the company’s behalf. It wrote to companies selling goods by mail order or on the internet in May 2025, where its stated aim was to reach companies before they claim at all. Each lists what HMRC keeps rejecting: day-to-day business activity, digitising administration, off-the-shelf platforms adapted to the business. Underneath all three letters is the same test: an advance in science or technology for the field as a whole, not just the company’s own knowledge. A care home claim that failed it reached the First-tier Tribunal. The care home letter puts one point plainly. HMRC says a no win, no fee arrangement does not mean there is little or no risk to the company: where a claim is wrong, it “must pay back the full amount claimed, including any agent fees”, and HMRC may charge interest and a penalty on top. What are the options once the letter arrives? Four, and which applies turns on the claim, not the letter. The claim stands. Do the review properly and record what was checked and who confirmed the technical position; that is what you will want if a compliance check follows later. Where the letter asks for a reply, reply. The return is still open to amendment. The correction goes there, where HMRC’s own letter points; it is the cheapest route. Backdated R&D claims sets out how long a return stays open. The amendment window has closed and there is money to repay. HMRC runs a disclosure service for overclaimed R&D relief. R&D voluntary disclosure covers what it involves, what it costs, and the two-step route where an SME claim should have been RDEC. The claim was knowingly wrong. Then the disclosure service is not the route, and advice comes before anything goes in writing. If you cannot tell which of the four applies, that is a question about the claim rather than about the letter — and suspecting a claim was wrong is not the same as knowing it. R&D voluntary disclosure starts from the same point. Why is ignoring it the worst option? Because it changes nothing except the price. The letter neither opens an enquiry nor closes the window for one, and after that window HMRC can still assess by discovery, on time limits set by behaviour — can HMRC make me pay back an R&D tax credit? sets out both. Waiting does not make the claim safer; it means somebody else reads it first. One penalty point is worth understanding first. A penalty for an inaccurate return is reduced according to whether the disclosure was unprompted — made when the company had no reason to believe HMRC had discovered, or was about to discover, the error. Whether a disclosure is unprompted is an objective test on the facts. HMRC’s guidance to its own officers says that a national campaign highlighting an area HMRC will be concentrating on does not stop a disclosure from being unprompted, and that being contacted to say HMRC wishes to check the return does. A nudge letter sits between the two: it says on its face that it is not a compliance check, but it arrives addressed to your company. ICAEW’s tax faculty records that the position is unsettled for letters of this kind, so this is an argument to be made on the facts rather than an outcome to rely on — and it stops being available at all once a notice of enquiry arrives. Where reasonable care was taken, no penalty arises either way. What penalties can HMRC charge if an R&D claim is wrong? shows what the difference is worth. For an independent read of the claim first, our free claim review is a confidential second opinion on claims already filed, including those another firm prepared. There is no obligation to take anything further, and nothing goes to HMRC on your behalf without your instruction. If the letter has already become a compliance check, HMRC R&D enquiries explains what follows. Sources CH600110: the one to many approach — “A One to Many approach is where HMRC sends one standard message to many customers… A One to Many approach is not a compliance check.” CH600120: what a One to Many approach is — formal notices covered by legislation are outside the One to Many approach, and an officer who wants information must either open a compliance check or make clear there is no obligation to provide it. (Page under HMRC review.) Check your claim for Research and Development tax relief — HMRC’s January 2023 letter, released through the Chartered Institute of Taxation: “This letter is not a compliance check into your Company Tax Return. It is to help you make sure your claims are complete and correct.” The seven-point checklist and the amendment signpost are HMRC’s. CIOT records 2,024 letters in two batches, issued in the weeks commencing 23 and 30 January 2023. R&D care home letter — HMRC’s 2023 letter to the nursing and care home sectors, released through CIOT: the activities HMRC rejects in the sector, pay first and check afterwards, and repayment of “the full amount claimed, including any agent fees”. Claims for Research and Development tax relief — HMRC’s May 2025 letter to companies selling by mail order or on the internet, released through CIOT. HMRC’s approach to R&D tax reliefs 2023 to 2024 — the education campaigns and the sectors targeted; “In July 2023, HMRC wrote to around 7,500 companies” in the care home sector. HMRC’s approach to Research and Development tax reliefs (17 July 2023) — “large-scale one-to-many interventions” as part of HMRC’s R&D compliance activity. FA 1998 Sch 18 para 24 — an enquiry is opened by giving the company notice of intention to enquire, the “notice of enquiry”. FA 2008 Sch 36 para 1 — an information notice is given “by notice in writing” and requires information or documents reasonably required to check the taxpayer’s tax position. CH82420: unprompted and prompted disclosure — a disclosure is unprompted where the person “has no reason to believe that we have discovered or are about to discover the inaccuracy or under-assessment”. CH82421: determining unprompted or prompted disclosure — an objective test; “A national campaign highlighting an area of the trading community on which HMRC will be concentrating would not stop a disclosure from being unprompted”, whereas being contacted to say HMRC wishes to make a compliance check does. ICAEW, Has HMRC sent your client a letter? — a professional body’s summary, not HMRC’s words: nudge letters are not formal enquiries, they are either educational or data-based, and some state that a compliance check will follow if HMRC receives no response. Tell HMRC if you’ve claimed too much R&D tax relief — the disclosure route where the return can no longer be amended. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # Does an R&D tax credit affect EIS or SEIS status? URL: https://www.limestonegrey.com/rd-tax-relief/questions/does-claiming-rd-tax-credits-affect-eis-or-seis-status/ Description: No. EIS and SEIS status, and VCT qualifying holdings, turn on what a company does and how big it is, not on what it receives from HMRC. Questions •8 min read Does claiming R&D tax credits affect EIS or SEIS status? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards No. Claiming an R&D tax credit, under the merged scheme or ERIS, does not disturb a company’s EIS or SEIS status, or the standing of its shares as a VCT qualifying holding. Those schemes test what a company does and how big it is: its trade, its activities, its assets, its age, its headcount. A credit paid by HMRC is a tax receipt, not an activity, and none of the conditions a company has to meet turns on whether it claims R&D relief. Research and development is itself one of the activities EIS and SEIS money may be raised for. Does a payable credit affect the qualifying trade test? No, because that test asks what a company does, not what it receives. An EIS or SEIS company must exist wholly, ignoring incidental purposes, to carry on one or more qualifying trades — or, where it is a parent company, its group’s business must not be substantially made up of non-qualifying activities. For SEIS the trade must also have begun within the three years before the share issue, and be the company’s first. A qualifying trade is one conducted on a commercial basis and with a view to the realisation of profits, and not wholly or substantially in excluded activities. That list is exhaustive and specific — dealing in land or financial instruments, banking, leasing, property development, farming. Receiving a tax credit is not on it. HMRC judges the test by what directors and employees actually do: its manual says a new company setting up a trade does not fail merely because it is not yet trading, with much of its money temporarily on deposit. One entry on that list bears on R&D-led companies: a trade consisting to a substantial extent in receiving royalties or licence fees is excluded, unless the fees are attributable to intangible assets of which the company, or a qualifying subsidiary, created the greater part by value. A biotech licensing out a compound it discovered itself is inside that carve-out; one licensing in and sub-licensing is not. Can EIS or SEIS money be raised for the research itself? Yes — and that is the strongest answer to the question in the title. Both schemes define the activity money may be raised for as carrying on a qualifying trade, or preparing to carry one on, or carrying on research and development from which the company intends that a qualifying trade will be derived, or which will benefit a qualifying trade it carries on or will carry on. The research has to be under way when the shares are issued, or begin immediately afterwards. A pre-revenue company with no sales can take EIS or SEIS money for the science. Which limb the money is raised under matters, because the money must then go to that activity and nothing else — within two years of the share issue for EIS, and within three years for SEIS. HMRC’s manual states plainly that preparing to carry on a trade does not cover research and development, an activity in its own right. So a development programme is funded on the research limb, not by presenting the same spend as trade preparation. Venture capital trusts are drafted differently: for a VCT qualifying holding the activity is carrying on a qualifying trade, or preparing to carry one on, with no research and development limb. A company raising VCT money on a research programme alone therefore has less room, which is worth settling with the fund before terms are agreed. Whether R&D relief is available before trading begins is a separate question: who can claim R&D tax relief sets out the ERIS pre-trading election, the only route to it. Where does R&D spending change an EIS or VCT outcome? In the knowledge-intensive tests, where it helps. A knowledge-intensive company must have fewer than 500 full-time equivalent employees rather than fewer than 250, gets a ten-year window from first commercial sale rather than seven, and faces higher investment limits. To get there it must meet an operating costs condition — at least 15% of relevant operating costs spent on research and development or innovation in one of the three preceding years, or at least 10% in each — and either an innovation condition or a skilled employee condition. HMRC’s guidance lets a company use the qualifying expenditure from its R&D claim as the measure of that spend, provided every company in the group is treated the same way. The cost schedule behind an R&D claim does double duty; a company that has never claimed has to build that figure from scratch. Gross assets are the one place the credit itself is counted. The cap applies immediately before the share issue, on everything that would appear on a balance sheet drawn up at that moment, with no deduction for liabilities. A payable credit counts, whether debtor or cash. For EIS and VCT the ceiling — £30 million immediately before the issue and £35 million immediately after, for shares issued from 6 April 2026 — is high enough that this rarely bites. For SEIS it can: the limit is £350,000, so a credit landing the week before a seed round is worth planning around. The risk-to-capital condition sits outside all of this. Its factors include the nature of a company’s sources of income, and HMRC’s concern there is assured income streams making up a significant part of a company’s revenue; neither the legislation nor the guidance addresses R&D tax credits. Does an EIS or SEIS raise reduce the R&D claim? No. The subsidised expenditure rules were not carried into the merged scheme for accounting periods beginning on or after 1 April 2024, and grant funding no longer reduces relief either. Those rules, while they ran, reached grants, subsidies and expenditure met by another person — what subsidised expenditure means works through the three limbs for a period that began before that date. The raise can still change the answer by a different route. ERIS is open to SMEs only, and an investor crossing 50% becomes a linked enterprise whose headcount, turnover and balance sheet come in whole — how linked and partner enterprises affect an R&D claim sets out the carve-out that keeps most venture-backed companies inside the definition. The two regimes meet on paper at advance assurance, where an application asks for the business plan, the financial forecasts and details of every activity with the expected spend on each. A company whose runway depends on R&D credits will show them there. It is a separate service from advance assurance for an R&D claim. Sources ITA 2007 s179 (EIS) and s257HG (SEIS) — a qualifying business activity is carrying on or preparing to carry on a qualifying trade, or carrying on research and development from which it is intended that a qualifying trade will be derived, or which a qualifying trade will benefit; the research must be under way when the shares are issued, or begin immediately afterwards. s175 and s257CC with s257AC — the money raised must be employed wholly for the qualifying business activity within two years of the share issue for EIS, and spent for it before the end of the three-year period B for SEIS. s181, s189 and s257DA — the trading requirement, and a qualifying trade as one conducted on a commercial basis and with a view to the realisation of profits, not wholly or substantially in excluded activities; s257HF adds, for SEIS, that the trade must be new. s192 and s195 — the excluded activities list, and the carve-out where royalties or licence fees are attributable to intangible assets the greater part of which, by value, was created by the issuing company or a qualifying subsidiary. s290 and s291 — for a VCT qualifying holding the qualifying activity is a qualifying trade carried on or being prepared for; there is no research and development limb. s186, s297 and s257DI — gross assets: £30 million immediately before and £35 million immediately after the issue, for EIS shares and VCT qualifying holdings issued on or after 6 April 2026 (£15 million and £16 million before that date, and still for a specified Northern Ireland company); £350,000 immediately before the issue for SEIS, for shares issued on or after 6 April 2023. s252A (EIS) and s331A (VCT) — knowledge-intensive company: 15% of relevant operating costs on research and development or innovation in one of the three relevant preceding years or 10% in each, plus the innovation or skilled employee condition; with s186A and s297A requiring fewer than 500 full-time equivalent employees against 250, and s175A and s294A giving a ten-year initial investing period against seven. s157A and VCM8542 — the risk-to-capital condition and the factors taken into account, including the nature of a company’s sources of income and how assured they are. VCM12110 — preparing to trade does not cover research and development, which is a qualifying business activity in its own right; and VCM13050 — a new company setting up a trade does not fail the trading requirement merely because a large part of its funds is temporarily held on deposit. VCM13110 — gross assets are all the assets that would be shown on a balance sheet drawn up at that time, without deduction for liabilities. VCM8163 and VCM8164 — the operating costs conditions, what counts as operating costs, and that a company may instead use the qualifying expenditure from an R&D tax credit claim, on the same basis for every company in the group. Apply for advance assurance on a venture capital scheme — the business plan and financial forecasts, and details of all trading and activities and the expected spend on each. Merged scheme RDEC reform (policy paper) — the subsidised expenditure rules were not carried forward into the merged scheme, for accounting periods beginning on or after 1 April 2024. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # How do I appeal an HMRC decision on an R&D claim? URL: https://www.limestonegrey.com/rd-tax-relief/questions/how-do-i-appeal-an-hmrc-decision-on-an-rd-claim/ Description: Appeal to HMRC within 30 days, then choose: a statutory review usually answered in 45 days, or the First-tier Tribunal within 30 days of the review letter. Questions •9 min read How do I appeal an HMRC decision on an R&D claim? MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards The appeal itself goes to HMRC, and three routes open from there: ask HMRC for a statutory review, accept a review HMRC offers, or notify the appeal to the First-tier Tribunal. All three follow the first step — a written appeal against the amendment the closure notice makes, given to HMRC within 30 days of that amendment being notified to the company. What happens if my R&D claim is rejected covers that step, including where a claim was removed on procedure. Each statutory deadline that follows is counted from the date on the HMRC document that starts it, so the clock does not wait for the letter to be read. Miss the wrong one and the dispute is over: where HMRC offers a review and the company neither accepts it nor notifies the tribunal inside the 30-day acceptance period, HMRC’s view takes effect as a written settlement, and only a late appeal the tribunal admits will displace it. What does a statutory review involve? HMRC looking at its own decision again, through a review officer in a different team not involved in it. It does not use up the right to go to the tribunal. Two ways in. The company asks for one, and HMRC must write with its view of the matter, normally within 30 days. Or HMRC offers one, and the company has 30 days from the date on the offer letter to accept. Only one review is available per matter, and the option closes once the appeal reaches the tribunal. How far the review goes is for HMRC to judge. What the review officer cannot ignore is representations made in time to be considered — the one part of a review the company controls. An R&D dispute reads differently when the advance, the uncertainties and the cost workings are set out once, in order, for someone reading them cold. The conclusion — upheld, varied or cancelled — must be notified within 45 days, running from the day HMRC gave its view where the company asked, or from its receipt of the acceptance where HMRC offered the review. A different period can be agreed. If nothing arrives in time, the review counts as upholding HMRC’s view. Once issued, the conclusions take effect as a settlement in writing. The only way back is to notify the appeal to the tribunal — inside the post-review period, or later if the tribunal gives permission. How long is there to take the appeal to the tribunal? Thirty days from the date on the review conclusion letter. Where a review was offered and not accepted, the same 30 days runs from the date of the offer. Outside either 30-day window the appeal can be admitted only with the tribunal’s permission, which the notice must request and justify. That permission also reaches a review offer left to lapse: a late appeal the tribunal admits displaces the settlement the offer would otherwise have made final. And where the 45 days ran out with no conclusion, the window opens the day after — there is nothing to wait for. The notice identifies the decision, the result the company wants and its grounds, with a copy of HMRC’s decision and reasons so far as the company has or can reasonably obtain them. The tribunal then allocates the case: default paper, basic, standard or complex. Each side normally bears its own costs. The exceptions are narrow: wasted costs, a party acting unreasonably in bringing, defending or conducting the proceedings, and complex cases. Complex allocation carries a costs regime with it, and the only way out is a written request to the tribunal within 28 days of receiving the allocation notice — the one deadline here that runs from when the notice arrives rather than the date on it. A First-tier Tribunal decision binds the parties to it and sets no precedent: winning settles nothing for anyone else, and losing closes no sector. Such decisions still carry weight with officers and later tribunals, which makes the register of R&D tribunal decisions worth reading before a dispute, not during one. An onward appeal to the Upper Tribunal lies on a point of law, with permission. Where the enquiry is still open and nothing has been decided, the company can ask the tribunal to direct HMRC to close it; how long an HMRC enquiry takes sets out that application. Where does alternative dispute resolution fit? Alongside the appeal, not instead of it. An HMRC mediator works with the company and the officer holding the case, without taking it over. ADR is available where agreement has broken down, during a compliance check that has stalled, and at the end of one that produced an appealable decision, and asking for it gives up no right to appeal or to ask for a review. It is not a statutory process: HMRC decides case by case whether to accept an application, and the conditions below sit in HMRC’s published guidance rather than in legislation, so check the current version before relying on the dates. For corporation tax the order of events catches companies out. Where HMRC has offered a statutory review, ADR is not open until the appeal has been notified to the tribunal and acknowledged, whether that review was accepted or turned down. It is also closed to cases the tribunal has categorised as paper or basic. HMRC answers an application within 30 days, and acceptance commits the company to replies within 15 working days and a meeting within 90 days. Does the tax have to be paid while the appeal runs? Unless payment is postponed, yes. Tax charged by the closure notice amendment is due and payable as if there had been no appeal. Postponement is a separate application, and a change of circumstances allows a later one. Where the company has grounds for believing the amendment overcharges it, it applies to HMRC in writing within 30 days of the closure notice, stating the amount overcharged and why. If HMRC does not agree the figure, the company has 30 days from the date on HMRC’s decision letter to refer it to the tribunal. What gets postponed is the amount there appear reasonable grounds for believing is overcharged. Two limits. Postponement does not stop interest, which can be charged on tax in dispute until it is paid. And it reaches only the tax the amendment charges. A payable credit HMRC has not paid is a different question, and can HMRC make me pay back an R&D tax credit? covers both withholding before payment and recovery after it. What an HMRC R&D enquiry involves sets out the material all of this runs on. Where another firm prepared the claim, HMRC enquiry defence is the standalone engagement that covers it. No adviser can tell you what a tribunal would decide. Sources TMA 1970 s49A — once notice of appeal has been given to HMRC, the appellant may require a review, HMRC may offer one, or the appellant may notify the appeal to the tribunal. TMA 1970 s49B — where the appellant requires a review, HMRC must notify its view of the matter within 30 days of receiving the notification, or such longer period as is reasonable; no review where one has already been required or offered, or the appeal notified to the tribunal. TMA 1970 s49C — HMRC’s offer of a review, with an acceptance period of 30 days beginning with the date of the offer document; where the offer is not accepted, HMRC’s view is treated as if contained in a written settlement agreement under s54(1) which the appellant may not resile from, except so far as the appeal is notified to the tribunal under s49H. TMA 1970 s49E — the nature and extent of the review are as appear appropriate to HMRC, having regard to steps taken before it began; the review must take account of representations made at a stage giving HMRC a reasonable opportunity to consider them; conclusions are upheld, varied or cancelled, notified within 45 days beginning with the relevant day or such other period as may be agreed, failing which the review is treated as upholding HMRC’s view. TMA 1970 s49F — the conclusions of a review take effect as a written settlement agreement, unless the appeal is notified to the tribunal under s49G. TMA 1970 s49G and s49H — the post-review period of 30 days beginning with the date of the review conclusion document, and the acceptance period where a review was offered but not accepted; outside either, the appeal may be notified only with the tribunal’s permission. TMA 1970 s55 — tax charged by an amendment under paragraph 34 of Schedule 18 to the Finance Act 1998 is due and payable as if there had been no appeal; application to postpone by notice in writing within 30 days of the issue of the closure notice, stating the amount believed overcharged and the grounds, with referral to the tribunal within 30 days of the date of the document notifying HMRC’s decision on it, a later application where circumstances change, and postponement of the amount there appear reasonable grounds for believing is overcharged. FA 1998 Sch 18 para 34 — notice of appeal against an amendment made by a closure notice must be given in writing, within 30 days after the amendment was notified to the company, to the officer who gave the notice. Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, rule 20 — what a notice of appeal must contain, and the requirement that a late notice request permission and give the reason for the delay. The 30-day limit itself sits in TMA 1970, not in the Rules. Rule 23 and rule 10 — allocation to default paper, basic, standard or complex categories; costs orders confined to wasted costs, unreasonable conduct in bringing, defending or conducting proceedings, and complex cases where the taxpayer has not asked, within 28 days of receiving notice of the allocation, to be excluded from the costs regime. TCEA 2007 s11 — appeal to the Upper Tribunal on a point of law only, exercisable only with permission from the First-tier Tribunal or the Upper Tribunal. Use alternative dispute resolution to settle a tax dispute — the mediator’s role; availability during a compliance check where progress has stalled and at the end of one where an appealable decision has been made; ADR does not affect the right to appeal or to ask for a statutory review; for direct tax, where a review was offered, the appeal must be notified to the tribunal and acknowledged before applying; paper and basic cases excluded; a response within 30 days, replies to requests within 15 working days and a meeting within 90 days of acceptance; rejections agreed by a panel of independent tax professionals. Disagree with a tax decision or penalty: get a review — the review officer is in a different team and was not involved in the original decision, and reviews usually take 45 days. Disagree with a tax decision or penalty: delay payment — 30 days from starting the process to ask to delay payment, and interest chargeable on the tax in dispute until it is paid. Appeal to the tax tribunal — the 30-day window from the date on the decision letter, and a judge’s decision on any late appeal. This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us. --- # R&D tax relief case law: tribunal decisions register URL: https://www.limestonegrey.com/rd-tax-relief/cases/ Description: One cited page per UK tribunal decision on R&D tax relief: what was at issue, what was decided, and what it changes for a claim being prepared now. Case law R&D tax case law: a register of the tribunal decisions Fewer than a dozen tribunal decisions decide most of the arguments an R&D claim actually runs into. Whether a customer’s payment subsidises the work. Whether the company or its customer owns the claim. Who is qualified to speak for the science. Whether there was a project at all, and whether anyone can prove what was spent on it. This register holds one page per decision: the neutral citation, what was at issue, what the tribunal decided and in whose favour, the paragraphs that carry it, and what it changes for a claim being prepared today. Why case law matters when a claim is challenged An HMRC enquiry is an argument about the same handful of statutory tests every time, and the tribunal decisions are where those tests have been argued out on real facts. An officer who says the competent professional is not qualified in the right field is making the point that decided Flame Tree Publishing. An officer who says a customer’s payments subsidised the work is making the point HMRC lost in Collins Construction and then withdrew from its own manual. Knowing which is which — and which way the decision went — is the difference between a defence and a concession. The same decisions work in the other direction, before anything is filed. Most claims that fail at a tribunal were unwinnable on the day they were signed: no contemporaneous plan, no time records, nobody qualified in the field the advance was claimed in. Those are cheap to fix at the start of a claim and impossible to fix at a hearing. That is the practical value of reading them. What a First-tier Tribunal decision can and cannot do It cannot change the law. First-tier Tribunal decisions bind only the parties to them and set no precedent, so a company losing on its facts puts no sector outside the relief, and a company winning does not open a door for anyone else. What they do carry is weight. HMRC officers read them and argue from them. Later tribunals cite them. And where a decision goes unappealed and HMRC rewrites its guidance to match — as happened after Collins Construction and Stage One Creative Services — the practical effect is as real as a change in the law, even though nothing in the statute moved. How a dispute travels from a closure notice to a hearing — review, ADR, the tribunal, and the deadline on each — is set out in how do I appeal an HMRC decision on an R&D claim?. So each entry below states the direction explicitly: who won, on which point, and what remains unsettled. Where a decision has been overtaken by later cases or by the merged scheme, the entry says so rather than leaving a reader to apply a dead rule. The register Every decision we hold an entry on, newest first. The case name opens our entry; the citation opens the decision itself. Case | Citation | Decided | At issue | Outcome Tanglewood Care Services Ltd v HMRC | [2026] UKFTT 1137 (TC) | 6 Aug 2026 | Whether infection-control work in care homes was R&D at all | Appeal dismissed — no advance beyond the company itself Stage One Creative Services Ltd v HMRC | [2024] UKFTT 1059 (TC) | 25 Nov 2024 | Subsidy, contracting out, and two discovery assessments | Company won on all four issues Collins Construction Ltd v HMRC | [2024] UKFTT 951 (TC) | 21 Oct 2024 | Whether client payments subsidised the R&D, or contracted it out | Company won on both limbs Get Onbord Ltd v HMRC | [2024] UKFTT 617 (TC) | 9 Jul 2024 | Whether an AI project advanced capability, and who can be a competent professional | Company won — the AI project qualified Flame Tree Publishing Ltd v HMRC | [2024] UKFTT 349 (TC) | 25 Apr 2024 | Competent professional, one project or seven, and evidence for the costs claimed | HMRC won — no competent professional, costs unproved Hadee Engineering Co Ltd v HMRC | [2020] UKFTT 497 (TC) | 10 Oct 2020 | Whether there were projects and plans, and whether the work was contracted out or subsidised | Mostly dismissed — one project survived in principle Register last updated 7 September 2026. It is updated when decisions land, and when a decision already listed is appealed or overturned. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # Tanglewood Care Services v HMRC [2026] UKFTT 1137 (TC) URL: https://www.limestonegrey.com/rd-tax-relief/cases/tanglewood-care-services/ Description: A care operator's £880,286 R&D claim for Covid infection control failed. The tribunal accepted most of the claimant's law and refused it on the evidence. R&D tax relief •4 min read Tanglewood Care Services Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2026] UKFTT 1137 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 6 August 2026 Judge Judge Stapenhurst and Mr Julian Sims The claim was dismissed. A care operator had claimed £880,286 of enhanced R&D expenditure for infection-control work across seven residential care homes in the year to 31 January 2021; HMRC removed it, and the appeal failed. What makes the decision useful is that the tribunal accepted most of the claimant’s legal arguments and refused the claim anyway, on the evidence. We cover this decision in full in a separate article, including what it says about how a claim comes to be made in a sector HMRC had already written to. This entry is the register summary. What was at issue Whether pandemic infection-control work in care homes — deploying, balancing and managing measures across seven homes — was R&D within the Guidelines at all. Four tests had to be satisfied at once: a project, an advance in science or technology, scientific or technological uncertainty, and a competent professional who could not readily resolve it. The period ended in January 2021, so the old SME scheme and the 2010 Guidelines applied (paragraph 21). What the tribunal decided Appeal dismissed. But read what HMRC lost first, because it is the more useful half. The tribunal held that no formally documented plan is required: a coordinated programme of gathering, review and implementation towards a defined objective was enough to be a project, expressly unlike Hadee Engineering (paragraph 87). It declined to read the Guidelines as requiring an advance in underlying knowledge in every case — advances may arise from resolving uncertainty that affects capability as well as knowledge (paragraph 94). It rejected HMRC’s submission that the claim must fail because the individual measures were already known, and held the company did not have to be advancing scientific understanding of the virus (paragraph 98). It accepted that uncertainty can arise from the interaction of multiple measures within a system (paragraph 104). The claim still failed. The activities were directed at the company’s own operations, and the evidence did not show they aimed at an advance in knowledge or capability beyond them (paragraph 99). Uncertainty in the wider scientific community does not establish that a claimant’s own activities were directed at resolving scientific or technological uncertainty (paragraph 105). Staffing, visitor policies, admissions, PPE and compliance were real problems, but “predominantly operational and managerial in character” (paragraph 106), and social-science work sits outside the definition (paragraph 107). Two evidential findings closed it. The three witnesses were found honest, conscientious and experienced in the care sector, but none claimed expertise in a scientific or technological discipline that could tell the tribunal what the state of knowledge in the field was (paragraphs 111 to 113). And the work, extensive and expensive as it was, did not amount to a systematic process of investigation or experimentation directed at resolving scientific or technological uncertainty (paragraph 115). What it changes for a claim being prepared now Measure the advance against the field, not against yourself. Being ahead of where you were, or ahead of official guidance, is not an advance in science or technology. The tribunal found the company had moved before later Government guidance did (paragraph 80) and it made no difference. Separate operational difficulty from technological uncertainty, in writing, while the work runs. In a hard year the two feel identical. Three years later, at an enquiry, they read completely differently. Bring someone who can speak for the field. The tribunal was explicit that its point was not that the field had to be virology. It was that nobody could tell it what a competent professional in the relevant field already knew. Record the method. Effort and expenditure are not a systematic investigation. Hypothesis, test, result, next iteration is. Has it been appealed? Not settled, and it is too early to say it is. No onward appeal has been reported and no Upper Tribunal decision in the case appears on the published record as at the review date above. But the decision gives the parties 56 days from the date it was sent to apply for permission to appeal, which on the decision date of 6 August runs to about 1 October 2026 — and applications for permission are not published in any event. We update this entry if anything is reported. This is a First-tier Tribunal decision on its own facts. It puts no sector outside the relief, and on the points of principle the tribunal went the claimant’s way. Sources Tanglewood Care Services Ltd v HMRC — the decision, cited as [2026] UKFTT 1137 (TC), released 6 August 2026. Every paragraph number above refers to it. Our full analysis of the decision — including HMRC’s 2023 letter to around 7,500 care companies and the wider agent-conduct picture. Guidelines on the meaning of R&D for tax purposes — the four tests, and 15A on the social sciences, numbered 15 in the 2010 revision applied here. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Stage One Creative Services v HMRC [2024] UKFTT 1059 (TC) URL: https://www.limestonegrey.com/rd-tax-relief/cases/stage-one-creative-services/ Description: A live-events engineering firm won on all four issues. Two discovery assessments fell on a practice generally prevailing based on HMRC's old guidance. R&D tax relief •4 min read Stage One Creative Services Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2024] UKFTT 1059 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 25 November 2024 Judge Judge Anne Scott and Christopher Jenkins The company won every issue. A month after Collins Construction, a second tribunal rejected the same two HMRC arguments about subsidy and contracting out — and went further, striking down two discovery assessments because HMRC’s own earlier guidance had established a practice the company had followed. That last finding is the one that matters most in an enquiry. What was at issue Stage One Creative Services provides engineering, construction and automation for live events and installations (paragraph 46). Its SME claims for the years ended 31 December 2017, 2018 and 2019 were challenged on four fronts. Two were the arguments Collins had just defeated: that client payments subsidised the R&D under section 1138, and that the R&D was contracted out to Stage One by its customers. The other two were about how HMRC had reopened the older years. It had raised discovery assessments for 2017 and 2018 — £248,100.67 of tax plus interest for 2017, £198,971.32 for 2018 — rather than opening enquiries in time. That put two statutory protections in play: whether HMRC could show the officer could not reasonably have been expected to know of the loss of tax from the information given, and whether the returns had been made in accordance with a practice generally prevailing when they were filed. What the tribunal decided The appeal was allowed on all four issues. Nothing was decided against the company. On subsidy: the expenditure “was not subsidised within the meaning of section 1138 CTA 2009” (paragraph 182). On contracting out: the tribunal found the company “do not agree to carry out R&D or seek reimbursement of those costs” (paragraph 166), that “the R&D was a means to an end” which benefited the company itself (paragraph 208), and so the expenditure was not contracted out (paragraph 209). Then the discovery findings. The tribunal examined how HMRC’s own manual had changed, and found that the newer version “removed those factors and made it clear that only freestanding R&D could qualify” (paragraph 273). Because the older guidance was what advisers and companies had been working to, there was a practice generally prevailing based on it, and Stage One’s returns accorded with that practice (paragraphs 282 to 284). HMRC’s remaining discovery argument failed too. It carried the burden on that issue (paragraph 285) and did not discharge it (paragraph 297). One qualification the decision itself flags: a closing footnote records that had the first discovery issue been decided by reference to the practice findings, the position would have been different, with a discovery arising after a meeting in November 2020 (paragraphs 298 to 301). It is not a clean win on that limb so much as a win on how HMRC ran it. What it changes for a claim being prepared now A guidance change is a fact you can argue. Where HMRC has rewritten its manual and then assessed you on the new reading for an old year, the practice generally prevailing point is live. It is a technical argument about paragraph 45 of Schedule 18 FA 1998, and it is the reason two assessments here fell away entirely. Look at how the year was opened, not only at the merits. Discovery assessments carry conditions HMRC has to satisfy, and it carries the burden. A claim that would be hard to defend on the technical merits can still be safe if the year was reopened badly. Our page on what happens if an R&D claim is rejected sets out the routes. R&D as a means to an end still counts. The company was not doing research for its clients; it was solving problems in order to deliver. That was enough. The relief does not require a laboratory. As with Collins, the subsidy and contracting-out holdings are about the old SME scheme. Periods beginning on or after 1 April 2024 turn on a different statutory test — see contracted-out R&D. Has it been appealed? No onward appeal has been reported, and no Upper Tribunal or Court of Appeal decision naming Stage One Creative Services appears on the published record. HMRC has said, in the Research and Development Communication Forum minutes of 6 May 2025, that it accepts the tribunal’s decisions in this case and Collins Construction and has updated its position and approach. It amended CIRD81650 and CIRD84250 on 27 February 2025. The same minutes record that no retrospective correction mechanism has been created for companies that followed the earlier position. Sources Stage One Creative Services Ltd v HMRC — the decision, cited as [2024] UKFTT 1059 (TC), reference TC09358, heard 20 to 22 November 2023 and released 25 November 2024. Every paragraph number above refers to it. CIRD81650: subsidised expenditure and CIRD84250: contracted-out R&D — both amended 27 February 2025 to reflect the decisions. R&D Communication Forum minutes, 6 May 2025 — HMRC records that it accepts both decisions and has not established a correction mechanism. Our article on both 2024 verdicts — Collins and Stage One together, and what changed afterwards. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Collins Construction v HMRC [2024] UKFTT 951 (TC) URL: https://www.limestonegrey.com/rd-tax-relief/cases/collins-construction/ Description: HMRC argued a contractor's client payments subsidised its R&D and that it was contracted out. The tribunal rejected both, and HMRC rewrote its guidance. R&D tax relief •4 min read Collins Construction Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2024] UKFTT 951 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 21 October 2024 Judge Judge Kim Sukul and Sonia Gable The company won, on both points, in full. HMRC argued that a fit-out contractor’s R&D was paid for by its clients — so the expenditure was subsidised — and that the same payments meant the R&D had been contracted out to it. The tribunal rejected both arguments. HMRC has since said it accepts the decision, and rewrote the relevant manual pages. What was at issue Collins Construction is a fit-out and refurbishment contractor working under standard JCT contracts. It claimed SME R&D relief across 27 projects for the years ended 30 June 2018 and 30 June 2019. HMRC’s closure notices in September 2021 removed a £573,056.72 repayment claim and a £2,670,972.94 R&D tax credit claim. HMRC did not dispute that Collins was an SME, and did not dispute that the work was R&D or that the other conditions were met (paragraph 13). It refused the claims on two limbs only (paragraph 12). The first: that client payments meant the expenditure was subsidised, because a commercial contract price indirectly meets the cost of the R&D inside it. The second: that anything a contractor does to discharge its contract is R&D contracted out to it by the customer. Between 2021 and 2024 that pair of arguments was HMRC’s standard objection to claims from companies that develop while delivering for customers. What the tribunal decided The appeal was allowed (paragraph 75). Neither limb succeeded, and nothing was decided against Collins. On subsidy, the tribunal declined to depart from the earlier decision in Quinn (London) Ltd, finding “striking similarities in both cases” (paragraph 50), and concluded that “the relevant expenditure was not subsidised expenditure for the purposes of section 1138” (paragraph 58). A price paid for a building is not a payment made to meet the cost of research. On contracting out, the decision turned on what the parties had actually agreed. The tribunal found that “the bargain made between the parties is not for Collins to undertake R&D activities on behalf of the client” (paragraph 67). Expenditure is on contracted-out R&D where the activities “are carried out on behalf of another person” (paragraph 73) — and a client who wants a finished fit-out has not asked for research. The purpose of those conditions, the tribunal noted, is to prevent double relief by passing the ability to claim up the chain (paragraph 70), not to deny relief to everyone in it. What it changes for a claim being prepared now Two audiences should read this decision. If you have an open enquiry on an old-scheme period and HMRC is running the subsidy or contracting-out argument, this decision and HMRC’s own revised guidance belong at the centre of the reply. HMRC’s manual now says payments from a principal do not subsidise R&D unless the payment is specifically linked to those activities, and that R&D incidental to the supply of a product or service is not contracted out. That is the opposite of the position that refused these claims. If you did not claim for an old-scheme period because you were told the customer’s payments ruled you out, check whether the period is still open to amendment before assuming it is lost. Our guide to backdated claims sets out the runway and the notification trap that can close it early. One caution. This is a decision about the old SME scheme. For accounting periods beginning on or after 1 April 2024 the merged scheme replaced both restrictions with a different statutory question: whether the customer intended or contemplated that R&D of that sort would be done when the contract was made. Winning the old argument does not answer the new one — see contracted-out R&D. Has it been appealed? No onward appeal has been reported, and no Upper Tribunal or Court of Appeal decision naming Collins Construction appears on the published record. HMRC’s own position is on the record and is stronger evidence than the absence of an appeal. In the Research and Development Communication Forum minutes of 6 May 2025, HMRC states that it accepts the tribunal’s decisions in this case and in Stage One Creative Services and has updated its position and approach accordingly. It amended CIRD81650 and CIRD84250 on 27 February 2025, and both pages carry a note saying the guidance reflects HMRC’s view following recent First-tier Tribunal decisions. Worth knowing, if this affected you: the same minutes record that HMRC has created no correction mechanism of the kind it once set up for reimbursed expenditure, on the footing that the tribunal disagreed with its interpretation without finding it baseless. A company whose position is now final does not get a way back. Sources Collins Construction Ltd v HMRC — the decision, cited as [2024] UKFTT 951 (TC), reference TC09332, heard 12 and 13 December 2023 and released 21 October 2024. Every paragraph number above refers to it. CIRD81650: subsidised expenditure — amended 27 February 2025; payments from a principal do not subsidise unless specifically linked to the R&D. CIRD84250: contracted-out R&D — amended 27 February 2025; R&D incidental to the supply of a product or service is not contracted out. R&D Communication Forum minutes, 6 May 2025 — HMRC records that it accepts both decisions and has not established a correction mechanism. Our article on both 2024 verdicts — Collins and Stage One together, and what HMRC did next. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Get Onbord v HMRC [2024] UKFTT 617 (TC): the AI claim that won URL: https://www.limestonegrey.com/rd-tax-relief/cases/get-onbord/ Description: The tribunal accepted an AI and machine learning project as R&D, and accepted a competent professional with no formal qualifications. R&D tax relief •4 min read Get Onbord Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2024] UKFTT 617 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 9 July 2024 Judge Judge Mark Baldwin and Mr Mohammed Farooq The company won. A tribunal accepted that an artificial intelligence and machine learning project to automate KYC verification was R&D, and accepted a competent professional who held no formal qualification in the field. It is the decision most often cited by software and AI claimants, and it is narrower than it is usually made to sound. What was at issue Get Onbord Limited — by the time of the decision, in liquidation, with the appeal continued by its joint liquidators — had claimed an R&D tax credit under section 1054 CTA 2009 for building an automated process to verify identity and profile risk for “know your client” (KYC) checks. HMRC raised one objection and only one: that the work did not advance overall knowledge or capability in the field, so it was not R&D within the Guidelines. Two questions sat inside that. Could the company’s witness, a former director with no formal qualification in the field, speak as a competent professional? And did building on open-source and existing components mean nothing had been advanced? What the tribunal decided The appeal was allowed (paragraph 98). The project was R&D within the Guidelines, and the company was entitled to claim. On the person: the tribunal recorded that the witness had no formal qualifications in the area, then said it was “completely satisfied” that he had experience, coding included, and up-to-date knowledge of software capabilities, “albeit perhaps only in the area he works in” (paragraph 82). Experience and current knowledge carried it; the certificate was not the test. On the technology: solving a real-world problem in a new way using technology was at least an indication of an appreciable advance (paragraph 93). Each component of the solution did not have to be new in itself (paragraph 94). What mattered was that the technology the company set out to build was “not already publicly available or readily deducible” (paragraph 95). The part people over-read At paragraph 96 the tribunal touched on the evidential burden shifting to HMRC once a claimant has put forward a credible case. It is regularly quoted as though it settled something. It did not: the tribunal decided the appeal on the balance of probabilities in any event, so the remark carries no weight as part of the reasoning. Nor is this a decision that AI projects qualify. It is a decision that this project, on this evidence, did. HMRC had conceded everything except the advance, so the case never tested costs, records or apportionment — the grounds on which claims are more often lost. What it changes for a claim being prepared now Three things are worth taking from it. A competent professional is made by expertise, not by paperwork. A self-taught engineer with current, demonstrable command of the field can be the right person. What the tribunal wanted was evidence of that command, given by the person themselves. Building on open source does not disqualify the work. The question is whether the capability you set out to create was already publicly available or readily deducible by a competent professional — not whether every part was new. Say what was not deducible, and why. That sentence is the claim. “We combined existing tools in a new way” is not it; “a competent professional in this field could not have derived this from what was published” is. Where AI work does and does not qualify is set out at more length in our article on machine learning and qualifying R&D, and the person question in who counts as a competent professional. Where those tests land across AI and robotics work more widely — model architectures, data regimes, deployment constraints and the machines the models run on — is set out in R&D tax relief for AI and robotics companies. Has it been appealed? No onward appeal has been reported. There is no Upper Tribunal decision in the case on the published record. Applications for permission to appeal are not published, so that is not proof that none was made. The decision is First-tier Tribunal: it binds only the parties and sets no precedent. Read alongside Flame Tree Publishing, which refused a claim because nobody could speak for the software, the two decisions are consistent — one had the right person, the other did not. Sources Get Onbord Ltd (in liquidation) v HMRC — the decision, cited as [2024] UKFTT 617 (TC), heard 3 January 2024 and released 9 July 2024. Every paragraph number above refers to it. Guidelines on the meaning of R&D for tax purposes — the advance and uncertainty tests the tribunal applied. The judgment states no accounting period and no claim figure, so neither is given here. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Flame Tree Publishing v HMRC [2024] UKFTT 349 (TC) URL: https://www.limestonegrey.com/rd-tax-relief/cases/flame-tree-publishing/ Description: A publisher's R&D claim was refused twice over: nobody qualified in software could speak for the work, and the costs were never evidenced. R&D tax relief •5 min read Flame Tree Publishing Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2024] UKFTT 349 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 25 April 2024 Judge Judge Anne Redston and Mr Michael Bell A publisher claimed £266,644 of enhanced R&D expenditure for digitising its back catalogue. The appeal was dismissed on two independent grounds: nobody put forward as a competent professional was qualified in software or computing, and the costs claimed were never evidenced. Either ground alone would have sunk it. What was at issue Flame Tree Publishing is a music and art publisher. For the year ended 30 June 2018 it claimed SME R&D relief on work to digitise its archive and turn it into a curated, searchable online resource — an enhanced deduction of £266,644, worth £50,662 off its corporation tax bill. It filed the claim by amended return in June 2020; HMRC issued a closure notice refusing it in July 2022. Three questions reached the tribunal. Was this one project or the seven the claim had described? Did the people relied on count as competent professionals in the relevant field? And was there evidence that the money claimed had actually been spent on the work? A fourth fact ran underneath all of it: the programming and the search engine were built by an outside supplier, whose costs were never in the claim at all. What the tribunal decided HMRC won, on every point. The claim described seven projects; at the hearing the company argued it had really been one. The tribunal found one project (paragraph 55) — no start or end dates had ever been given for the seven, no costs had ever been allocated between them, and the company had told HMRC there were no specific documents about any of them (paragraph 54). It added that seven projects would not have saved the claim either (paragraph 79). The competent professional point is the one that did the work. The founder was found to be a competent professional in publishing, and a colleague in digital archiving. Neither was one in software, programming or computing — the field the claimed advance sat in — and the same was true of the ten other employees and a subcontractor relied on (paragraph 68). Without that, the claim failed the Guidelines outright (paragraph 69). The costs failed separately, and are dealt with below. Separately again, the outside supplier’s work could not be brought into the claim at all: the claim had been made under the in-house route in section 1052 CTA 2009, which excludes contracted-out activities, and no claim was ever made under section 1053 (paragraph 81). The findings that did the damage Two passages are worth reading if you prepare claims. On the people: the tribunal adopted HMRC’s formulation that a competent professional must have appropriate qualifications, experience and up-to-date knowledge of the relevant scientific or technological principles, and said it had “no hesitation in agreeing with HMRC” (paragraphs 66 and 68). Expertise in the company’s trade is not expertise in the field the advance is claimed in. The founder knew publishing; the advance was said to be in software. On the money: “there is no evidential basis for the quantum of any of the employee costs claimed” (paragraph 73). There was no time recording. The percentages had been agreed in discussion with the adviser, who had not worked on the project. One witness had no recollection of the time he had spent. A 1.5% slice of cost of sales carried “no explanation … for that percentage” (paragraph 75). The tribunal refused the appeal “for the additional reason that it has failed to prove that the sums claimed were spent on the Project” (paragraph 76). That second ground is the one advisers under-rate. A claim can clear every technical test and still be refused because nobody can show where the numbers came from. What it changes for a claim being prepared now Four things follow, and all four are cheap now and impossible at a hearing. Name the field first, then find the person. If the advance is in software, the competent professional must be qualified and current in software. A director who has run the business for decades is a competent professional in the business, which is not the same thing and will not be treated as if it were. Record time while the work happens. Percentages reconstructed two years later, in a meeting with an adviser who was not there, are not evidence. Timesheets, sprint records, project codes in the payroll — anything contemporaneous beats anything remembered. Explain every apportionment in writing. A figure with no stated basis is a figure the tribunal will not accept, however reasonable it looks. Check which statutory route the claim is on. Work done by an outside supplier is not in-house R&D. Claiming it under the wrong section does not get corrected at the hearing — it is simply lost. Our page on who counts as a competent professional takes the first point further, and the records a claim needs covers the second and third. Has it been appealed? No onward appeal has been reported. A search of the published judgment record turns up no Upper Tribunal decision in the case, and later tribunals continue to cite it as it stands — Tanglewood Care Services applied it in August 2026. Applications for permission to appeal are not published, so absence of a reported appeal is not proof that none was sought. The decision is First-tier Tribunal, so it binds only the parties and sets no precedent. Its weight is practical: it is the decision HMRC officers and later tribunals reach for on what a competent professional has to be qualified in. Sources Flame Tree Publishing Ltd v HMRC — the decision, cited as [2024] UKFTT 349 (TC), released 25 April 2024, case reference TC09149. Every paragraph number above refers to it. Guidelines on the meaning of R&D for tax purposes — the four tests the tribunal applied. Tanglewood Care Services Ltd v HMRC — [2026] UKFTT 1137 (TC), which applies Flame Tree on the competent professional at paragraph 112. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Hadee Engineering v HMRC [2020] UKFTT 497 (TC): what survived URL: https://www.limestonegrey.com/rd-tax-relief/cases/hadee-engineering/ Description: Eight items of R&D were claimed; one survived. The decision on plans, methodology, subcontracted work and risk — and which parts of it are now out of date. R&D tax relief •4 min read Hadee Engineering Co Ltd v HMRC MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Citation [2020] UKFTT 497 (TC) Tribunal First-tier Tribunal (Tax Chamber) Decided 10 October 2020 Judge Judge Jennifer Dean and Mrs Ann Christian An engineering company claimed eight items of R&D across two accounting periods. One survived. The tribunal held that a project needs a plan and a methodology you can point to, and that work commissioned and paid for by a customer, with no risk to the company doing it, was both contracted out and subsidised. Parts of that second holding no longer apply — see the caution below before you rely on it. What was at issue Hadee Engineering claimed enhanced R&D deductions of £182,377 and £121,317 for the years ended 30 April 2009 and 30 April 2010. HMRC’s closure notices removed them and assessed additional corporation tax of £51,065.56 and £33,968.76. The claim was built from a consultant’s report describing eight items — marine gear welding, a double deck loader, a hollow ingot manipulator, a trombone walkway gantry, a 5,000 tonne manipulator track, a tilting wash down system, an animal centrifuge, and “general R&D”, which was conceded. Much of the work had been commissioned by customers, Sheffield Forgemasters among them, and paid for. Three questions ran through it. Was any of this R&D at all? Was the expenditure evidenced and apportioned? And did the claim clear the old SME scheme’s conditions on who owns the R&D — the ones about work contracted out to the company and expenditure subsidised by someone else? What the tribunal decided The appeal was allowed in part (paragraph 313), and dismissed as to the rest (paragraph 314). Only the marine gears project met the requirements, and only in principle: how much qualified was left for the parties to agree, with a further hearing if they could not. Everything else failed, on a mixture of law and evidence. The managing director’s evidence on the activities claimed was found “vague and at times contradictory” (paragraph 234), and the consultant’s report was treated with caution because its author was not called to be questioned on it (paragraph 235). The findings that did the damage A project needs a plan. The tribunal held that formulating a plan is required, and that although no particular form is prescribed, it would “expect some record” of one (paragraph 217). A claimant has to show a clear methodology that identifies the uncertainty it set out to resolve (paragraphs 220 and 221). Following the High Court in Gripple, it said a narrow approach is required. Being commissioned and paid can be fatal — under the old rules. Where the work was “a direct commission subcontracted to the Appellant with no risk and in respect of which the Appellant was reimbursed” (paragraph 287), the claim failed the conditions on contracted-out and subsidised expenditure at once. The evidential gap made it worse: no terms of engagement were produced that would have shown what the contract actually covered, and payments could have been for the product, for the R&D, or for both (paragraph 226). Read this before you rely on it The second holding is a decision about the old SME scheme, on periods that ended in 2009 and 2010, and it has been overtaken twice. First by the tribunal itself: Collins Construction and Stage One Creative Services both rejected the reading that ordinary commercial payments subsidise R&D, and HMRC has since said it accepts those decisions and rewrote its guidance to match. Second by Parliament: the merged scheme replaced the old subsidised and subcontracted tests with a single statutory question about who intended or contemplated the R&D when the contract was made. Our guide to contracted-out R&D sets out the current test. What has not dated is the first holding. Plans, methodology and records are still where claims are won and lost, and Hadee remains the decision HMRC cites for it. What it changes for a claim being prepared now Write the plan before the work, not the claim after it. A project in the statutory sense has an objective and a route to it. If nothing was written at the time, the tribunal has said what it expects to see and you will not have it. Name the uncertainty and the method used to attack it. A description of what was built is not a description of what was uncertain. Put the contracts in the file. In Hadee the terms of engagement were never produced, and the tribunal had no way to tell what the customer was paying for. That question is still live under the merged scheme, in a different form. Call your own expert. A consultant’s report whose author does not attend is worth much less than the person who did the work, answering questions. Has it been appealed? No onward appeal against the R&D decision has been reported, and no Upper Tribunal decision on it appears on the published record. One warning, because it is widely got wrong. A 2022 Upper Tribunal decision is indexed under the Hadee name — [2022] UKUT 84 (TCC) — and it is not an appeal in this case. It concerns different appellants, a different First-tier decision released in November 2020, and capital gains, penalties and a loss carry-back. It says nothing about R&D. A second citation in circulation, [2022] UKUT 258 (TCC), is a different case again and has nothing to do with Hadee. Hadee’s R&D holdings are First-tier Tribunal only: persuasive, and binding on nobody. Sources Hadee Engineering Co Ltd v HMRC — the decision, cited as [2020] UKFTT 497 (TC), reference TC07969, heard in Manchester on 25 and 26 November 2019 and released 10 October 2020. Every paragraph number above refers to it. CIRD84250: contracted-out R&D — HMRC’s case-by-case position on subcontracted R&D under the old SME scheme, revised in February 2025 after the tribunal decisions. CIRD81650: subsidised expenditure — HMRC’s position that commercial contract payments are not, in themselves, subsidies. First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us. --- # Sectors we serve | LimestoneGrey URL: https://www.limestonegrey.com/sectors/ Description: R&D tax relief for the sectors whose business is their R&D: life sciences, biotech, medtech, agritech, AI and robotics, software and engineering. Sectors R&D tax relief, sector by sector R&D tax relief for life sciences companies How life sciences companies claim R&D tax relief under the merged scheme and ERIS: grant funding, CRO contracts, clinical trials and loss-making phases. R&D tax credits for biotech companies Most biotechs are loss-making and R&D-intensive, so ERIS can pay up to 26.97p per £1 of qualifying spend. The intensity test, grants and the PAYE cap. R&D tax credits for medtech companies Medical device R&D tax relief: which development and regulatory work qualifies, and how prototypes and clinical evaluation enter a claim. R&D tax relief for agritech companies Agritech companies claim R&D tax relief on crop science, precision farming and livestock technology. What qualifies, current rates and who claims a grant. R&D tax relief for AI and robotics companies Model architectures, training, fine-tuning and robotics integration: which work meets the R&D test, and which is routine application of known technique. R&D tax credits for space and satellite technology R&D tax relief for space companies: satellite platforms, propulsion, ground segment and in-orbit technology, with grant funding and ERIS handled properly. R&D tax credits for aerospace and defence Where the R&D line falls on aerospace and defence programmes, and who holds the claim when development is contracted down the supply chain. R&D tax credits for cleantech and energy R&D tax relief for cleantech and energy companies: storage, hydrogen, grid and marine technology, with grant funding under the merged scheme. R&D tax credits for semiconductors and photonics R&D tax relief for semiconductor and photonics companies: device, process and packaging development, claimed by chartered advisers in South Wales. R&D tax relief for software development Software development qualifies for R&D tax relief only where it advances the technology. Where claims stand up, where they fail and the current rates. R&D tax credits for engineering firms Which engineering work meets HMRC's R&D test — civil, mechanical, electrical, process — which costs qualify, and where the line falls. R&D tax relief for manufacturing companies Where process improvement crosses into qualifying R&D, and how prototype, pilot plant and trial-run costs are treated in a manufacturing claim. R&D tax relief for construction Construction R&D tax relief: what qualifies against the competent professional test — ground behaviour, structural form, materials — and who claims. --- # Agritech R&D tax credits: what qualifies and the rates URL: https://www.limestonegrey.com/sectors/agritech/ Description: Agritech companies claim R&D tax relief on crop science, precision farming and livestock technology. What qualifies, current rates and who claims a grant. Sectors •14 min read R&D tax relief for agritech companies MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Agritech work often qualifies for R&D tax relief, and it usually comes with the evidence a claim needs: replicated field trials, recorded growing protocols and the data trail regulatory approval demands. Work in crop science, precision farming, controlled environment growing and livestock technology regularly meets HMRC’s definition of qualifying R&D, and the relief is worth between 14.7p and 26.97p per £1 of qualifying spend depending on the scheme. The harder questions are about boundaries: where the science ends, who claims when the money arrives as a grant, and how to evidence work that runs on growing seasons rather than sprint cycles. Agritech R&D claims at a glance Claim element | Agritech Typical qualifying activities | Precision agriculture models whose field accuracy cannot be deduced from published work; Sensing and imaging where the signal must be separated from canopy, weather and soil variation; Controlled environment growing where no published data settles the light, nutrient and energy interactions; Breeding, biologicals and crop protection where existing agronomy cannot predict the outcome; Field robotics and selective harvesting where the difficulty is the system's combined behaviour; Replicated trials run to settle a question the field cannot already answer Costs that usually qualify | Staff time apportioned to development, covering field and glasshouse technicians as well as the lab; Seed, growing media, nutrient, crop protection and feed consumed in the trial; Water, fuel and power consumed by the R&D, apportioned on plot areas or run hours; Licensed satellite imagery, weather series and agronomic datasets, with the compute behind model training; Unconnected subcontracted work and externally provided workers, both at 65% Costs that usually do not | Consumables absorbed into produce transferred in the ordinary course of business; Capital expenditure on glasshouses or rigs, and rent and patent costs; Overseas contractor and externally provided worker costs, unless the narrow conditions exception is met Where claims go wrong | Claiming demonstration plots or standard-protocol comparison trials, which are agronomy rather than R&D; Treating regulatory trials as qualifying because the regulator demands them; Assuming a grant settles who claims, when the collaboration agreement and work packages do; Treating grant funding as a bar to relief, abolished for periods beginning on or after 1 April 2024; Missing the claim notification window, six months from the end of the period of account Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What agritech work qualifies as R&D? Work that seeks an advance in science or technology by resolving an uncertainty a competent professional in the field could not readily settle. A claim answers four questions per project, in order. What the field could already do, from published knowledge and what a competent professional could deduce from it — the baseline. What the work set out to add — the advance. What was not known about whether that was achievable, or how — the uncertainty. And what was attempted to settle it, failures included — the resolution. Agritech meets that test across both of its halves, the biology and the engineering. At concept level, qualifying work looks like this: Precision agriculture. Variable-rate application, yield prediction and decision models whose field accuracy cannot be deduced from published work, and which degrade in ways the training data did not anticipate. Sensing and imaging. Spectral, acoustic and in-soil sensing where the signal has to be separated from canopy, weather and soil variation before it means anything. Controlled environment agriculture. Interactions between light, nutrient delivery and energy use in indoor growing systems where no published data settles the design. Breeding, biologicals and crop protection. Trait selection methods, biological control agents and treatment regimes where existing agronomy cannot predict the outcome and the mechanism has to be established rather than looked up. Robotics and automation. Field robotics, selective harvesting and weeding in unstructured environments, where the difficulty is the system’s combined behaviour rather than any one component. Soil and water. Nutrient cycling, irrigation scheduling and run-off management where the field’s models do not predict behaviour for the soil, catchment or cropping system. Livestock technology. Monitoring, welfare and yield systems where biological variability defeats standard approaches. One of the Guidelines’ own worked examples is an agrochemical one. Finding a new active ingredient for a weed-killer and developing a formula around it is an advance, and systematically testing the resulting formulations for performance, toxicity, solubility and damage to other plants is R&D even though the testing uses established methods. Assessing what the product needs to appeal to consumers is not. The advance must be to the field’s knowledge or capability, not just your company’s. Adapting knowledge from another field counts, but only where the adaptation was not readily deducible, and much of agritech sits on that line: machine vision written for a factory line, put to work in a canopy. Applying an established sensor platform to a new crop is unlikely to qualify on its own; developing the platform because no existing one survives the conditions is a different matter. Our guide to what counts as qualifying R&D sets out the test in full. When is a field trial R&D, and when is it agronomy? When it is run to settle a question the field cannot already answer, and only until that question is settled. Testing that directly contributes to resolving the uncertainty is R&D. Testing after it has been resolved is not, however necessary and however expensive. From the tramlines, a qualifying trial and ordinary agronomy look identical. A replicated trial designed to establish whether a treatment works, and why, sits inside the claim. A demonstration plot run to show growers a product that already performs sits outside it. Variety and product comparison trials run to a standard protocol, on standard plots, to produce the data a customer expects, are ordinary agronomy. Regulatory trials follow the same rule rather than a separate one. HMRC’s compliance guidance is direct: obtaining certification for a product which already has proven functionality does not qualify, and where certification requires further advances to materially improve functionality, the work aimed at those advances does. Efficacy, residue and safety packages are not R&D because the regulator demands them; they are R&D to the extent they resolve something still open. The same reasoning applies to the release and marketing notification route for precision bred plants in England, which Defra operates under the Genetic Technology (Precision Breeding) Act 2023 and its 2025 regulations. Developing the trait is the R&D. Notifying the release and clearing that route is compliance. R&D also has an end: when the knowledge is codified in a form a competent professional can use, or when a prototype or pilot plant with all the functional characteristics of the final product exists. In a seasonal business, that end point rarely falls at a year end. Do pilot plots and prototypes that produce a saleable crop still qualify? Yes, with one cost category carved out. Designing, building and testing a prototype rig, growing module or machine is R&D, and a later sale does not take that work back out of the claim. What drops out is the consumable materials that ended up inside the item sold. A pilot plot works the same way: seed, nutrient and crop protection consumed in the trial qualify, except for the proportion absorbed into produce transferred in the ordinary course of business. Output scrapped, ploughed in or sold only as waste is unaffected, and where only part is sold, only that part of the cost comes out. The harder case is the crop or unit that was always going to be sold, where the restriction reaches wider than materials. Can I claim R&D tax relief on a prototype that is later sold? works it through. Does grant funding reduce an agritech claim, and who claims in a consortium? Grant funding does not reduce the claim. Who claims is a separate question, and it is answered below. Under the old SME rules a grant did reduce relief, and for accounting periods beginning on or after 1 April 2024 those rules are abolished: a grant-funded project claims in full under the merged scheme or ERIS. Much of the advice still circulating online predates the change. See grant funding and R&D tax relief, and Innovate UK grants and R&D tax relief together. Much of the public money reaching English agritech comes through Defra’s Farming Innovation Programme, delivered in partnership with Innovate UK, part of UK Research and Innovation. It funds by competition, and the strands differ by scale and by who can lead: Research Starter awards led by farmers, growers and foresters; feasibility studies and small and large R&D partnerships led by UK businesses; longer Farming Futures projects; and the ADOPT fund for on-farm adoption of existing solutions. Collaboration is a condition of funding. A grant does not certify that the work is R&D for tax purposes. ADOPT is the clearest case: where the work is adopting a proven solution, there is no advance to claim. Who claims turns on contracts rather than on where the money came from. Where a customer contracts for activities, and it is reasonable to assume from the contract terms and surrounding circumstances that the customer intended or contemplated that R&D of that sort would be done, the customer claims and the contractor does not. Where the customer did not, the contractor claims on its own costs. A grant offer letter does not settle this; in a consortium the collaboration agreement and the partner-to-partner work packages do. Agritech consortia raise three points the general rule does not. Universities and other institutions of higher education, charities, scientific research organisations and health service bodies cannot claim R&D relief at all, and a company doing R&D contracted out to it by one of them can claim in its own right. So can a contractor whose customer is not acting in the course of a trade, profession or vocation within the charge to tax — the question to ask where a levy body or public funder commissions work directly rather than awarding a grant. And work done at the company’s own risk before any contract exists stays its own R&D even if a contract follows and later reimburses it. Contracted-out R&D sets out the intended-or-contemplated test in full. Get it wrong in either direction and the same work is claimed twice or by nobody. How do growing seasons affect a claim? They compress your chances to experiment, which makes contemporaneous records more valuable, not less. A field trial may give you one data point per year, so hypotheses, protocols and results should be captured as the season runs rather than reconstructed at year end. Trials that fail still qualify: the relief rewards the attempt to resolve the uncertainty, not the outcome. Apportionment is the harder half, because agronomists, technicians and engineers move between trial work and commercial production inside the same week. HMRC’s compliance guidance accepts an estimated proportion of known expenditure where the estimate is arrived at using evidence and reason and based on facts. It recommends recording the claim methodology and the method behind each apportioned figure. Trial plot records, spray diaries and equipment logs usually supply it. Which costs go into an agritech claim? Staff costs apportioned to development time, covering field and glasshouse technicians and trial agronomists as well as the lab and the data team. Consumables carry unusual weight: seed, growing media, nutrient, crop protection product, feed, and the water, fuel and power consumed by the R&D, apportioned on a basis a reader can follow — plot areas, treatment counts or run hours rather than a round percentage of the farm bill. Agency staff enter as externally provided workers at 65% of payments to unconnected providers, and only where those workers’ earnings bear UK PAYE and Class 1 National Insurance, or the overseas conditions below are met. Unconnected subcontracted work, contract research organisations and trial sites included, enters at 65% too; connected parties are restricted to the lower of the payment and the other party’s own relevant expenditure. Software used for R&D has always qualified, and data licences and cloud computing joined it for accounting periods beginning on or after 1 April 2023. The category is larger in agritech than most people expect: licensed satellite imagery and weather series, agronomic datasets, the compute behind model training. Capital expenditure does not qualify, whatever the glasshouse or rig cost, though capital spending on the R&D itself can attract R&D allowances instead; rent and patent costs qualify for neither, though patent rights have their own allowances. The category rules sit in which costs qualify for R&D tax relief. Who is the competent professional in an agritech claim? Whoever holds the relevant expertise, which in agritech is usually more than one person: the plant breeder or crop scientist speaks to the biology, the agricultural or control engineer to the machine, the data scientist to the model. HMRC expects each to be knowledgeable about the relevant scientific and technological principles, aware of the current state of knowledge, and to have accumulated experience and a recognised track record. Having worked in a field, or taking an intelligent interest in it, does not by itself qualify someone. Their opinion has to explain, without jargon, what the advance is and why it advances the field’s knowledge rather than the company’s own. A bare assertion that the project was R&D is unlikely to be enough. Because that judgement carries the claim, we interview those people directly rather than working from a project list. Which R&D scheme applies to agritech companies? It depends on profitability and R&D intensity. Profitable agritech companies claim under the merged scheme: a 20% expenditure credit worth £20,000 gross on £100,000 of qualifying spend, which nets to £15,000 at the 25% corporation tax rate, £14,700 at the 26.5% marginal rate where augmented profits fall between £50,000 and £250,000, or £16,200 where the 19% rate applies. Loss-making companies under the merged scheme also receive £16,200 net in cash on the same spend. Pre-revenue agritech companies should look hard at Enhanced R&D Intensive Support (ERIS). A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure receives up to 26.97p per £1: on £100,000 of qualifying spend, a £26,970 payable credit. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones, and many venture-backed agritech businesses pass comfortably in their development years. A later dip need not cost the relief, but the grace period runs for a single year, and only for a company that met the intensity condition in its most recent prior 12-month accounting period and obtained relief for it. The ERIS intensity calculator works the 30% ratio, and the claim value calculator estimates both schemes on your own numbers. Can overseas field trials qualify? Sometimes, under a deliberately narrow exception. The default rule is that contractor and externally provided worker costs qualify only where the R&D is undertaken in the UK. The exception applies where conditions necessary for the R&D are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate here. Those conditions include geographical, environmental or social ones, and legal or regulatory requirements as a result of which the R&D may not be undertaken in the UK. Trialling a crop system in a climate the UK does not have is the case the exception was written for. Cost and workforce availability are expressly excluded as justifications. The detail is in overseas R&D costs. How we work with agritech companies LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief, with a deliberate focus on R&D-intensive companies, agritech among them. Every claim is prepared by our specialist team and signed off by a chartered adviser, enquiry support is included as standard, and the fee is agreed before work starts. Preparing the claim includes telling you which trials do not qualify. Two compliance points are worth flagging early. A company claiming for the first time, or that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account, or the claim is invalid: see claim notification. And HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, which is why agritech claims should be built on trial records, not year-end recollection. If you are weighing a first claim, an ERIS position or a grant interaction, get in touch for a considered view from a chartered adviser. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 6 and 9 on the advance and on adaptation from another field where not readily deducible; 13 and 14 on uncertainty and on fine-tuning; 20 and 26 on overall knowledge or capability and on direct contribution; 27(c) and 28(c) on testing that directly contributes and on production and distribution; 29 and 30 on system uncertainty; 34 and 39 on where R&D ends and on prototypes; and example E, the weed-killer active ingredient, the formulation testing that is R&D and the consumer-appeal work that is not. GfC3: How to identify qualifying R&D activities (part 4) — testing after the uncertainties are resolved does not qualify, and obtaining regulatory certification for a product with already proven functionality is not R&D unless certification requires further advances that materially improve functionality. GfC3: Recommended approach to claims and record keeping (part 5) — estimates arrived at using evidence and reason and based on facts, and HMRC’s recommendation to record the claim methodology and the method used for each apportioned figure. Check what R&D costs you can claim — the cost categories, consumable items including fuel and power, and the 65% contractor rule. CTA 2009 s1125 — computer software at subsection (1)(a) from the outset, with data licences and cloud computing services inserted at (1)(aa) and (ab) by Finance (No. 2) Act 2023 Sch 1, with effect for accounting periods beginning on or after 1 April 2023; subsection (2), consumable materials including water, fuel and power. CTA 2009 s1132A — subsection (2), earnings are qualifying where PAYE and Class 1 National Insurance must be accounted for; subsection (3), where it does not apply, earnings attributable to R&D undertaken outside the UK to which section 1138A applies are still qualifying. CTA 2009 s1138A — subsection (2), conditions not present in the UK, present in the location used and wholly unreasonable to replicate here; (3)(a), the geographical, environmental, social and legal or regulatory limbs; (3)(b), cost and worker availability excluded. CIRD161000 — the intended-or-contemplated test, contractual chains, pre-contract scoping work remaining the contractor’s own R&D even where later reimbursed, and claims by a contractor for an irrelievable client, including a customer not acting in the course of a trade, profession or vocation within the charge to tax. CIRD163000 — ineligible companies: charities, institutions of higher education, scientific research organisations and health service bodies. CIRD81300 — the competent professional: knowledgeable about the principles, aware of the current state of knowledge, with accumulated experience and a recognised track record, and what their opinion must explain. CIRD82300 and CTA 2009 s1126A — consumables absorbed into items transferred in the ordinary course of business, the waste position, and apportionment where only part of the output is transferred. Farming Innovation Programme — Defra’s programme delivered with Innovate UK, part of UKRI, for farmers, growers and foresters in England; the Research Starter, feasibility, small and large R&D partnership, Farming Futures and ADOPT strands, who can lead each, and the requirement to collaborate. Precision breeding register: notices and decisions — Defra’s register of release and marketing notices under the Genetic Technology (Precision Breeding) Act 2023 and the Genetic Technology (Precision Breeding) Regulations 2025; currently only precision bred plants can be released or marketed in England. --- # AI and robotics R&D tax relief: where the line falls URL: https://www.limestonegrey.com/sectors/ai-and-robotics/ Description: Model architectures, training, fine-tuning and robotics integration: which work meets the R&D test, and which is routine application of known technique. Sectors •13 min read R&D tax relief for AI and robotics companies MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards AI and robotics companies do some of the clearest qualifying R&D in the UK, and file some of the most scrutinised claims. Genuine development work on models, perception, control systems and physical integration qualifies readily, and is worth between 14.7p and 26.97p per £1 of qualifying spend depending on the scheme. But HMRC examines software and AI claims closely, so the work has to be framed as an advance in the field of science or technology, and evidenced like one. AI and robotics R&D claims at a glance Claim element | AI and robotics Typical qualifying activities | Model architectures or training methods designed because existing approaches cannot meet the accuracy, latency or safety constraints; Making models work under scarce labels, heavy class imbalance, or distribution shift between training and deployment; Search, planning and constraint solvers where whether any method meets the problem's scale or guarantees is uncertain; Perception in conditions the published methods were never characterised for; Transfer from simulation to hardware, where a policy that converges in the simulator degrades on the machine; Sub-systems a competent professional cannot readily deduce how to combine to give the intended function Costs that usually qualify | Staff time apportioned to the qualifying work, including the engineers on a robotics build; Data licence and cloud computing costs for training runs, simulation and evaluation environments; Materials used up in prototypes and test builds, as consumables; Agency workers under your direction as externally provided workers, at 65% of payments to an unconnected provider Costs that usually do not | The production cluster serving live customers; The test rig itself, and any other capital expenditure; Data or cloud costs attributable to a qualifying indirect activity; Work bought in from an offshore ML contractor Where claims go wrong | Framing the advance in your company's capability rather than in computer science or software engineering; Naming artificial intelligence or computer vision as the field without saying what moved in it; A dataset licence carrying a right to sell, publish or share the data; Assuming the claim is yours when the customer contemplated the R&D in the contract; A small payroll meeting the PAYE cap with no exemption checked Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. Where does the advance have to sit? In the field of computer science or software engineering, not in your company’s capability. HMRC’s software guidance places software development inside computer science and information technology, and the Guidelines require an advance in overall knowledge or capability in the field, not a company’s own state of knowledge alone. Applying an existing model or framework to a business problem it has not met before is a step for the business: the field already knew the technique worked. HMRC’s compliance guidance puts it in a worked example. Software written to analyse market research data is not R&D, because market research is not a qualifying field, unless the work seeks an advance of computer science or software engineering itself. An algorithm, the same example says, does not qualify as such unless it extends overall knowledge or capability of algorithms themselves. Nor is naming a field enough: where the advance is claimed in a sub-area such as artificial intelligence or computer vision, HMRC expects the competent professional to explain how the project is new in, or an appreciable improvement to, that sub-field relative to what is publicly available or readily deducible from it. Since April 2023 the Guidelines also treat a mathematical advance as science in its own right. What AI development qualifies as R&D? Development that pushes past what a competent professional could achieve with published knowledge and established techniques. In practice that covers more than model work: Novel model architectures or training methods, developed because existing approaches cannot meet the accuracy, latency or safety constraints of the problem. Making models work under hostile data regimes: scarce labels, heavy class imbalance, distribution shift between training and deployment. AI beyond machine learning: planning and scheduling systems, search and constraint solvers, and hand-built vision pipelines, where the uncertainty is whether any method can meet the problem’s scale or guarantees — no learned model required. Deployment engineering that is genuinely unresolved, such as running inference within hard power or memory budgets on edge hardware, where the work shades into the device development on our semiconductors and photonics page. Fine-tuning an available model with standard tooling to ship a product feature is commercial development, however valuable: new to your company, not to the field. HMRC’s own examples cut the same way. Adapting a natural language processing technique to a website by readily available methods published in open-source communities is routine use of existing knowledge, even for a company that has never used it. Independently reproducing a data-processing method a competitor holds as a trade secret does qualify, because the original is neither publicly available nor readily deducible. Where each of those lines falls — architectures and training methods, difficult data regimes, deployment constraints — is worked through with the evidence each needs in when machine learning development qualifies as R&D. What robotics development qualifies as R&D? Robotics claims usually rest on integration and environment uncertainty. Components that each work to specification can still produce a system whose behaviour cannot be predicted: perception, planning and actuation interact, and the real world refuses to match the simulator. Qualifying work typically includes control systems for unstructured environments, closing the gap between simulation and physical performance, and prototype iterations where each build tests a hypothesis the last one raised. Saying where the uncertainty sits is what turns that into a claim. Perception in conditions the published methods were never characterised for. Real-time control of a machine whose dynamics nobody can predict from the datasheets. Transfer from simulation to hardware, where a policy that converges in the simulator degrades on the machine for reasons still to be isolated. Safety cases that have to hold across operating conditions the established verification methods were never built to cover. Integration meets a standard objection — every component came from a catalogue — and the Guidelines answer it: the uncertainty is whether a competent professional could readily deduce how those sub-systems combine to give the intended function, not whether the parts were new. Assembly to an established pattern is not R&D. The iteration record is the evidence, covered in robotics prototyping and technological uncertainty. Activity | Usually inside the claim | Usually outside the claim Models and training | Architectures, loss functions or training regimes designed because published approaches cannot meet the accuracy, latency or safety constraints | Fine-tuning a documented model with standard tooling; running larger versions of an experiment whose outcome the field can already predict Perception, control and integration | Behaviour the field’s published methods were not characterised for; sub-systems a competent professional cannot readily deduce how to combine | Tuning inside an operating window the field understands; assembly to an established pattern Prototypes | Design, construction and testing while the uncertainty is live | Work after the test findings are reflected in the design and further testing is satisfactorily completed How closely does HMRC look at AI and robotics claims? Closely, and it would be wrong to pretend otherwise. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and software-based claims have attracted particular attention through the compliance push of recent years. The recurring failure is framing: claims written around the product and the market rather than the technological uncertainty. HMRC caseworkers are advised by the department’s own computer specialists, who do not hold themselves out as competent professionals on any particular project — the caseworker still makes the decision. Where a specialist and your competent professional disagree, HMRC’s guidance says the competent professional may be asked to clarify, by reference to public-domain information, what prevented the advance and the uncertainties from being readily deduced. That is the baseline argument again, made after the fact. Our page on HMRC R&D enquiries explains what a check involves, including claims filed by other advisers. What does the Get Onbord decision establish? Less than it is usually made to carry. In 2024 the First-tier Tribunal allowed the appeal of a company that had built an automated know-your-client verification process using AI and machine learning. HMRC objected on one ground: that the work advanced nothing in the field. The tribunal held that each component did not have to be new in itself, and that what mattered was whether the technology the company set out to build was already publicly available or readily deducible. It accepted a former director with no formal qualification in the field as the competent professional. But the decision binds only the parties, and HMRC had conceded everything except the advance, so costs, records and apportionment were never tested. Our register entry gives the paragraph references and the part people over-read. Which costs go into an AI or robotics claim? Staff costs apportioned to the qualifying work: research engineers, the people running and evaluating experiments, and the mechanical and electronics engineers on a robotics build. Software licence fees for the R&D, at a reasonable share where a licence is only partly used for it. Data and compute. Data licence and cloud computing costs are qualifying categories for accounting periods beginning on or after 1 April 2023, which covers every claim under the current schemes. Cloud computing services are described in the statute as including remote data storage, hardware facilities, operating systems and software platforms; a data licence is a licence to access and use a collection of digital data. Two restrictions apply to these categories alone. The cost drops out where the licence gives you a right to sell the data, or to publish or share it beyond what the R&D reasonably needs — read the dataset agreement before signing. And it drops out so far as it is attributable to a qualifying indirect activity. Which software and cloud costs qualify works through the apportionment. Data acquisition and labelling have no category of their own, so each cost follows the route by which you obtained it. A dataset bought in is a data licence cost; labelling by employees is a staff cost; labelling by agency workers under your direction enters as externally provided workers, at 65% of payments to an unconnected provider; and labelling bought in as a finished service is a contractor payment, but only where the work bought in is itself part of the R&D contracted out. The activity still has to sit inside the R&D project: labelling by known methods to build a general dataset is not, by itself, work to resolve an uncertainty. Robotics hardware. Materials used up in prototypes and test builds qualify as consumables; the rig itself does not. Capital spending on the R&D can attract R&D allowances instead. Where the first article was always going to be delivered to a customer, the boundary tightens across every cost category: can I claim R&D tax relief on a prototype that is later sold? Contracted-out model development. Where one company pays another to carry out R&D, only one of them claims it. The customer claims where it intended or contemplated, when the contract was made, that R&D of that sort would be done; where it did not, the contractor claims in its own right. AI companies meet this from both sides: commissioning model development, and building models to a client’s specification. Read contracted-out R&D before assuming the claim is yours. Location. The overseas restriction is written for externally provided workers and contractors: the work must be done in the UK, or the workers within UK PAYE and Class 1 NIC, with one narrow exception, for conditions the R&D needs that are absent from the UK and would be wholly unreasonable to replicate here — never for cost or the availability of workers. It does not reach software, data licence or cloud computing costs, so compute bought from a provider whose region sits outside the UK is not caught on that ground. An offshore ML contractor is. Overseas R&D costs sets out the exception. The PAYE cap can bite small payrolls. Payable credits are capped at £20,000 plus 300% of relevant PAYE and NIC. An exemption applies where the company is taking steps towards creating relevant intellectual property, creating it, or doing a significant amount of management work on relevant IP it holds — the activity wholly or mainly undertaken by its own employees — and where its connected-party contractor and externally provided worker spend does not exceed 15% of its qualifying expenditure. Many genuine AI and robotics developers meet it, including teams whose IP is still being worked towards rather than already created, but it needs checking rather than assuming. The PAYE cap page has the conditions. Grants no longer reduce the claim. The old subsidised-expenditure restriction is abolished for current-scheme periods, so an Innovate UK funded project claims in full: grant funding and R&D tax relief has the detail. Which scheme applies, and what is it worth? Pre-revenue AI and robotics companies are exactly who Enhanced R&D Intensive Support (ERIS) was designed for. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure receives up to 26.97p per £1: a £26,970 payable credit on £100,000 of qualifying spend. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones, so deep in the development phase the test is often passed comfortably. If intensity falls away later, one year of grace may still be available, where the company met the condition in its most recent prior 12-month accounting period and obtained relief for it. Profitable companies claim under the merged scheme: a 20% credit that nets to £15,000 on £100,000 of spend at the 25% corporation tax rate, £14,700 at the 26.5% marginal rate where augmented profits fall between £50,000 and £250,000, or £16,200 where the 19% rate applies. The gap matters at scale. On £400,000 of qualifying spend in a period beginning on or after 1 April 2024, a loss-making company with intensity above 30% takes £107,880 in cash under ERIS; the same spend under the merged scheme gives an £80,000 credit, worth £64,800 net to a loss-maker. Both sit before the PAYE cap. Every rate, and the date test that fixes which applies, is on rates by year; the ERIS intensity calculator works the 30% ratio including connected companies, and the claim value calculator estimates both. What should the claim record? The competent professional’s account, written while the work was still uncertain, with the baseline set out clearly enough that a reader can see what the field could already do. Experiment trackers, training logs and evaluations against that baseline supply the AI half; build logs, test reports and the failures that changed the next iteration supply the robotics half. What both usually lack is the connective tissue — a note of what question each run or build was asking, and what the answer changed. HMRC has published what it expects of the documentation in its Guidelines for Compliance; the person is covered in who counts as a competent professional. Two compliance deadlines sit around all of this. The Additional Information Form has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023, and a first-time claimant, or one that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid. What our AI and robotics clients say “Working with LimestoneGrey has been a genuinely positive experience. Their communication is clear and proactive and they are always on hand to answer queries and provide reassurance throughout the process. We have complete trust in their expertise and feel confident that our claims are being handled professionally.” Dr Varghese, Laennec AI Limited “We have been very happy with the service provided by LimestoneGrey. In particular, their attention to detail has been exceptional, making the entire process smooth and reassuring for us.” Marcus, Neurabotics Limited Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. We focus on R&D-intensive companies, with advanced AI and robotics among our core sectors. Every claim is prepared by our specialist team and signed off by a chartered adviser, enquiry support is included as standard, and the fee is agreed before any work starts. If you want a straight answer on whether your development qualifies, how the intensity test falls on your numbers, or how to evidence a claim HMRC may check, get in touch. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 6 and 8 on the advance lying in the field rather than the company, 15B on mathematical advances treated as science from April 2023, 20 on readily deducible knowledge, 29 and 30 on system uncertainty, 31 and 32 on qualifying indirect activities, and 39 on where prototype work ends. CIRD81960: the Guidelines applied to software — software development as part of computer science and information technology; why naming a sub-area such as artificial intelligence or computer vision is not specific enough; HMRC’s computer specialists, and the request to clarify by reference to the public domain. GfC3: how to identify qualifying R&D activities (part 4) — example 4.4 on reproducing a trade secret independently, 4.5 on adapting a natural language processing technique by published open-source methods, and 4.6 on market research software and on algorithms. CTA 2009 s1125 and s1126ZA — data licences and cloud computing services, and the restrictions where a right to sell, publish or share the data is obtained or the cost is attributable to a qualifying indirect activity; both take effect for accounting periods beginning on or after 1 April 2023. CTA 2009 s1138A — the overseas restriction, headed “externally provided workers and contractors”, and an exception turning on conditions present outside the UK but expressly not on cost or the availability of workers. Check what R&D costs you can claim — the cost categories, the 65% rule for unconnected staff providers and contractors, and the exclusion of capital expenditure. Get Onbord Ltd (in liquidation) v HMRC — [2024] UKFTT 617 (TC): the competent professional without formal qualifications, and components that need not each be new. HMRC’s approach to R&D tax reliefs 2023 to 2024 — compliance checks covering 17% of claims in 2023 to 2024, the source of the one-in-six figure. CTA 2009 s1112E — the PAYE cap exemption: condition A on relevant intellectual property created or managed wholly or mainly by the company’s own employees, and condition B’s 15% limit on connected-party contractor and externally provided worker spend. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% credit and the ERIS conditions. --- # Software development R&D tax credits: an honest guide URL: https://www.limestonegrey.com/sectors/software/ Description: Software development qualifies for R&D tax relief only where it advances the technology. Where claims stand up, where they fail and the current rates. Sectors •9 min read R&D tax relief for software development MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Software development qualifies for R&D tax relief when it seeks an advance in the underlying technology, not just a new product built with existing tools. That distinction excludes a large share of commercial development work, and HMRC applies it strictly. The question is always whose knowledge ran out. The advance has to lie in the field’s overall knowledge or capability, not the company’s own, and HMRC’s software guidance is explicit that building a software product is not an advance in science or technology simply because software technology was used to create it. This page sets out where software claims stand up, where they do not, and what the relief is worth when they do. Software development R&D claims at a glance Claim element | Software development Typical qualifying activities | Scale, latency, accuracy and concurrency targets published approaches cannot satisfy together; Processing data at volumes or speeds where established architectures demonstrably fail, against a measured baseline; Separate components or sub-systems a competent professional cannot readily deduce how to combine; Pushing past what published architectures, training regimes or toolchains can demonstrably do; Unit, integration and performance testing whose results feed back into resolving the uncertainty Costs that usually qualify | Staff time apportioned to the work that resolved the uncertainty; Cloud computing and data licences used in the R&D; Training runs, simulation and the environments used to test an unproven architecture; Payments to unconnected subcontractors at 65%, for work done in the UK Costs that usually do not | The production cluster serving live customers; Requirements gathering, user acceptance testing, deployment and maintenance time; Subcontracted development carried out overseas, subject to a narrow exception Where claims go wrong | Claims written in product language, listing features rather than uncertainties; Treating unfamiliarity with a technique as uncertainty, rather than its absence from the field; Drawing the boundary around the release rather than the uncertainty it resolved; Claiming a faster result reached by a route the field could readily deduce; Adapting a documented model to your own data by the vendor's route Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. When does software development qualify as R&D? When a competent software professional, armed with published knowledge and established techniques, could not readily resolve the technical problem you faced. The Guidelines put the test as knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, being neither readily available nor readily deducible by a competent professional in the field — and “the field” means knowledge publicly available or readily deducible from it, which in software is a large and well documented body. Unfamiliarity with a technique is not uncertainty. Its absence from the field is. Qualifying work typically involves: Constraint sets that published approaches cannot satisfy together. Scale, latency, accuracy and concurrency rarely bind one at a time, and the uncertainty sits in the trade-off rather than any single target. An indexing scheme with known behaviour at one data volume and a consistency model that holds under one set of failure assumptions are each documented alone; whether they hold together at the operating point the project needs often is not. Processing data at volumes or speeds where established architectures demonstrably fail. “Demonstrably” carries the weight: the baseline should be a measured limit of a known approach, not a later assumption that it would not have coped. Integration where the combined behaviour of systems is genuinely uncertain. The Guidelines describe system uncertainty as uncertainty that results from the complexity of a system rather than uncertainty about how its individual components behave. They go further: work on combining standard technologies, devices and/or processes can involve scientific or technological uncertainty even if the principles for their integration are well known, and there will be uncertainty where a competent professional working in the field cannot readily deduce how the separate components or sub-systems should be combined to have the intended function. The caveat sits alongside it: assembling components, or software sub-programs, to an established pattern, or following routine methods for doing so, involves little or no uncertainty. “Every part of it already existed” does not close the question; nor does “we integrated many parts”. Work can be new to your company, commercially valuable and technically demanding, and still not qualify. Our guide to what counts as qualifying R&D covers the test in full, and what a scientific or technological uncertainty is takes the uncertainty limb on its own. What software work does not qualify? Most of it, honestly. The following are routine development, however skilled: Building applications with established frameworks, languages and APIs used as intended. Configuring or customising existing platforms to a specification. User interface and user experience work. Porting a working system to a new platform, language or hosting provider by documented means, where the outcome was never in doubt. Replicating functionality well understood in the field, even if it is new to your business. HMRC’s guidance for compliance puts routine analysis, copying or adaptation of an existing process or product outside the definition, even where the work is well planned and resource-intensive. Routine testing, debugging and maintenance, including testing that runs after the uncertainty is resolved and only confirms what is known. The Guidelines also exclude, in terms, improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology. Making something faster is not automatically R&D. Making it faster by a route the field could not readily deduce may well be. Where a genuinely qualifying core sits inside a larger commercial build, the project boundary matters. The R&D project is almost always narrower than the release: it begins when work on the identified uncertainty starts and ends when that uncertainty is resolved or abandoned, which puts requirements gathering, user acceptance testing, deployment and maintenance outside it whatever the sprint board says. The claim covers the work that resolved the uncertainty, not the whole product, and drawing that boundary carefully is what keeps a software claim defensible. Activity | Usually inside the claim | Usually outside the claim Architecture under competing constraints | Scale, latency, accuracy and concurrency targets published approaches cannot satisfy together | Building applications with established frameworks, languages and APIs used as intended; user interface and user experience work Data processing at volume or speed | Volumes or speeds where established architectures demonstrably fail, against a measured baseline | Improvements, optimisations and fine-tuning that do not materially affect the underlying technology Integration and system behaviour | Separate components or sub-systems a competent professional cannot readily deduce how to combine to have the intended function | Assembly to an established pattern; configuring or customising an existing platform to a specification Machine learning and AI | Pushing past what published architectures, training regimes or toolchains can demonstrably do | Adapting a documented model to your own data by the vendor’s route Testing and validation | Unit, integration and performance testing whose results feed back into resolving the uncertainty | User acceptance testing, deployment and maintenance; testing that runs after the uncertainty is resolved and only confirms what is known Why does HMRC guidance matter so much for software claims? Because software is where HMRC has concentrated much of its compliance effort, and its guidance is specific about the difference between advancing software technology and using it. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and has over 500 people working on R&D compliance. The claims that fail tend to be written in product language, listing features rather than uncertainties. That guidance is granular about activities. Technical design and development aimed at the uncertainty can qualify, as can unit, integration and performance testing where the results feed back into resolving it; requirement gathering, configuring software to a customer’s specification, user acceptance testing, deployment and maintenance do not. A claim built on it names the field, states what was already publicly achievable, and records the experiments, including the ones that failed. We go further into this in setting the technological baseline for a software claim. Our page on HMRC R&D enquiries covers what happens when a claim is checked. What records does a software claim need? Better ones than most development teams keep by default, though rarely more than good engineering practice produces anyway. Every claim is made through the company tax return with an Additional Information Form describing the projects, so the technical account has to exist and has to hold up. HMRC’s expectation is proportionate: its guidance for compliance says the records you normally create while running the business are often enough, and lists designs, test results and email exchanges among what it may ask to see. In a development team’s artefacts, that means: The technical lead’s statement of the uncertainty at the outset, and why existing approaches were insufficient, written while it was still uncertain. Design documents and architecture decision records, particularly those recording options considered and rejected. Tickets, commits and branch history showing which approaches were tried and in what order. Benchmark and test results, including the failures, and incident or post-mortem records where production behaviour drove the work. A sensible basis for apportioning staff time between qualifying and routine work. Version control history is often the most persuasive evidence a software company already holds: it timestamps the iterations and shows the dead ends that a tidy retrospective write-up would hide. What a repository cannot supply is the question each iteration was asking, which is why a short running note alongside it earns its keep in a claim. What about machine learning and AI? AI development raises the same test with different facts, and we treat it separately. The recurring line is the field one: adapting a documented model to your own data by the vendor’s route rarely advances what the technology can do, whereas pushing past what published architectures, training regimes or toolchains can demonstrably do often involves genuine uncertainty. The added difficulty is the baseline, which in machine learning moves quickly enough that a capability genuinely open during the accounting period may be settled by the time the claim is written. See when machine learning development qualifies as R&D for the field-advance analysis, and our AI and robotics sector page for the wider claim picture. What is a software claim worth? Under the merged scheme, £100,000 of qualifying spend gives a £20,000 gross credit: £15,000 net at the 25% corporation tax rate, £16,200 at the 19% rate or for loss-making companies. That is 15p to 16.2p per £1 of qualifying spend, and as low as 14.7p where marginal relief applies. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure can instead claim up to £26,970 on the same spend through ERIS. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Qualifying costs include apportioned staff time, cloud computing and data licences, and payments to unconnected subcontractors at 65%, subject to the UK-only rules on where the work is done. The compute line is often the one nobody has interrogated: training runs, simulation and the environments used to test an unproven architecture belong in the claim; the production cluster serving live customers does not. Which software and cloud costs qualify works through the categories. Grant funding no longer reduces relief under the current schemes; the position is explained in grant funding and R&D tax relief. The claim value calculator gives an estimate on your own numbers, and the ERIS intensity calculator works the 30% test. A measured word on our approach Software claims built on weak foundations were a large part of the mis-selling era, and they remain a focus of HMRC’s checks. We would rather tell you a project does not qualify than file a claim that will not withstand scrutiny. LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. Every claim is signed off by a chartered adviser, and enquiry support is included as standard. If an earlier adviser filed software claims you are no longer comfortable with, we can review the position, and where HMRC has already opened an enquiry we can take over the defence. If you want an honest view on whether your development work qualifies, talk it through with a chartered adviser. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 6 on the advance being in the field rather than the company, paragraphs 13 and 14 on uncertainty and on fine-tuning that does not materially affect the underlying technology, paragraph 20 on publicly available knowledge, and paragraphs 29 and 30 on system uncertainty, assembly to an established pattern and combining standard technologies. CIRD81960: the Guidelines applied to software — the advance must lie in the underlying technology rather than the product, and the qualifying and non-qualifying software activities. GfC3 part 4: how to identify qualifying R&D activities — readily deducible knowledge, routine copying and adaptation, and where a project starts and ends. GfC3 part 5: recommended approach to claims and record keeping — the records HMRC expects and when to create them. HMRC’s approach to R&D tax reliefs 2023 to 2024 — compliance coverage of 17% of claims in 2023 to 2024 and over 500 people working on R&D compliance. --- # R&D tax credits for engineering firms: what qualifies in the UK URL: https://www.limestonegrey.com/sectors/engineering/ Description: Which engineering work meets HMRC's R&D test — civil, mechanical, electrical, process — which costs qualify, and where the line falls. Sectors •11 min read R&D tax credits for engineering firms MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Engineering firms sit awkwardly against the R&D definition, because the sector’s ordinary work is technical. Solving hard problems to a deadline is the job. Difficulty is not the test. The test is whether a competent professional could readily resolve the problem with knowledge already available in the field. Many engineering businesses have both kinds of work in the same year: a qualifying core, wrapped in delivery that is skilled, chargeable and outside the claim. A profitable company keeps 14.7p to 16.2p per £1 of qualifying spend under the merged scheme, so that boundary decides real money. Engineering R&D claims at a glance Claim element | Engineering Typical qualifying activities | Constraint sets established methods cannot satisfy together: weight against strength, temperature against cost; Substitute materials with no performance data for the application, where behaviour must be established; Ground or structural response nobody can predict from the site investigation alone; Fatigue, sealing, vibration or thermal behaviour published models do not predict for the duty; Control, power electronics or retrofit behaviour appearing only once new and legacy equipment run together; Scale-up where the small version's yield, tolerance and repeatability do not survive the line; Machining a substitute alloy, or a form whose distortion existing data cannot predict, where the process window has to be established Costs that usually qualify | Staff time apportioned to development, covering workshop, test and site engineers as well as the design office; Materials consumed in prototypes, rigs and trial builds that are not sold; Agency staff as externally provided workers at 65% for unconnected providers; Unconnected subcontracted development at 65%, for work done in the UK; Software and cloud costs used in the R&D Costs that usually do not | Capital expenditure, whatever the machine or test rig cost; Rent and patent costs, which qualify for neither R&D relief nor R&D allowances; Materials absorbed into something sold in the ordinary course of business; Externally provided workers whose earnings sit wholly outside UK PAYE and Class 1 NIC Where claims go wrong | Made-to-order work on the firm's established design approach, nothing technically in doubt; Design to published codes and standard calculation methods applied to a new duty; Value engineering: the same specification at lower cost using known products; Commissioning and tuning that does not materially affect the underlying science or technology; Tighter tolerances held with established fixturing, tool paths and metrology: routine adaptation, new only to the firm; Assuming the claim is yours without reading which side of the contract it sits on Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What engineering work qualifies as R&D? The shapes differ by discipline. Design-and-build and product engineering. A constraint set established methods cannot satisfy together: weight against strength, temperature against cost, throughput against tolerance. Also substitute materials, where no performance data exists for your application and behaviour has to be established rather than looked up. Civil and structural. Ground that does not behave as the site investigation predicted, a form or span with no reliable precedent, temporary works whose behaviour has to be proved by instrumentation. More on our construction page. Mechanical. Fatigue, sealing, vibration and thermal behaviour published models do not predict for the duty in question; machinery pushed past the envelope the field has characterised. Electrical, control and instrumentation. Control of a system whose dynamics cannot be deduced in advance; power electronics and EMC behaviour at the edge of established practice; retrofits to legacy plant where the combined behaviour is unknown until it runs. Process engineering. Scaling from bench or workshop to production, where yield, tolerance and repeatability that held on the small version fail on the line. The Guidelines meet this directly: uncertainty will often arise from turning something already established as scientifically feasible into a cost-effective, reliable and reproducible process (paragraph 13); our manufacturing page develops it. Attempts that failed still qualify: the relief follows the work to resolve the uncertainty, not the outcome. An iteration record of what was tried, what broke and what changed next is the best evidence a claim can have, the pattern set out in robotics prototyping and technological uncertainty. Engineering also shades into sectors we cover separately: aerospace and defence, where certification standards drive the development, and cleantech and energy for scale-up from bench to pilot plant. Where the qualifying line falls Integration claims meet a standard objection: that each component came from a catalogue. The Guidelines answer it. There will be uncertainty if a competent professional cannot readily deduce how the separate components or sub-systems should be combined to have the intended function (paragraph 30), even where the principles for their integration are well known. The limit sits alongside it: assembling components to an established pattern, or following routine methods for doing so, involves little or no uncertainty (paragraph 29). A machine builder combining a servo drive, a vision system and a PLC as that firm has for a decade is doing skilled work with a predictable answer. Routine application of established engineering practice does not qualify, and that covers a great deal of excellent work: Design to code. Published design codes, standard calculation methods and manufacturers’ data applied to a new duty, including simulation confirming a margin already understood. Made-to-order work on the firm’s established design approach: a one-off machine dimensioned for a new customer, where nothing about the engineering was in doubt. Work that only brings a company into line with what the field already knows is not an appreciable improvement (paragraph 24). Value engineering: the same specification at lower cost using known products. Commercial gain, not an advance in technology. Commissioning and tuning. Paragraph 14 is explicit: improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty. The end of a project matters as much as its start: R&D ends when the knowledge is codified in a form a competent professional can use, or when a prototype with all the functional characteristics of the final product or process is produced (paragraph 34). We say no to work on this list regularly, including on projects a client was confident about. Does precision machining or toolmaking qualify? Subcontract machining and toolmaking sit at the hardest end of this boundary, because the work is exacting and the answer is usually already known. Holding a tighter tolerance by applying established fixturing, tool paths and metrology is skilled production: routine adaptation of an existing process does not advance overall knowledge or capability, even where it is new to the company or to its trade (paragraph 22). The claim appears where the material, the geometry or the duty puts the process outside what the field has characterised — machining a substitute alloy whose behaviour under the required cut is not published, or holding a form whose distortion cannot be predicted from existing data, so the process window has to be established rather than looked up. Paragraph 13 puts the same test to production: uncertainty often arises in turning something already established as scientifically feasible into a reliable and reproducible process. The evidence takes the same shape as the rest of an engineering claim — first-off inspection records, the trials that did not hold and the reason they did not, and the settled parameters at the end. Who claims when the engineering is done under contract? For a contract engineering firm this is often the largest question in the claim. For accounting periods beginning on or after 1 April 2024, the customer claims where it intended or contemplated, when the contract was made, that R&D of that sort would be done. Where it did not, the contractor claims in its own right. A contractor whose customer carries on no trade within the charge to UK tax — an overseas customer with no UK trade, say — can also claim in its own right; a UK sole-trader customer is within the charge to income tax, so that route does not apply there. Three shapes recur in engineering. On design-and-build for a client, where the contract, its scope and its testing regime describe the development itself, the client contemplated the R&D and claims it, taking 65% of what it pays an unconnected engineering firm. On subcontracted detail design — a package let against a performance specification, priced as a deliverable, with no technical unknown named in the tender — the firm that then has to resolve genuine uncertainty claims on its own costs. Own-product development sits outside the question entirely: nothing was contracted out, so the company claims. The same R&D cannot be claimed twice, so relief claimed on the wrong side of a contract is an incorrect claim. Read contracted-out R&D before you assume the claim is yours, or the customer’s. Discipline by discipline: inside and outside the claim Discipline | Usually inside the claim | Usually outside the claim Design-and-build | Constraint sets established methods cannot satisfy together; materials with no performance data | Made-to-order work on the established design approach, nothing technically in doubt Civil and structural | Ground or structural response nobody can predict from the site investigation alone | Code-compliant design; a proven method applied to a different site Mechanical | Fatigue, sealing, vibration or thermal behaviour published models do not predict | Sizing to a published duty; confirming a known margin Electrical and control | Behaviour that only appears once new and legacy equipment run together | Wiring and integrating a control scheme the firm has built before Process | Scale-up where the small version’s yield and repeatability do not survive the line | Bringing a line to the supplier’s stated performance; changes inside a proven range Precision machining and toolmaking | Material, geometry or duty putting the process window outside what the field has characterised | Tighter tolerances held with established fixturing, tool paths and metrology, new only to the firm Which costs go into an engineering claim? Staff costs apportioned to development time, covering workshop, test and site engineers as well as the design office. Materials consumed in prototypes, rigs and trial builds qualify as consumables where they are not sold; materials absorbed into something you sell in the ordinary course of business fall outside, which catches firms whose prototype ships as the deliverable. Where the unit was always going to ship, the boundary reaches development time too, not only materials: can I claim R&D tax relief on a prototype that is later sold? Agency staff enter as externally provided workers at 65% of payments to unconnected providers, and only so far as their earnings are within UK PAYE and Class 1 NIC — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Unconnected subcontracted development enters at 65% too; connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Software and cloud costs used in the R&D count. No capital expenditure qualifies, whatever the machine or test rig cost, though capital spending on R&D can attract R&D allowances instead; rent and patent costs qualify for neither. Two location restrictions apply: subcontracted R&D counts only where the work is done in the UK, and externally provided workers only so far as their earnings are within UK PAYE and Class 1 NIC. Overseas R&D costs covers the narrow exception. What is an engineering claim worth? Take £100,000 of qualifying spend. The merged scheme turns it into a £20,000 expenditure credit at 20%, and because that credit is itself taxable, what the company keeps depends on its rate: £15,000 at the 25% corporation tax rate, £14,700 where augmented profits fall between £50,000 and £250,000 and the 26.5% marginal rate applies, and £16,200 at the 19% rate or for a loss-making company, subject to the PAYE cap. Profitable firms are the more common case in engineering. The alternative is narrower than it looks. A loss-making SME whose relevant R&D expenditure reaches 30% of its total relevant expenditure takes up to £26,970 on the same £100,000 through ERIS. The denominator is the catch: total relevant expenditure is broadly the trading costs in the accounts for the period, not the R&D ones alone, and connected companies enter both halves. An engineering business buying materials and letting subcontract packages rarely clears 30%. Grant funding no longer reduces relief under the current schemes; see grant funding and R&D tax relief. Run your own figures through the claim value calculator, and the ratio through the ERIS intensity calculator. Our Midtec Products case study works a real engineering claim: a £40,000 benefit across staff, agency and material costs, on a retrofit emissions device developed after new DEFRA eco criteria. A change in industry legislation is one of the most reliable triggers for qualifying work. What evidence does an engineering claim need? The records most firms already produce, kept with the claim in mind rather than filed against the job cost. Design reviews and drawing revisions show the constraint being fought. Test reports, failure investigations and non-conformance records show the uncertainty being worked through, with dates attached. A trade study that closed an option because the data would not support it evidences an unresolved uncertainty better than any later narrative. Apportionment is the harder half, because engineers move between the qualifying core and ordinary delivery inside the same week. HMRC’s guidelines for compliance accept an estimated proportion of known expenditure where the estimate is arrived at using evidence and reason and the apportionment basis is recorded. Tie the records to a project boundary with a stated advance and uncertainty, then write the Additional Information Form from them rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. See what records an R&D claim needs and HMRC R&D enquiries. What to bring to a first conversation You do not need a prepared claim. Five things make the first hour productive: A shortlist of projects, not contracts. Two or three pieces of work where the answer was genuinely not known at the start. The engineer who led each one. HMRC anchors a claim in the judgement of a competent professional, and we interview them directly. The contracts behind that work, or the tender documents. Who claims turns on what they say. A rough cost shape: development headcount, agency use, subcontracted work, prototype materials. Your period dates and claim history. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid. See claim notification. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. We prepare engineering claims that are meant to be checked: costed carefully, evidenced from design and test records, signed off by a chartered adviser, with enquiry support included as standard and the fee agreed before work starts. Part of that work is telling you which projects do not qualify. For a straight view on your development work, and on which side of your contracts the claim sits, call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — paragraph 13 on turning feasibility into a reliable process, 14 on fine-tuning, 22 on routine adaptation of an existing process, 24 on appreciable improvement, 29 and 30 on combining standard technologies and the limits of system uncertainty, and 34 on where R&D ends. CIRD161000 — the intended-or-contemplated test and customers outside UK corporation tax; CIRD162000, HMRC’s worked examples. GfC3: Recommended approach to claims and record keeping (part 5) — estimates arrived at using evidence and reason, and recording the apportionment basis. Check what R&D costs you can claim — the cost categories, the 65% rule, and the exclusion of capital, rent and patent costs. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% credit and the ERIS conditions. --- # Manufacturing R&D tax credits: prototypes and process work URL: https://www.limestonegrey.com/sectors/manufacturing/ Description: Where process improvement crosses into qualifying R&D, and how prototype, pilot plant and trial-run costs are treated in a manufacturing claim. Sectors •11 min read R&D tax relief for manufacturing companies MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Manufacturers claim R&D tax relief for two kinds of work: developing new or improved products, and developing the processes that make them. Both qualify where the work had to resolve genuine technical uncertainty rather than apply methods the industry already understands. Under the merged scheme, £100,000 of qualifying spend is worth £15,000 net at the 25% corporation tax rate. Manufacturing R&D claims at a glance Claim element | Manufacturing Typical qualifying activities | Performance that cannot be reached with existing materials, designs or formulations; Redesign forced by regulation or by a component becoming unavailable; A speed-against-quality trade-off known methods and supplier settings do not solve; Automation where the interaction between new and legacy equipment is uncertain; Tooling, fixtures or process parameters for a material or geometry the industry has not handled before; Scale-up where yield, tolerance and repeatability that held on the bench fail on the line Costs that usually qualify | Staff time apportioned to development, including production engineers and operators running trials; Materials consumed in prototypes, trial runs and scrapped batches; Water, fuel and power consumed by the R&D, apportioned on run hours or batch counts; Agency staff as externally provided workers at 65% for unconnected providers; Subcontracted development at 65% for unconnected parties Costs that usually do not | Capital equipment, including new machinery, however advanced; Ordinary production plant, which takes normal capital allowances rather than R&D allowances; Rent and patent costs; Materials absorbed into something you then sell in the ordinary course of business Where claims go wrong | Commissioning a line to the supplier's specification claimed as process development; Dialling parameters in within a known operating window, or tuning back into a held tolerance; Work continuing after a prototype with all the functional characteristics of the final product exists; Improvements that only bring the company into line with what the field already knows; Developing to a customer's specification without checking which side of the contract claims Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What manufacturing work qualifies as R&D? On the product side: development where the required performance cannot be reached with existing materials, designs or formulations, including redesign forced by regulation or by a component becoming unavailable. On the process side, qualifying work is common and regularly missed. At concept level: Increasing line speed without losing quality, where the trade-off is not solved by known methods or supplier settings. Integrating automation into an existing line where the interaction between new and legacy equipment is uncertain, a pattern we examine in robotics prototyping and technological uncertainty. Developing tooling, fixtures or process parameters for a material or geometry the industry has not handled before. Scaling up from pilot batches to production volumes where behaviour changes with scale: yield, tolerance and repeatability that held on the bench failing to hold on the line. Automation projects meet a standard objection — every component came from a catalogue — and the Guidelines answer it. System uncertainty results from the complexity of a system rather than from uncertainty about how its individual components behave (paragraph 29), and combining standard technologies, devices and processes can involve scientific or technological uncertainty even where the principles for their integration are well known — there will be uncertainty if a competent professional working in the field cannot readily deduce how the separate components or sub-systems should be combined to have the intended function (paragraph 30). The limit is stated alongside it: assembling components to an established pattern, or following routine methods for doing so, involves little or no uncertainty (paragraph 29). We take that line further on what a scientific or technological uncertainty is. Trial runs that get scrapped, and development that fails, still qualify. The relief follows the attempt to resolve the uncertainty, not the outcome. Much of this overlaps general engineering R&D and off-site construction, which we cover on their own pages. When does process development count as an advance? A process qualifies on the same test as a product. The Guidelines treat a project seeking an appreciable improvement to an existing process through scientific or technological changes as R&D (paragraph 9(c)), and an advance may have tangible consequences, such as a process which generates less waste, or intangible ones, including cost improvements (paragraph 7). A process producing the same output materially more efficiently can therefore be an advance, provided the improvement comes from scientific or technological change and is appreciable: more than a minor or routine upgrading, and something a competent professional in the field would acknowledge as genuine and non-trivial (paragraph 23). Work that only brings a company into line with what the field already knows is not an appreciable improvement, however new it is to your site (paragraph 24). Scale-up often carries both an advance and an uncertainty. The Guidelines are direct: uncertainty will often arise from turning something already established as scientifically feasible into a cost-effective, reliable and reproducible process (paragraph 13). Yield that collapses at volume, tolerances that drift across a line, a formulation that behaves differently in a 2,000-litre vessel than a 20-litre one — each asks whether and how the thing can be made, which having made it once does not settle. The full definition sits in what counts as qualifying R&D. How do prototypes and pilot plants fit? The design, construction and testing of prototypes generally fall within the scope of R&D; once modifications reflecting the test findings have been made and further testing satisfactorily completed, the uncertainty has been resolved and further work is not R&D (paragraph 39). A pilot plant’s construction and operation is R&D while its operations are being assessed, until the uncertainty associated with the intended advance is resolved (paragraph 40). More generally, R&D ends when the knowledge is codified in a form a competent professional can use, or when a prototype or pilot plant with all the functional characteristics of the final process or product is produced (paragraph 34), though uncertainty emerging after that point can require new R&D, which the Guidelines separate from routine fault fixing (paragraph 35). What does not qualify? Buying and installing new machinery, however advanced, is capital investment rather than R&D, and capital expenditure does not qualify for R&D tax relief. Capital spending on the R&D itself — the rig, the test cell, the pilot line — can attract research and development allowances. Ordinary production plant gets neither: it goes through the normal capital allowances instead. Routine quality control, cosmetic changes and efficiency gains achieved by applying known methods do not qualify either. The line that decides most manufacturing claims runs between qualifying process development and routine commissioning. Paragraph 14 is explicit: improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty. Commissioning a line to the supplier’s specification, dialling parameters in within a known operating window, tuning a process back into a tolerance it has held before: skilled and necessary, but not R&D. HMRC’s compliance guidance applies the same logic to scale-up: in its worked example, preparing for factory production does not qualify because the competent professionals identify no technological uncertainties in it, and the days spent fine-tuning and testing to meet manufacturing standards do not qualify either. That is a finding about one project, not a rule that scale-up never qualifies. The test throughout is whether a competent professional could readily have resolved the problem with existing knowledge. Activity | Usually inside the claim | Usually outside the claim Product development | Performance that cannot be reached with existing materials, designs or formulations; redesign forced by regulation or a component becoming unavailable | Cosmetic changes; work that only brings the company into line with what the field already knows Line speed and throughput | A speed-against-quality trade-off that known methods and supplier settings do not solve | Efficiency gains achieved by applying known methods; dialling parameters in within a known operating window Automation and integration | Interaction between new and legacy equipment that a competent professional cannot readily deduce in advance | Assembling components to an established pattern; buying and installing the machinery itself, which is capital Tooling and process parameters | A material or geometry the industry has not handled before | Tuning a process back into a tolerance it has held before Preparing for factory production | Yield, tolerance and repeatability that held on the bench failing to hold on the line | Preparation where the competent professionals identify no technological uncertainty; fine-tuning to meet manufacturing standards Prototypes and pilot plant | Design, construction and testing, and a pilot plant while its operations are still being assessed | Work after a prototype or pilot plant with all the functional characteristics of the final process or product exists; routine fault fixing What does a manufacturing claim look like in practice? Midtec Products, a manufacturing company in Ammanford, South Wales, developed an emissions reduction device that could be retrofitted to existing wood-burning stoves after DEFRA released new eco criteria for cleaner fuel burning. The qualifying costs covered staff, agency staff and materials, and the claim was worth £40,000. “We had excellent advice and support from LimestoneGrey in handling the submission of the claim and guiding us through the process.” Trefor Jenkins, Director at Midtec Products The full Midtec Products case study sets out the project. It also illustrates a wider point: a change in industry legislation, whether it opens an opportunity or forces a redesign, is one of the most reliable triggers for qualifying work in manufacturing. Which costs go into a manufacturing claim? Staff costs apportioned to development time, including production engineers and operators running trials, not just the design office. Materials consumed in prototypes and trial runs. Agency staff, as externally provided workers, at 65% of payments to unconnected providers, so far as their earnings are subject to UK PAYE — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Subcontracted development at 65% for unconnected parties. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Subcontracting also raises the question of who claims: a manufacturer developing to a customer’s specification should check which side of the line the contract puts it on, and our guide to contracted-out R&D works through the test. Software used in the R&D also counts. Capital equipment, rent and patent costs do not, though capital equipment bought for R&D may attract R&D allowances instead. Consumables carry more weight here than in most sectors. Materials used, consumed or transformed in the R&D qualify: raw materials, prototype components and test batches, including the scrapped trial runs that make up much of a manufacturing claim. Water, fuel and power consumed by the R&D qualify too, apportioned on a basis a reader can follow: run hours or batch counts rather than a round percentage of the site bill. One rule catches manufacturers more than most: where materials are absorbed into something you then sell in the ordinary course of business — a prototype that ships as a product, or trial output that reaches customers — the cost of those materials has been outside the consumables claim since 1 April 2015, with apportionment where only part of a batch is sold. Materials used up in testing, in iterations you keep, and in output scrapped or sold only as waste are unaffected: a transfer of waste is not a transfer in the ordinary course of business, whether or not you are paid for it. The category rules sit in which costs qualify for R&D tax relief. Where the unit was always going to be delivered rather than built for the R&D, the split runs wider than the materials: can I claim R&D tax relief on a prototype that is later sold? What is the claim worth? Most manufacturers claim under the merged scheme: a 20% expenditure credit, so £100,000 of qualifying spend gives a £20,000 gross credit, netting to £15,000 at the 25% corporation tax rate or £16,200 where the 19% rate applies. Loss-making companies receive £16,200 net in cash on the same spend, subject to the PAYE cap. That is 15p to 16.2p per £1 of qualifying spend, and as low as 14.7p where marginal relief applies. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure can claim up to £26,970 per £100,000 of qualifying spend through ERIS. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones, which is why 30% is a high bar for most manufacturers. Connected companies are counted on both sides of the ratio. Grant funding no longer reduces relief under the current schemes; the position is set out in grant funding and R&D tax relief. The claim value calculator gives an estimate on your own numbers, and the ERIS intensity calculator works the 30% test. What evidence does a manufacturing claim need? Evidence is rarely a problem in manufacturing if it is captured while the work runs. The shop floor already produces the right material: trial run and batch logs, scrap and rework records, control charts showing a process moving in and out of capability, non-conformance reports, and the machine settings tried and abandoned. A control chart that will not settle describes an unresolved process uncertainty better than any narrative written a year later. Three things turn that material into a claim. Tie the records to a project boundary, since a trial log evidences R&D only inside a project with a stated advance and uncertainty. Give the apportionment a basis where operators and engineers split time between trials and production: HMRC’s compliance guidance accepts an estimated proportion of known expenditure where the estimate is arrived at using evidence and reason, with the methodology and apportionment basis recorded, and trial run hours usually supply it. Write the Additional Information Form from those records rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Our page on what records an R&D claim needs covers the general position. Get a straight answer LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. We prepare manufacturing claims that are meant to be checked: costed carefully, evidenced from production records, with enquiry support included as standard and the fee agreed before work starts. Two compliance points to hold onto: a company claiming for the first time, or that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid, and HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, so process development should be documented while the trials run. Our guide to HMRC R&D enquiries sets out what a check involves. If you want a straight answer on whether your development work qualifies, get in touch. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 7, 9, 23 and 24 on the advance and appreciable improvement, 13 and 14 on uncertainty and fine-tuning, 29 and 30 on system uncertainty and combining standard technologies, and 34, 35, 39 and 40 on prototypes, pilot plants and where R&D ends. GfC3: How to identify qualifying R&D activities (part 4) — HMRC’s worked example on preparing for factory production and on fine-tuning to meet manufacturing standards. GfC3: Recommended approach to claims and record keeping (part 5) — HMRC on estimates arrived at using evidence and reason, and on recording the methodology, sampling and apportionment basis. CTA 2009 s1126A and CIRD82300 — consumables incorporated into items sold in the ordinary course of business, the waste and scrap position, and the apportionment rules; treatment identical under the current schemes (CIRD136000). Check what R&D costs you can claim — the qualifying cost categories, consumable items and the 65% contractor rule. --- # R&D tax credits for life sciences companies URL: https://www.limestonegrey.com/sectors/life-sciences/ Description: How life sciences companies claim R&D tax relief under the merged scheme and ERIS: grant funding, CRO contracts, clinical trials and loss-making phases. Sectors •6 min read R&D tax relief for life sciences companies MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards Life sciences R&D runs for years and leaves a documented trail as it goes: study protocols, laboratory records, clinical trial data and regulatory submissions are exactly the evidence an R&D claim has to stand on. A profitable company keeps 14.7p to 16.2p per £1 of qualifying spend under the merged scheme; a loss-making, R&D-intensive company can receive up to 26.97p per £1 in cash under ERIS. The difficulty is rarely whether the science qualifies. It is the structure around the science: grant stacks, CRO and CDMO contracts, clinical trials and long pre-revenue phases, each of which changes how the claim should be built. Life sciences R&D claims at a glance Claim element | Life sciences Typical qualifying activities | Target validation and preclinical development of a therapeutic candidate; Clinical development where safety and efficacy in humans cannot be deduced from existing knowledge; Assay or diagnostic development beyond the sensitivity or specificity existing methods reach; Scaling a bioprocess where yields and stability do not survive the transfer to production volumes; Formulation and delivery work where a compound's stability or bioavailability defeats known approaches Costs that usually qualify | Payments to an unconnected CRO or CDMO, entering the sponsor's claim at 65%; Payments to clinical trial volunteers, a cost category specific to this sector; Externally provided workers supplied by unconnected providers, at 65% Costs that usually do not | Subcontracted work undertaken outside the UK, unless the overseas exception is met; Overseas trial costs justified by cost savings, which are expressly excluded; Capital expenditure, rent and patent costs Where claims go wrong | Treating grant funding as a bar to relief, abolished for periods beginning on or after 1 April 2024; Claiming routine testing to established protocols, or projects whose only uncertainty is commercial; Assuming the CRO holds the claim, when the sponsor commissioning a defined study usually does; Relying on the ERIS grace period where the earlier year was never actually claimed; Missing the claim notification window, six months from the end of the period of account Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in life sciences? Work that seeks an advance in a field of science or technology by resolving uncertainty a competent professional could not readily resolve. That is the statutory test, and life sciences work meets it more naturally than most. At concept level, qualifying projects look like: taking a therapeutic candidate through target validation, preclinical work and clinical development, where safety and efficacy in humans cannot be deduced from existing knowledge developing an assay or diagnostic where existing methods cannot reach the sensitivity or specificity the application demands scaling a bioprocess from bench to production volumes, where yields and stability do not survive the transfer formulation and delivery work where a compound’s stability or bioavailability defeats known approaches Not everything in a lab qualifies. Routine testing to established protocols, and projects whose only uncertainty is commercial, sit outside the definition. The boundary matters, because HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. Our guide to what counts as qualifying R&D sets out the full test. Which scheme will a life sciences company claim under? Profit and R&D intensity decide it. Our R&D tax relief worked examples cost five claims of this kind in full. On the standard worked example of £100,000 of qualifying spend: Position | Credit | Net cash benefit Merged scheme, profitable at the 25% CT rate | £20,000 gross credit | £15,000 Merged scheme, profitable with augmented profits of £50,000 to £250,000 | £20,000 gross credit, taxed at the 26.5% marginal rate | £14,700 Merged scheme, loss-making | £20,000 gross credit, notional tax at 19% | £16,200 ERIS, loss-making and R&D-intensive | £26,970 payable credit, not taxable | £26,970 The merged scheme is a 20% taxable credit available to companies of every size. Enhanced R&D Intensive Support (ERIS) is reserved for a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Most pre-revenue life sciences companies clear the test comfortably. Check your own ratio with the ERIS intensity calculator, or put figures on a claim with the claim value calculator. Does grant funding reduce the claim? No, not for accounting periods beginning on or after 1 April 2024. The subsidised-expenditure rules were abolished alongside the old SME scheme, so Innovate UK and other grant funding no longer blocks or reduces relief under the merged scheme or ERIS. A great deal of online guidance still says otherwise, because it describes rules that no longer apply. This change matters most in life sciences, where grant stacks run deeper than in any other sector. A company can now take the grant and claim relief on the same project’s qualifying costs. The detail is in grant funding and R&D tax relief, and the sector application in Innovate UK grants and R&D tax relief together. Who claims when a CRO or CDMO does the work? Usually the sponsor. Under the merged scheme, the customer claims contracted-out R&D where it intended or contemplated R&D of that sort when the contract was made, and a sponsor commissioning a defined study almost always did. Payments to an unconnected CRO then enter the sponsor’s claim at 65%. Two restrictions need active management. Subcontracted work generally qualifies only where it is undertaken in the UK. And overseas trial costs qualify only under the qualifying overseas expenditure exception, for example where the patient population a trial needs is not available in the UK and would be wholly unreasonable to replicate here; cost savings are expressly excluded as a justification. Payments to clinical trial volunteers are a qualifying cost category specific to this sector. We cover the contracts in CRO contracts and R&D tax relief: who owns the claim? and the trials in clinical trial costs in R&D claims. How does relief work through the long loss-making years? ERIS exists for exactly this phase: it converts R&D losses into cash years before profitability, at up to 26.97p per £1. Three rules shape the planning: The grace period. A company that met the intensity condition in its most recent prior twelve-month period, and obtained relief for that period, keeps ERIS for one further year even if intensity then dips below 30%. That protects a lumpy spending profile, but only where the earlier year was actually claimed: eligibility on its own banks nothing. The PAYE cap. Payable credits under both schemes are limited to £20,000 plus 300% of relevant PAYE and NIC. A small internal team directing a large outsourced programme can hit it, though an exemption applies where the company’s own employees create relevant intellectual property, take steps towards creating it, or manage IP the company holds, and connected-party subcontracting stays low. A company that has yet to create any IP is not shut out on that ground; both conditions are on the PAYE cap page. Claim notification. First-time claimants, or companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account. Miss the window and the claim is invalid, however strong the science. The intensity arithmetic for a typical pre-revenue burn profile is worked through in ERIS for pre-revenue biotech and medtech. Looking for biotech or medtech specifically? This page covers the sector at umbrella level. For platform and asset development, the PAYE cap exemption and first-claim deadlines, see R&D tax credits for biotech companies. For device development, prototyping, regulatory testing and clinical evaluation, see R&D tax credits for medtech companies. Crop science and controlled-environment growing sit alongside this work; see R&D tax relief for agritech companies. Why life sciences companies work with LimestoneGrey LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. We work with life sciences companies across the UK from our Cardiff base. In 2026 we were named a finalist at the One Nucleus Awards for Most Innovative Professional Services Company, and we work within the sector’s networks rather than at arm’s length from them. Every claim is prepared by our specialist team and signed off by a chartered adviser, and enquiry support is included as standard in every engagement: see how to respond to an HMRC enquiry. “Working with LimestoneGrey has been a genuinely positive experience. Their communication is clear and proactive and they are always on hand to answer queries and provide reassurance throughout the process. We have complete trust in their expertise and feel confident that our claims are being handled professionally.” Dr Varghese, Laennec AI Limited Whether you are preparing a first claim, changing adviser or partway through a grant-funded programme, talk it through with a chartered adviser. We will tell you which scheme applies and agree the fee before any work starts. Sources Guidelines on the meaning of R&D for tax purposes — the advance, the technological uncertainty and the competent professional test behind what qualifies in life sciences. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% merged-scheme credit, the ERIS intensity condition and the rates quoted here. Check what R&D costs you can claim — the cost categories, the 65% restriction on unconnected subcontractors and externally provided workers, and the exclusion of capital, rent and patent costs. --- # Biotech R&D tax credits: ERIS and the merged scheme URL: https://www.limestonegrey.com/sectors/biotech/ Description: Most biotechs are loss-making and R&D-intensive, so ERIS can pay up to 26.97p per £1 of qualifying spend. The intensity test, grants and the PAYE cap. Sectors •6 min read R&D tax credits for biotech companies MJ Matthew Jones ACA CTA Last reviewed August 2026 · Editorial standards For most biotech companies the relief that matters is Enhanced R&D Intensive Support (ERIS), which pays loss-making, R&D-intensive SMEs up to 26.97p per £1 of qualifying spend in cash. A typical pre-revenue biotech passes the 30% intensity test with room to spare, and since April 2024 grant funding no longer reduces the relief. The points that need care are the SME test for venture-backed groups, the PAYE cap where lab work is heavily outsourced, and the claim notification deadline that silently invalidates late first claims. Biotech R&D claims at a glance Claim element | Biotech Typical qualifying activities | Candidate programmes where behaviour in biological systems cannot be predicted from existing knowledge; Discovery and preclinical work establishing that behaviour experimentally; Platform development advancing the field's capability rather than the company's alone; Delivery technology, discovery engines or analytical methods existing approaches cannot match Costs that usually qualify | Payments to unconnected subcontractors, including CROs, at 65%; Externally provided workers supplied by unconnected providers, at 65%; Subcontracted laboratory work undertaken in the UK Costs that usually do not | Overseas subcontracted work, save the narrow exception for conditions the UK cannot supply; Capital expenditure, rent and patent costs Where claims go wrong | Assuming an Innovate UK grant reduces the claim, a restriction abolished with the old SME scheme; Reading the SME test on the company alone, ignoring connected and partner enterprises; Relying on the grace period without having met intensity and obtained relief for the prior period; Building the claim before establishing the PAYE cap exemption position; Missing the claim notification deadline, six months from the end of the period of account Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. Why is ERIS the biotech scheme? Because its conditions describe a biotech. ERIS applies to a company that is an SME, is loss-making, and whose relevant R&D expenditure is at least 30% of its total relevant expenditure. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. A pre-revenue biotech spending most of its budget on discovery, preclinical work and platform development usually clears 30% by a wide margin. The value is the standard worked example: £100,000 of qualifying spend, with sufficient losses, gives £100,000 x 186% x 14.5% = £26,970 as a payable credit, and the credit is not taxable. The same company under the merged scheme would receive £16,200. The full conditions and mechanics are on our ERIS page, and the ERIS intensity calculator tests the 30% threshold on your own numbers. Two caveats catch biotechs specifically. The SME definition (fewer than 500 staff and either turnover of €100m or less or a balance sheet total of €86m or less) aggregates connected and partner enterprises, so investor and group structures can change the answer for a company that looks small on its own. And the intensity ratio includes connected companies on both sides. A one-year grace period can hold ERIS where intensity later dips, but only where the company met the intensity condition in its most recent prior 12-month accounting period and obtained relief for it. Investors ask the venture capital question the other way round, and the answer is short: claiming an R&D tax credit does not affect EIS or SEIS status, and the claim’s cost schedule can do double duty in the knowledge-intensive tests. A biotech that reaches profitability moves to the merged scheme: a 20% taxable credit worth £15,000 net per £100,000 of qualifying spend at the 25% corporation tax rate. That is 15p per £1 of qualifying spend, and as low as 14.7p where marginal relief applies. The claim value calculator covers both schemes. Platform or asset development: does it matter for the claim? Both can qualify; the test does not distinguish business models. What the DSIT guidelines require is an advance in the knowledge or capability of the field, not just the company, achieved by resolving uncertainty a competent professional could not readily resolve. An asset company meets it through candidate programmes, where behaviour in biological systems cannot be predicted from existing knowledge and must be established experimentally. A platform company meets it where the platform itself pushes the field’s capability: a delivery technology, a discovery engine, an analytical method that existing approaches cannot match. What does not qualify is the routine application of established methods, running a validated assay to a known protocol, however commercially important the output. The practical discipline is drawing project boundaries around the uncertainty being resolved, not around funding rounds or programme names. Our guide to what counts as qualifying R&D covers the definition and the documentation HMRC expects. Do Innovate UK grants reduce a biotech’s R&D claim? No. For accounting periods beginning on or after 1 April 2024, grant funding, including Innovate UK, neither blocks nor reduces relief under the merged scheme or ERIS. The old subsidised-expenditure restriction was abolished with the old SME scheme. Much of what is written online still reflects the old rule, and grant-funded biotechs are the companies most often misadvised because of it. See grant funding and R&D tax relief for the current position and Innovate UK grants and R&D tax relief together for how the two supports combine on one project. Will the PAYE cap limit the credit? It can, and biotech is the classic case. Payable credits under both current schemes are capped at £20,000 plus 300% of the company’s relevant PAYE and NIC. A biotech running a large outsourced programme through a small internal team has a small payroll, and the cap is calculated from that payroll. An exemption applies where the company’s own employees are creating relevant intellectual property, taking steps towards creating it, or managing IP the company itself holds, and its connected-party subcontracting stays low. Existing IP is not a precondition. Taking steps towards creating it counts in its own right, which is what keeps a discovery-stage biotech inside the exemption rather than outside it. Most genuine biotechs can meet the conditions, but the position should be established before the claim is built, not discovered after the credit is restricted. Our PAYE cap page sets them out in full. Outsourcing raises two further rules. Payments to unconnected subcontractors, including CROs, enter the claim at 65%, and subcontracted work generally qualifies only where it is undertaken in the UK, with a narrow exception for conditions the UK cannot supply, such as clinical trial populations. Who claims on commissioned work, sponsor or CRO, is covered in CRO contracts and R&D tax relief. Making a first claim? Watch the notification deadline A company claiming for the first time, or that has not claimed in the three years ending with the notification deadline, must send HMRC a claim notification within six months of the end of the period of account. Missing the window invalidates the claim entirely, even where the normal amendment deadline is still open. Biotechs are disproportionately first-time claimants, so this deadline belongs in the calendar from incorporation. The cash-flow planning that follows, intensity forecasting, grace-period strategy and credit timing, is worked through in ERIS for pre-revenue biotech and medtech. Why biotechs work with LimestoneGrey LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW and registered with HMRC, working with biotech companies across the UK from Cardiff. In 2026 we were a finalist at the One Nucleus Awards for Most Innovative Professional Services Company. Every claim is prepared by our specialist team and signed off by a chartered adviser, and enquiry support is included as standard: HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and we stand behind the claims we prepare. “We’ve worked with LimestoneGrey for several years and their professionalism, speed and clear approach make them a pleasure to work with. They quickly understand the complexities of our R&D and ensure the claims process is straightforward, fair and accurate.” Sandy, Jellagen Limited Biotech sits within our wider life sciences practice. If you are pre-revenue and wondering what your spend is worth, or already claiming and wanting a second view, contact us: we will give you a straight answer on scheme, value and deadlines before any work starts. Sources Guidelines on the meaning of R&D for tax purposes — the advance, the technological uncertainty and the competent professional test this page applies to platform and asset development. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% merged-scheme credit, the ERIS intensity condition and the rates quoted here. Check what R&D costs you can claim — the cost categories, the 65% restriction on unconnected subcontractors and externally provided workers, and the exclusion of capital, rent and patent costs. --- # Medtech R&D tax credits: medical device tax relief URL: https://www.limestonegrey.com/sectors/medtech/ Description: Medical device R&D tax relief: which development and regulatory work qualifies, and how prototypes and clinical evaluation enter a claim. Sectors •14 min read R&D tax credits for medtech companies MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Medical device development is dense with qualifying R&D, from first prototype through verification testing to clinical evaluation. The judgement a medtech claim turns on is scope, not rate. Development work that resolves technological uncertainty qualifies; conformity work on functionality already proven does not; and the two run side by side through a device programme, often through the same engineer and the same test bench in the same week. Which scheme pays, and what it pays, follows from that boundary and from whether the company is loss-making and R&D-intensive. Medtech R&D claims at a glance Claim element | Medtech Typical qualifying activities | Sensing and signal work where published filtering and compensation methods do not hold across motion, temperature or drift; Coatings, adhesives or substrates that must keep their properties and biocompatibility through repeated sterilisation cycles; Integrating sensing, processing and power where a competent professional cannot readily deduce how the sub-systems combine; Software as a medical device, where the accuracy the clinical application demands is beyond established techniques; AI in diagnostics, where established architectures and training methods cannot reach the performance a clinical decision demands; A clinical investigation designed to answer a question the literature and bench data cannot Costs that usually qualify | Staff time on design, build and testing, apportioned to the qualifying work; Materials used up building and testing prototypes; Payments to unconnected contractors at 65%, on the portion of R&D undertaken in the UK; Payments to the subjects of clinical trials, a category in its own right; Software, data licences and cloud computing used in the R&D, including model training compute Costs that usually do not | Conformity assessment of proven functionality, technical documentation and the declaration of conformity; Maintaining the quality system, document control and supplier audits; Materials that end up inside an item sold in the ordinary course of business; Capital expenditure, rent and patent costs Where claims go wrong | Claiming the final protocol run that records a settled design meeting its specification; Reading the MHRA's status-based triggers as evidence of technological uncertainty; Applying the overseas restriction to volunteer payments and own staff time, which it does not reach; Treating the EPW qualifying-earnings test and the subcontractor UK test as one test; Assuming ERIS on intensity alone, when the SME and loss-making conditions apply too Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in medtech? Work seeking an advance in the field of science or technology by resolving uncertainty a competent professional could not readily resolve. In device development that test is met constantly. Write the account in four moves. The baseline is what the field could already do: the published methods, the materials data, the architectures a competent professional would have reached for. The advance is the improvement in that capability the project sought. The uncertainty is the question the baseline could not answer, and the resolution is what was tried, in what order, and the date the question closed. Concept-level examples: Sensing and signal work, where published filtering and compensation methods do not hold across motion, temperature, tissue variation or drift. Design, materials and sterilisation: coatings, adhesives or substrates that must keep their properties and biocompatibility through repeated sterilisation cycles, with no performance data for the combination. Integration of sensing, processing and power into a form factor the body will tolerate. Standard components are not a bar: there is uncertainty where a competent professional cannot readily deduce how the sub-systems should be combined to have the intended function (paragraph 30). Software as a medical device, where the accuracy the clinical application demands is beyond established techniques. The Guidelines apply the same criteria to software engineering as to any branch or field of science or technology. AI in diagnostics, where established architectures and training methods cannot reach the performance a clinical decision demands on the available data. Retraining a standard model with routine tuning is adaptation, not an advance. Manufacture at scale, where tolerances and processes proven on the bench do not transfer. Uncertainty often arises in turning something already established as feasible into a reliable and reproducible process (paragraph 13). The advance must be to the field’s capability, not just your company’s (paragraph 24), so reproducing what a competitor already sells needs careful analysis before it goes in a claim. The full test is in what counts as qualifying R&D. Where does the line fall between development and regulatory work? At the point the answer stops being in doubt. HMRC’s Guidelines for Compliance put the rule broadly — testing after the uncertainties have been resolved does not qualify — and give the device case as their example: obtaining regulatory certification for a product which already has proven functionality is not R&D. The exception matters as much as the rule — where certification requires further advances in science or technology to materially improve functionality, the work aimed at those advances qualifies. Our page on what HMRC’s Guidelines for Compliance expect from an R&D claim sets out that reading. The MHRA regulates the UK medical devices market, and devices placed on the Great Britain market fall under the Medical Devices Regulations 2002. Most of the work that framework generates sits outside the claim: technical documentation, the declaration of conformity, the quality management system and conformity assessment itself. Verification testing splits along the same seam. Once modifications reflecting the test findings have been made and further testing is satisfactorily completed, the uncertainty is resolved and further work is not R&D (paragraph 39). Activity | Usually inside the claim | Usually outside the claim Verification and validation | Test, fail and redesign loops while the answer is open; developing a test method where no established method measures the property | The final protocol run to record that a settled design meets its specification Regulatory conformity | Further advances the certification demands to materially improve functionality | Conformity assessment of proven functionality; technical documentation; declaration of conformity Quality system | Rarely anything | Maintaining the quality system, document control, supplier audits Usability engineering | Formative work where an interaction failure has no known fix and drives a design change | Summative validation of a resolved design Clinical evidence | An investigation answering a question the literature and bench data cannot | Literature-based evaluation demonstrating equivalence to a marketed device Scoping the boundary honestly protects the claim. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and claims that sweep whole regulatory budgets into qualifying costs are the sort that fail. When does a clinical investigation resolve uncertainty, and when does it confirm? It resolves uncertainty when the field could not already answer the question the investigation was built to settle. To UKCA or CE mark a device a manufacturer must show it meets the relevant essential requirements, and the MHRA says clinical data will usually be necessary to do that. The data can come from a critical evaluation of the literature, where equivalence to a marketed device is demonstrated and the data adequately shows compliance; from a critical evaluation of investigations of the new device; or from the two combined. A specifically designed investigation is likely to be required unless safety and performance can be shown by other means, and in particular for implantable and Class III devices. A literature-based evaluation, by contrast, establishes that the answer was already available, which is the opposite of an uncertainty. The MHRA lists seven circumstances in which a clinical investigation of a non-UKCA or CE marked device should be strongly considered. Some are status-based — the device is implantable or Class III, it is proposed for a new purpose or function, or there is a new manufacturer of a high-risk device. Others describe the kind of gap in knowledge that also characterises technological uncertainty: a completely new concept of device where components, features and methods of action are previously unknown; a modification introducing a novel feature, particularly one with an important physiological effect, or one that might significantly affect clinical performance or safety; materials previously untested in humans coming into contact with the body, applied to a new location, or used for significantly longer than before; and cases where in vitro or animal testing cannot mimic the clinical situation. An investigation answering one of the second group is usually resolving uncertainty; the status-based triggers say nothing either way. Post-market follow-up on a marked device, used within the exact conditions of its marking, generally is not. The regulatory steps are not themselves the claim. A manufacturer must give 60 days’ prior notice to the Secretary of State for Health, in writing to the MHRA through the IRAS portal, before the devices are made available to a medical practitioner. An NHS study also needs a research ethics committee opinion, with HRA Approval for sites in England and NHS Permission in the other UK nations. Those are gates rather than R&D. So is evidence generated for adoption: NICE’s evidence standards framework asks whether a digital health technology is clinically effective and offers value to the health and care system, and NICE is explicit that meeting it does not mean a technology has been assessed or endorsed by NICE, or given regulatory approval. That is a procurement question, not a question about whether the technology can be made to work. Payments to the subjects of clinical trials are a qualifying cost category in their own right, where the trial is an investigation in human subjects undertaken in connection with the development of a health care treatment or procedure. The definition turns on a treatment or procedure rather than on a device, so a device investigation needs that connection shown. It is straightforward for a therapeutic or surgical device and needs argument for a standalone diagnostic. Where an investigation runs overseas, the restriction reaches two categories only: payments to the contractor running it, and externally provided workers. Those qualify under a narrow exception — conditions necessary for the R&D that are absent in the UK, present where the work is done, and wholly unreasonable for the company to replicate here. A regulatory requirement preventing the work being done here counts, and so can a participant population the UK cannot supply; the cost of the R&D and the availability of workers are expressly disregarded. Volunteer payments the company makes itself, its own staff time and its own consumables carry no territorial restriction. Overseas R&D sets out both categories, and clinical trial costs in R&D claims covers the trial costs themselves. Who claims when a design house does the work? Usually the company that decided the R&D was needed. For accounting periods beginning on or after 1 April 2024, the customer claims contracted-out R&D where it intended or contemplated, when the contract was made, that R&D of that sort would be done; where it did not, the contractor claims in its own right. A device company commissioning a design house or a test laboratory against a defined scope has almost always contemplated the work. Payments to an unconnected contractor enter the claim at 65%, and generally only where the work is done in the UK. The same R&D cannot be claimed twice, so settle this before drafting: contracted-out R&D works through the test. Grants are a smaller problem than they were. For those same periods, grant funding, including Innovate UK, no longer blocks or reduces relief, because the old subsidised-expenditure rules were abolished. Device companies told years ago to keep grants and R&D claims apart should revisit that advice. The detail is in grant funding and R&D tax relief. Which costs go into a medtech claim? Staff time on design, build and testing, apportioned to the qualifying work. Externally provided workers, such as agency-supplied contract engineers, at 65% of payments to unconnected providers, limited to the part attributable to qualifying earnings — earnings on any part of which either the business contracting the worker or your own company must account to HMRC for both PAYE income tax and Class 1 National Insurance. Where any part of a worker’s earnings is UK-payrolled, all of them count. Subcontracted development at 65% too, but on a different test: the portion of the payment attributable to R&D undertaken in the UK. Software, data licences and cloud computing used in the R&D, including the compute behind model training. Payments to clinical trial volunteers. Capital expenditure, rent and patent costs do not qualify, though capital spending on R&D can attract R&D allowances instead. Category by category, the rules are in which costs qualify for R&D tax relief. Consumables need the closest attention. Materials used up building and testing prototypes qualify; materials that end up inside an item you then sell in the ordinary course of business do not. Where a first article was always going to be delivered to a customer, the split runs wider than the materials, because part of that build meets the order rather than resolving the uncertainty: can I claim R&D tax relief on a prototype that is later sold? sets out both boundaries. Prototype iterations carry evidential weight too: a version history of what failed, what changed and why dates the resolution as well as the uncertainty, and it is expensive to reconstruct later. Who is the competent professional in a device programme? The person whose judgement the uncertainty is measured against, in the field the uncertainty sits in. HMRC expects three attributes together: knowledge of the relevant scientific or technological principles, awareness of the current state of knowledge in the field as a whole, and accumulated experience with a successful track record. Having worked in a field is not enough on its own. Devices complicate this, because one programme can carry a materials question, a signal-processing question and a software question at once, and competence is judged field by field. The regulatory affairs lead is rarely the right person for any of them: their expertise is the conformity route, not the technology. Who counts as a competent professional works through the test. Will a medtech claim under ERIS or the merged scheme? It depends on size, profitability and intensity. A loss-making device company that is an SME, and whose relevant R&D expenditure is at least 30% of its total relevant expenditure, claims under Enhanced R&D Intensive Support (ERIS). The SME test aggregates connected and partner enterprises, so a venture-backed company can fail it on its investors’ numbers. The intensity denominator is broadly the trading costs in the accounts for the period, not just the R&D ones, and connected companies count on both sides of that ratio too. A one-year grace period can protect a company whose intensity later dips, but only where it met the condition in its most recent prior 12-month accounting period and obtained relief for it under the old SME scheme or ERIS — a merged-scheme claim in that period does not count. The arithmetic for a pre-revenue profile is in ERIS for pre-revenue biotech and medtech. Take a loss-making device company with £100,000 of qualifying spend and sufficient losses to surrender. Under ERIS that is £100,000 x 186% x 14.5% = £26,970 in cash, and the credit is not taxable. The same company under the merged scheme takes a £20,000 gross credit reduced by notional tax at 19%, leaving £16,200 in cash. The £10,770 gap is what the 30% test is worth on that spend, which is why the ratio deserves checking before the period ends rather than after it. Both sit before the PAYE cap, which bites hardest on exactly this profile: a small payroll directing a heavily outsourced programme. A profitable medtech claims the merged scheme: a 20% taxable credit, worth £15,000 net per £100,000 of qualifying spend at the 25% corporation tax rate, £14,700 at the 26.5% marginal rate where augmented profits fall between £50,000 and £250,000, or £16,200 at 19%. Every rate, including those for earlier periods still open to amendment, is in R&D tax relief rates by year; the claim value calculator and ERIS intensity calculator run your own figures. Investors ask a related question, and the answer is short: claiming an R&D tax credit does not affect EIS or SEIS status. A note on the Welsh medtech cluster LimestoneGrey works from Cardiff, alongside a Welsh medtech community that has grown around organisations such as Life Sciences Hub Wales, which exists to connect industry with health and social care bodies and research organisations. We are members of MediWales, the Welsh life science network, and we serve medtech companies across the whole of the UK, well beyond Wales. Why medtech companies work with LimestoneGrey LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants, regulated by ICAEW, specialising in R&D tax relief. The practice is led by a dual-qualified chartered accountant and chartered tax adviser, every claim is signed off by a chartered adviser, and the firm is registered with HMRC as a tax adviser. Enquiry support is included as standard in every engagement: see what to expect from an HMRC enquiry. “Having LimestoneGrey’s expertise to guide us through each step made a huge difference. The process was explained clearly and handled with professionalism, ensuring everything met the required legislative standards. We’ve built a genuine partnership with LimestoneGrey and value their ongoing advice and shared commitment to innovation.” Med-Tech client Medtech sits within our wider life sciences practice. If you are unsure where the qualifying boundary falls in your device programme, or which scheme your next period lands in, contact us: we will map it with you and agree the fee before any work starts. And if another adviser already prepares your R&D claims, our free claim review is a confidential second opinion on your most recent submission. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 13, 24, 30 and 39, and example B1 with paragraphs 15 to 18, applying the Guidelines equally to software engineering. GfC3 part 4 — testing after the uncertainties are resolved does not qualify; certifying proven functionality is HMRC’s example; certification requiring further advances to materially improve functionality does qualify. GfC3 part 3 — the three attributes of a competent professional. Regulating medical devices in the UK — the MHRA’s remit, the Medical Devices Regulations 2002, and UKCA marking through a UK approved body. Clinical investigations in Great Britain — clinical data usually necessary to show conformity, its three routes, the seven circumstances, and the 60 days’ notice. Determining if a clinical investigation is required — post-market follow-up within a device’s exact marked conditions needs no notification. Health Research Authority — HRA Approval and ethics review for a medical device study. NICE evidence standards framework — clinical effectiveness and value to the health and care system, and NICE’s caveat that meeting it is neither endorsement nor approval. Check what R&D costs you can claim — the categories, the 65% rule, consumables sold or transferred, cloud and data costs, clinical trial subjects, and the capital and rent exclusions. CTA 2009 s1132A — qualifying earnings: PAYE and Class 1 NIC on any part qualifies the whole. CTA 2009 s1136 — 65% of the portion incurred on R&D undertaken in the UK. CTA 2009 s1138A — the overseas exception, headed “externally provided workers and contractors”, disregarding cost and worker availability. CTA 2009 s1140 — a clinical trial as an investigation in human subjects connected with developing a health care treatment or procedure. Merged scheme and enhanced R&D intensive support — the 20% credit and the ERIS SME, loss-making and 30% intensity conditions. --- # Space R&D tax credits: what qualifies and the rates URL: https://www.limestonegrey.com/sectors/space/ Description: R&D tax relief for space companies: satellite platforms, propulsion, ground segment and in-orbit technology, with grant funding and ERIS handled properly. Sectors •8 min read R&D tax credits for space and satellite technology MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Space companies are among the most natural R&D claimants there are. Building hardware and software that must survive launch and then work, unattended, in an environment you cannot fully test on Earth is close to a working definition of scientific or technological uncertainty. The claims themselves still need care: agency funding, contracted programmes and long pre-revenue phases all change how a claim should be prepared. Space and satellite technology R&D claims at a glance Claim element | Space and satellite technology Typical qualifying activities | Platform and payload engineering where mass, power, thermal and radiation constraints interact; Propulsion development, from chemical and electric thrusters to novel propellant handling; Radiation-tolerant electronics and qualification of commercial components for orbit; Ground segment and flight software: autonomy, constellation management, downlink processing at scale; In-orbit demonstration programmes, where iteration evidence is often strong by nature; Breadboards, engineering models and qualification campaigns answering an open technical question Costs that usually qualify | Staff costs apportioned to development time across systems, mechanical, thermal, avionics and software engineering; Prototype and test hardware consumed in development, including units lost in test campaigns; Power consumed by test facilities; Externally provided workers and subcontracted development at 65% where the provider or contractor is unconnected; Software, data licences and cloud computing used in the R&D Costs that usually do not | Capital expenditure, rent, rates and patent costs; Materials in a unit sold in the ordinary course of business; Subcontracted work undertaken outside the UK, unless the narrow overseas exception is met; Externally provided workers' earnings outside UK PAYE and Class 1 NIC Where claims go wrong | Claiming acceptance testing of recurring flight units, once the uncertainty has been resolved; Treating routine integration of proven components as qualifying work; Justifying overseas test work on cost or the availability of engineers, both expressly excluded; Assuming the customer holds the claim without testing the contract for intended or contemplated R&D; Missing the claim notification deadline, six months from the end of the period of account Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in space technology? Work that seeks an advance in the field through uncertainty a competent professional could not readily resolve. At concept level, that regularly includes: Platform and payload engineering where mass, power, thermal and radiation constraints interact, and published solutions do not transfer to your configuration. Propulsion development, from chemical and electric thruster work to novel propellant handling. Radiation-tolerant electronics and the qualification of commercial components for orbit, which overlaps the device and photonics development we cover separately. Ground segment and flight software resolving genuine uncertainty, such as autonomy, constellation management or downlink processing at unusual scale. In-orbit demonstration programmes, where iteration evidence is often strong by nature. Routine integration of proven components, on its own, does not qualify. The boundary is the uncertainty, and how the project is documented decides how defensible the claim is. Two points help the statutory case and belong in the narrative. Uncertainty exists where knowledge of whether something is feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field (paragraph 13), and the orbital environment routinely defeats ground-based prediction. And an advance is still an advance where somebody has made or attempted it but the details are not readily available, a trade secret being the example given (paragraph 11): flight heritage data is among the most closely held information in the industry. Work that fails qualifies on the same basis. How do engineering, qualification and flight models fit? This is where most space claims need a boundary drawn, and the Guidelines give two usable rules. The design, construction and testing of prototypes generally fall within the scope of R&D; once modifications reflecting the test findings have been made and further testing satisfactorily completed, the uncertainty has been resolved and further work is not R&D (paragraph 39). And R&D ends when knowledge is codified in a form usable by a competent professional, or when a prototype with all the functional characteristics of the final product is produced (paragraph 34). Applied to a model philosophy, that puts breadboards, engineering models and the qualification campaign answering an open technical question inside the boundary, and acceptance testing of recurring flight units outside it. Uncertainty emerging later can start new R&D, which the Guidelines separate from routine fault fixing (paragraph 35). Mission analysis is not lost either: feasibility studies to inform the strategic direction of a specific R&D activity sit on the qualifying indirect activities list at paragraph 31. Does agency or grant funding affect the claim? Under the current schemes, no. The old subsidised-expenditure restriction is abolished: grant funding, including UK Space Agency and Innovate UK awards, no longer blocks or reduces relief under the merged scheme or ERIS. Much online guidance still repeats the old rule; our grants page corrects it. Agency and institutional contracts need one more question asked: the contracted-out R&D rules decide whether the customer or the contractor claims. The customer claims only where it is reasonable to assume, having regard to the terms of the contract and the surrounding circumstances, that it intended or contemplated R&D of that sort at contract; otherwise the contractor claims in its own right. HMRC’s guidance says the test requires a specific appreciation of what R&D will be done rather than awareness that some will happen. The customer’s tax position matters too: where the customer is an irrelievable client, the contractor claims in its own right regardless (CTA 2009 s1042F for the merged scheme, s1053A for ERIS). A customer is an irrelievable client if it is an ineligible company — a charity, an institution of higher education, a scientific research association, a health service body, or any other body the Treasury prescribes by order (s1142) — or if it is not, in relation to the contracting out, acting in the course of a trade, profession or vocation within the charge to tax. That can preserve relief for UK companies delivering into overseas and institutional programmes, though every person contracting the work out has to meet the test: an overseas intermediary beneath a UK customer who can claim does not help. It is a test to run on the contract, not on the customer’s name. Which scheme fits a space company? Many space businesses spend years pre-revenue with heavy engineering payrolls, which is the profile ERIS exists for. On £100,000 of qualifying spend: Position | Credit | Net benefit | Who it fits Merged scheme, profitable at the 25% CT rate | £20,000 gross credit | £15,000, or 15p per £1 | Established manufacturers and operators in profit Merged scheme, augmented profits of £50,000 to £250,000 | £20,000 gross credit, taxed at the 26.5% marginal rate | £14,700, or 14.7p per £1 | Profitable companies in the marginal band Merged scheme, loss-making | £20,000 gross credit, notional tax at 19% | £16,200, or 16.2p per £1 | Loss-makers below the 30% intensity threshold ERIS, loss-making and R&D-intensive | £26,970 payable credit, not taxable | £26,970, or up to 26.97p per £1 | Pre-revenue companies at 30% R&D intensity or above Payable credits under both schemes are limited by the PAYE cap: £20,000 plus 300% of relevant PAYE and NIC, which a small team directing a large outsourced build can reach. The 30% test measures relevant R&D expenditure against the company’s total relevant expenditure — broadly the trading costs in its accounts for the period, not just the R&D ones. The ERIS intensity calculator reads it, counting connected companies on both sides; which scheme applies works through the decision. Which costs go into a space claim? Staff costs apportioned to development time, across systems, mechanical, thermal, avionics and software engineering. Prototype and test hardware consumed in development, including units lost in test campaigns, qualifies as consumable costs where it is not sold on; where a unit is sold in the ordinary course of business, the materials in it fall outside. Power consumed by test facilities counts. Externally provided workers and subcontracted development both enter at 65% where the provider or contractor is unconnected, and for workers only so far as their earnings are within UK PAYE and Class 1 NIC — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Software, data licences and cloud computing used in the R&D qualify. Capital expenditure never qualifies for R&D tax relief, though it may attract R&D allowances; rent, rates and patent costs never do either, which matters in a sector that spends heavily on cleanrooms, chambers and rigs. Does overseas launch or test work qualify? For accounting periods beginning on or after 1 April 2024, subcontracted R&D qualifies only where the work is undertaken in the UK, and externally provided workers only so far as their earnings attract UK PAYE and Class 1 NIC. The exception is narrow. It needs conditions necessary for the R&D that are absent in the UK, present where the work is actually done, and wholly unreasonable for the company to replicate here — all three (CTA 2009 s1138A(2)). The legislation gives an open list of what counts, including geographical, environmental or social conditions, and legal or regulatory requirements that prevent the work being done in the UK (s1138A(3)(a)). The exclusions are closed: the cost of the R&D activity, and the availability of workers to carry it out (s1138A(3)(b)). That distinction decides most space cases. A test facility or launch range that does not exist in the UK, or a regulator requiring the activity in its own territory, is a condition of the work. A cheaper provider, or engineers easier to hire abroad, is a condition of the budget. Build the case before the spend: overseas R&D costs sets out what to record. What evidence does a space claim need? The sector’s own discipline supplies it. Requirements and verification matrices, trade studies recording options rejected and why, test plans and anomaly reports, and review milestones from PDR through CDR to flight readiness all describe technical uncertainty being opened and closed. An anomaly report that took three campaigns to close beats any narrative written after year end. Tie those records to a project boundary with a stated advance and uncertainty, and write the Additional Information Form from them rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Our page on what records an R&D claim needs covers the general position, and first-time claimants, and companies that have not claimed in the three years ending with the notification deadline, should watch the claim notification deadline: six months from the period of account’s end. Companies engineering for flight within the atmosphere should see aerospace and defence. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. Every claim is prepared by our specialist team and signed off by a chartered adviser, with enquiry support included as standard and the fee agreed before work starts. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, so a programme’s technical case is better documented while the campaign runs: our guide to HMRC R&D enquiries sets out what a check involves. If your company is building for orbit, a short scoping call will give you a straight view on eligibility and scheme fit. Call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 11, 13, 31, 34, 35 and 39. CIRD161000 — the intended-or-contemplated test and irrelievable clients; CIRD163000 for the CTA 2009 s1142 definition. CIRD151000 — the CTA 2009 s1138A(3)(a) conditions; CIRD151100 — the s1138A(3)(b) exclusion of cost and worker availability. Check what R&D costs you can claim — cost categories, the 65% rule, and the capital, rent and patent exclusions. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% credit and the ERIS conditions. --- # R&D tax credits for aerospace and defence contractors URL: https://www.limestonegrey.com/sectors/aerospace-and-defence/ Description: Where the R&D line falls on aerospace and defence programmes, and who holds the claim when development is contracted down the supply chain. Sectors •8 min read R&D tax credits for aerospace and defence MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Aerospace and defence engineering produces qualifying R&D at every tier of the supply chain, from primes to specialist component houses. The technical case is usually strong. The harder questions in this sector are contractual: on a contracted programme, who owns the claim, and how do you document classified or export-controlled work without compromising it? A profitable company keeps 14.7p to 16.2p per £1 of qualifying spend under the merged scheme, so those questions decide real money. Aerospace and defence R&D claims at a glance Claim element | Aerospace and defence Typical qualifying activities | Airframe and structures work with novel materials, joining methods or weight targets beyond established practice; Propulsion, fuel systems and thermal management development; Avionics, sensors and mission systems where integration behaviour cannot be predicted from published knowledge; Development driven by certification standards, where a new architecture or material makes compliance uncertain; Manufacturing process development for tight-tolerance or low-volume aerospace parts Costs that usually qualify | Staff costs apportioned to development time, covering test and manufacturing engineers as well as the design office; Test articles and development hardware consumed in the programme, where they are not sold; Externally provided workers and subcontracted development at 65% where the provider or contractor is unconnected; Connected-party payments at the lower of the payment and the other party's own relevant expenditure; Software and cloud costs used in the R&D Costs that usually do not | Capital expenditure, however advanced the machine or the rig; Rent, rates and patent costs; Materials in a unit sold in the ordinary course of business; Subcontracted work outside the UK, with cost and worker availability excluded as justification Where claims go wrong | Claiming verification testing where the compliance route is already understood; Claiming the assembly of qualified components to an established pattern; Assuming the customer holds the claim without testing what the contract contemplated at signature; Shifting project boundaries year to year on programmes spanning several accounting periods; Claiming improvements, optimisations and fine-tuning that do not materially affect the underlying technology Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in aerospace and defence? Work seeking an advance through uncertainty a competent professional could not readily resolve. At concept level, that commonly includes: Airframe and structures work with novel materials, joining methods or weight targets beyond established practice. Propulsion, fuel systems and thermal management development. Avionics, sensors and mission systems where integration behaviour cannot be predicted from published knowledge. Development driven by certification standards, where meeting the standard with a new architecture or material is itself technologically uncertain. Manufacturing process development for tight-tolerance or low-volume aerospace parts. Certification effort alone is not automatically R&D: where the route to compliance is understood and the work is verification, it falls outside the definition. Work that fails still qualifies — relief follows the attempt to resolve the uncertainty, not the outcome. Two objections the Guidelines answer The first is that every box came from a catalogue. System uncertainty results from the complexity of a system rather than from uncertainty about how its individual components behave (paragraph 29), and combining standard technologies can involve uncertainty even where the principles for their integration are well known: there will be uncertainty if a competent professional cannot readily deduce how the separate components or sub-systems should be combined to have the intended function (paragraph 30). The limit sits in the same paragraph — assembling components to an established pattern, or following routine methods for doing so, involves little or no uncertainty (paragraph 29). The second is that an allied programme has almost certainly solved this already. Where an advance has been made or attempted but the details are not readily available, a trade secret being the example given, work to achieve it can still be an advance (paragraph 11). Classification and export control keep knowledge out of the public domain as effectively as commercial secrecy, and the test is what a competent professional could deduce from what is published. Who claims on a contracted programme? This is the sector’s defining question. The customer claims only where it is reasonable to assume, having regard to the terms of the contract and the surrounding circumstances, that it intended or contemplated R&D of that sort when the contract was made; otherwise the contractor claims in its own right. HMRC’s guidance adds a gloss worth knowing: the test needs a specific appreciation of what R&D will be done, not mere awareness that some will happen, and work falling substantially outside the customer’s intention cannot be R&D contracted out by it. Where a build-to-specification contract turns out to demand development nobody contemplated at signature, HMRC’s own worked examples accept the contractor claiming it. The customer’s tax position matters too. Where the customer is an irrelievable client, the contractor claims in its own right (CTA 2009 s1042F for the merged scheme, s1053A for ERIS). A customer is an irrelievable client if it is an ineligible company — a charity, an institution of higher education, a scientific research association, a health service body, or any other body the Treasury prescribes by order (s1142) — or if it is not, in relation to the contracting out, acting in the course of a trade, profession or vocation within the charge to tax. That can preserve relief for UK contractors serving overseas customers, though every person contracting the work out has to meet the test: an overseas intermediary beneath a UK customer who can claim does not help. Where a public body sits at the top of the chain, this is the provision to work through, on that body’s own status and the capacity in which it contracts. What qualifies and what does not? Activity area | Usually inside the claim | Usually outside the claim Structures | Joints, layups and architectures where the fatigue, thermal or weight target cannot be met by established practice | Detail design and stress analysis applying established methods Propulsion and thermal | Behaviour that cannot be predicted from published knowledge or existing models | Re-running an established test to confirm a known design margin Systems integration | Combinations a competent professional cannot readily deduce the behaviour of | Assembling qualified components to an established pattern Certification | Meeting a standard demands a solution the field does not already hold | Verification testing where the compliance route is understood Manufacturing | Process, tooling and fixture development where the process window is unknown | Commissioning to specification; tuning within a known window Capital expenditure never qualifies for R&D tax relief, however advanced the machine or the rig, though it may attract R&D allowances; neither rent, rates nor patent costs qualify either way. Paragraph 14 draws the line that decides most claims here: improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty. Which scheme applies, and what is it worth? Most established aerospace and defence businesses are profitable and claim the merged scheme: a 20% expenditure credit, so £100,000 of qualifying spend gives a £20,000 gross credit, netting to £15,000 at the 25% corporation tax rate, £14,700 at the 26.5% marginal rate on augmented profits between £50,000 and £250,000, and £16,200 where the 19% rate applies or the company is loss-making, subject to the PAYE cap. Newer defence-tech companies are often the ERIS profile instead. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure receives up to 26.97p per £1. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Connected companies are counted on both sides of the ratio. The claim value calculator and ERIS intensity calculator work both tests. Grant funding no longer reduces relief under the current schemes; our grants page explains why. Which costs go into the claim? Staff costs apportioned to development time, covering test and manufacturing engineers as well as the design office. Test articles and development hardware consumed in the programme qualify as consumables where they are not sold; materials in a unit sold in the ordinary course of business fall outside. Externally provided workers and subcontracted development both enter at 65% where the provider or contractor is unconnected, and for workers only so far as their earnings are within UK PAYE and Class 1 National Insurance — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Software and cloud costs used in the R&D count. Two restrictions bite harder here than elsewhere: for accounting periods beginning on or after 1 April 2024, subcontracted R&D qualifies only where the work is undertaken in the UK, and externally provided workers only so far as their earnings are within UK PAYE and Class 1 National Insurance — a real constraint on programmes split across international sites. The narrow exception expressly excludes the cost of the R&D activity and the availability of workers as justifications (CTA 2009 s1138A(3)(b)); overseas R&D costs works through it. What evidence does the claim need? This sector already produces the right material: design review packs, test plans and reports, non-conformance and concession records, trade studies recording the options rejected and why, and the configuration history showing what changed between builds. A trade study that closed an option because the data would not support it evidences an unresolved uncertainty better than any narrative written a year later. Tie those records to a project boundary with a stated advance and uncertainty, give the apportionment a basis a reader can follow, and write the Additional Information Form from them rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Classified and export-controlled work can be claimed without disclosing controlled detail: the narrative describes the uncertainty and the approach at a level cleared for release. Long programmes spanning several accounting periods need consistent project boundaries year to year, which is where HMRC enquiries tend to probe. Companies building for orbit should also see space and satellite technology. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. We prepare aerospace and defence claims that are meant to be checked: costed carefully, evidenced from programme records, with enquiry support included as standard and the fee agreed before work starts. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid: see claim notification. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. If your company engineers for flight or defence, we will give you a straight view on eligibility and on who owns the claim in your contract chain. Call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 11, 14, 29 and 30. CIRD161000 — the intended-or-contemplated test and irrelievable clients; CIRD162000, worked examples; CIRD163000, the s1142 definition. CIRD151100 — cost and worker availability excluded under CTA 2009 s1138A(3)(b). Check what R&D costs you can claim — cost categories, the 65% rule, and the exclusion of capital, rent and patent costs. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% credit and the ERIS conditions. --- # Cleantech and energy R&D tax credits: what qualifies URL: https://www.limestonegrey.com/sectors/cleantech-and-energy/ Description: R&D tax relief for cleantech and energy companies: storage, hydrogen, grid and marine technology, with grant funding under the merged scheme. Sectors •8 min read R&D tax credits for cleantech and energy MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Cleantech and energy companies carry two features that shape their R&D claims: development cycles that run from laboratory to pilot plant over several loss-making years, and grant funding at almost every stage. Both are now well served by the current schemes, and both are still widely misunderstood because most online guidance describes rules that no longer exist. Cleantech and energy R&D claims at a glance Claim element | Cleantech and energy Typical qualifying activities | Energy storage development: cell chemistry, battery management, thermal behaviour and degradation under duty cycles; Hydrogen production, storage and handling, including electrolyser efficiency and materials work; Grid and demand-side software resolving uncertainty in forecasting, balancing or control at scale; Marine, wind and solar component engineering where published performance data runs out; Carbon capture, heat recovery and process electrification where conversion efficiency cannot be deduced; Scale-up from bench to pilot while technological uncertainty over behaviour at volume persists Costs that usually qualify | Staff costs apportioned to development time, covering engineers and technicians running rigs and trials; Feedstocks, electrolyte, membranes, catalyst and electrode materials consumed or transformed in the R&D; Water, fuel and power the R&D consumes, apportioned on rig hours or metered load; Externally provided workers and subcontracted development at 65% for unconnected parties; Software, data and cloud costs for simulation and modelling, apportioned across mixed use Costs that usually do not | Consumables absorbed into power, heat or hydrogen sold in the ordinary course of business; Capital expenditure, which sits outside R&D tax relief though R&D allowances may apply; Rent and rates on the pilot plant or site; Planning, consenting, environmental impact assessment and grid connection work Where claims go wrong | Claiming deployment: installing commercially available panels, turbines, heat pumps or battery systems; Claiming a proven process replicated at a second site, or routine capacity expansion; Treating grant funding as a bar to relief, on rules abolished with the old SME scheme; Apportioning utilities on a round percentage of the site bill rather than metered evidence; Surrendering more loss than the PAYE cap allows, since the ERIS credit does not carry forward Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in cleantech and energy? Work seeking an advance in the field through uncertainty a competent professional could not readily resolve. At concept level, that regularly includes: Energy storage development: cell chemistry, battery management, thermal behaviour and degradation under real duty cycles. Hydrogen production, storage and handling, including electrolyser efficiency and materials work. Grid and demand-side software resolving genuine uncertainty in forecasting, balancing or control at scale. Marine, wind and solar component engineering for environments where published performance data runs out. Carbon capture, heat recovery and process electrification, where conversion efficiency or materials behaviour cannot be deduced from existing knowledge. Scale-up from bench to pilot, where behaviour at volume cannot be reliably predicted from laboratory results. Scale-up qualifies while technological uncertainty persists; routine capacity expansion does not. The advance need not be a new product. A project seeking an appreciable improvement to an existing process through scientific or technological changes is R&D (paragraph 9(c)), and an advance may have tangible consequences, such as a process which generates less waste, or intangible ones, including cost improvements (paragraph 7). Efficiency work sits squarely inside the definition, provided the improvement comes from scientific or technological change and is more than routine upgrading (paragraph 23). When does scale-up from bench to pilot qualify? While the uncertainty is live, and no longer. The Guidelines are direct: uncertainty will often arise from turning something already established as scientifically feasible into a cost-effective, reliable and reproducible process (paragraph 13). An electrolyser stack that holds its efficiency at 5kW and loses it at 500kW, a chemistry that degrades differently once packs are cycled at grid duty, a capture solvent that fouls at pilot residence times — each asks whether and how the thing can be built and run, which having made it work on the bench does not settle. Two paragraphs govern the demonstrator itself. The design, construction and testing of prototypes generally fall within the scope of R&D; once modifications reflecting the test findings are made and further testing satisfactorily completed, the uncertainty is resolved and further work is not R&D (paragraph 39). Construction and operation of a pilot plant is R&D while its operations are being assessed, until the uncertainty associated with the intended advance is resolved (paragraph 40). Failed trials and scrapped demonstrator builds still count: the relief follows the attempt to resolve the uncertainty, not the outcome. Does grant funding reduce the claim? No. Under the merged scheme and ERIS, grant funding, including Innovate UK awards, no longer blocks or reduces relief. The old subsidised-expenditure rules are abolished. Advice built on the old SME rules costs cleantech companies real money: our grants page sets out the current position and covers the old rules only for backdated claims, and the sector application is worked through in Innovate UK grants and R&D tax relief together. Which scheme fits, and what is it worth? Five claims on this pattern are worked through in full. On the standard worked example of £100,000 of qualifying spend: Position | Credit on £100,000 | Net per £1 | Typical cleantech profile ERIS: loss-making SME, R&D at least 30% of total relevant expenditure (connected companies both sides) | £26,970 payable credit, not taxable | up to 26.97p | Pre-revenue developer, grant-funded, engineering payroll Merged scheme, loss-making | £20,000 gross, notional tax at 19% | 16.2p | Trading but still loss-making, or intensity under 30% Merged scheme, profitable at the 19% small profits rate | £20,000 gross, £3,800 tax | 16.2p | Small profitable developer or specialist installer Merged scheme, profitable at the 25% main rate | £20,000 gross, £5,000 tax | 15p | Established profitable operator Merged scheme, augmented profits £50,000 to £250,000 | £20,000 gross, £5,300 tax at 26.5% | 14.7p | Company crossing into the marginal band Pre-revenue developers should start with ERIS and check the 30% ratio with the intensity calculator, on figures that include connected companies. The denominator is the company’s total relevant expenditure — broadly the trading costs in its accounts for the period, not just the R&D ones. Payable credits under both schemes are limited to £20,000 plus 300% of relevant PAYE and National Insurance, which a small team running a largely subcontracted demonstrator programme can reach. Under the merged scheme any excess carries forward as a credit for the next period. Under ERIS the credit does not carry forward. Only the loss you decline to surrender survives, so size the surrender to the cap before filing. See the PAYE cap and, if the position is unclear, which scheme applies. Which costs carry a cleantech claim? Staff costs apportioned to development time, covering the engineers and technicians running rigs and trials as well as the design office. Agency staff enter as externally provided workers at 65% for unconnected providers, and only so far as their earnings are within UK PAYE and Class 1 National Insurance — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Subcontracted development enters at 65% for unconnected parties. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Consumables carry real weight here. Feedstocks, electrolyte, membranes, catalyst and electrode materials, cells and prototype components used up or transformed in the R&D qualify, as do the water, fuel and power the R&D itself consumes — a meaningful figure when rigs cycle packs or run stacks for months. Apportion on rig hours or metered load rather than a round percentage of the site bill. One rule needs settling early on demonstrators that export: where consumables are absorbed into something sold in the ordinary course of business, their cost falls outside the consumables claim, and a demonstrator producing saleable power, heat or hydrogen raises exactly that question. Software, data and cloud costs for simulation and modelling can qualify, apportioned across mixed use: see which costs qualify. Pilot plant spend needs splitting carefully — revenue costs of resolving uncertainty can qualify, while rent and rates never do, and capital expenditure sits outside R&D tax relief but may attract R&D allowances. What does not qualify? Deployment. Installing commercially available panels, turbines, heat pumps or battery systems is engineering and project management, however much carbon it saves, and it is not R&D: deploying existing technology in a new context with only minor changes is not an appreciable improvement (paragraph 24). The same applies to a proven process replicated at a second site. Paragraph 14 draws the line the rest follows: improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty. Commissioning a plant to the supplier’s specification, tuning a control loop back into a range it has held before, and routine capacity expansion all sit outside. Planning, consenting, environmental impact assessment and grid connection work are regulatory and commercial activity, not R&D — though feasibility studies informing the strategic direction of a specific R&D activity are a qualifying indirect activity (paragraph 31). Sector points worth knowing Consortium projects raise the contracted-out question: whether the customer intended or contemplated R&D of the sort actually undertaken, which HMRC reads as needing a specific appreciation of what R&D will be done, and therefore the ability to understand and specify it, rather than mere awareness that some R&D will happen. Offshore and overseas testing needs checking against the overseas restrictions: for accounting periods beginning on or after 1 April 2024, conditions necessary for the R&D must be absent in the UK, present where the work is done and wholly unreasonable to replicate here; environmental and geographical conditions can support that, while cost and worker availability are expressly excluded. First-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must watch the claim notification deadline: six months from the end of the period of account, or the claim is invalid however strong the engineering. Bioenergy and controlled-environment work overlaps agritech, which we cover on its own page. Cell, module and pack production at volume raises the same questions as manufacturing process development; forecasting and control software overlaps AI and robotics. What evidence does a cleantech claim need? Test programmes generate it as a by-product, which is this sector’s advantage. Rig and cycling logs, degradation and efficiency curves across duty profiles, design-of-experiment matrices, commissioning records showing which parameters were unknown going in, failure and root-cause reports, and the technical reporting already prepared for grant funders all serve. A performance curve that refuses to hold at scale evidences an unresolved uncertainty better than a narrative written after year end. Tie the records to a project boundary with a stated advance and uncertainty, and give the time apportionment a basis: HMRC accepts an estimated proportion of known expenditure where the estimate is arrived at using evidence and reason, with the methodology recorded, and rig hours usually supply it. Write the Additional Information Form from those records rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. Every claim is signed off by a chartered adviser, with enquiry support included as standard and the fee agreed before work starts. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, so pilot and demonstrator work is best documented while it runs — see HMRC R&D enquiries for what a check involves. If your company is engineering the energy transition, a short scoping call will give you a straight view on eligibility, scheme fit and the grant position. Call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 7, 9(c), 13, 14, 23, 24, 31, 39 and 40. Check what R&D costs you can claim — cost categories, consumables including fuel, power and water, the 65% rule, and the exclusion of capital expenditure, land, rent and patents. R&D tax relief: the merged scheme and enhanced R&D intensive support — the 20% credit, the ERIS conditions and the PAYE cap. CIRD161000 — the intended-or-contemplated test; CIRD151000 — the s1138A(3)(a) overseas conditions; CIRD151100 — the s1138A(3)(b) exclusion of cost and worker availability. GfC3: Recommended approach to claims and record keeping (part 5) — HMRC on estimates arrived at using evidence and reason, and on recording the methodology. --- # Semiconductor and photonics R&D tax credits URL: https://www.limestonegrey.com/sectors/semiconductors-and-photonics/ Description: R&D tax relief for semiconductor and photonics companies: device, process and packaging development, claimed by chartered advisers in South Wales. Sectors •8 min read R&D tax credits for semiconductors and photonics MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Semiconductor and photonics development is R&D-intensive by its nature: device physics, process engineering and packaging each carry uncertainty that published knowledge cannot resolve, and iteration is the working method. South Wales hosts a recognised compound semiconductor cluster, and we work on its doorstep, so these claims are familiar territory for us. Semiconductors and photonics R&D claims at a glance Claim element | Semiconductors and photonics Typical qualifying activities | Device development where performance cannot be predicted from published results; Epitaxy, deposition, etch and lithography work where yield or uniformity at specification is uncertain; Packaging and photonic integration whose combined thermal, optical and electrical behaviour cannot be deduced; Test and characterisation methods where existing techniques cannot measure what the device work requires; Design and modelling where the design objective cannot be met without resolving technological uncertainty; Test structures, split lots and shuttle runs while the question they were built to answer is open Costs that usually qualify | Device, process, integration and test engineer time, apportioned on a basis a reader can follow; Agency staff as externally provided workers at 65% for unconnected providers; Subcontracted development at 65% for unconnected parties; Wafers, substrates, precursors and process gases consumed in development runs, and the power the R&D uses; Simulation, TCAD and EDA software and cloud costs, apportioned where the licences also serve production Costs that usually do not | Fabs, tools and cleanroom build, which are capital and outside R&D tax relief; Consumables absorbed into something sold in the ordinary course of business; Rent, rates and land Where claims go wrong | Claiming work that only brings the company into line with what the field already knows; Yield walking inside a qualified window, or tool commissioning to a vendor specification; Capital fab, tool and cleanroom spend put in the claim instead of R&D allowances; Foundry and shuttle-run arrangements filed without settling who contracted out the R&D; Cleanroom and tool energy apportioned on a round percentage of the site bill Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What counts as qualifying R&D in semiconductors and photonics? Work seeking an advance in the field through uncertainty a competent professional could not readily resolve. An advance is an advance in overall knowledge or capability in a field, not in what one company happens to know (paragraph 6). At concept level, that regularly includes: Device development: new structures, materials systems and geometries whose performance cannot be predicted from published results. Process development: epitaxy, deposition, etch and lithography work where yield, uniformity or repeatability at specification is genuinely uncertain. Packaging and integration: thermal, optical and electrical behaviour of novel assemblies, including photonic integration. Test and characterisation methods, where existing techniques cannot measure what the device work requires. Design and modelling, where the design objective cannot be met without resolving technological uncertainty; design not contributing directly to that is not R&D (paragraph 41). Routine yield improvement within an established process window is the honest boundary: optimisation using known methods does not qualify, while work pushing past what the process can demonstrably do often does. Where does the uncertainty sit? In two places, both addressed by the Guidelines. The first is knowledge held privately: process recipes, epitaxy conditions and packaging methods are among industry’s most closely held trade secrets, and published literature stops well short of production practice. Where an advance has been made but the details are not readily available, for example because they are a trade secret, work to achieve it can still be an advance in science or technology (paragraph 11). The test is what is readily deducible from publicly available knowledge by a competent professional (paragraph 20), not what your company has done before: work that simply brings a company into line with overall knowledge or capability is not an appreciable improvement, however new it is to that company (paragraph 24). The second is integration, which meets the objection that every component was bought in. System uncertainty results from the complexity of a system rather than from uncertainty about how its components behave (paragraph 29), and uncertainty exists where a competent professional cannot readily deduce how the separate components should be combined to have the intended function (paragraph 30). A hybrid assembly whose coupling losses, drift and crosstalk cannot be predicted from the datasheets is that pattern; assembly to an established pattern is not. Where does R&D start and stop on a pilot line? The design, construction and testing of prototypes generally fall within the scope of R&D; once modifications reflecting the test findings are made and further testing satisfactorily completed, the uncertainty is resolved and further work is not R&D (paragraph 39). Construction and operation of a pilot plant is R&D while its operations are being assessed, until the uncertainty associated with the intended advance is resolved (paragraph 40) — the paragraph that governs a pilot line as much as a chemical plant. Test structures, split lots and shuttle runs sit inside the boundary while the question they were built to answer is open; qualification runs against a settled process sit outside it. What does not qualify? Activity area | Usually qualifies | Usually does not Device design | Structures whose behaviour cannot be predicted from published results | Re-spins to a proven design rule set Wafer processing | Work pushing past demonstrated process capability | Fine-tuning inside a qualified window; production runs Packaging and integration | Assemblies whose combined thermal, optical and electrical behaviour cannot be deduced | Assembly to an established pattern Test and characterisation | New measurement methods the existing ones cannot provide | Routine inspection to a customer standard Fab and facilities | Revenue costs of the development runs | Tools, cleanroom build, rent, rates, land Paragraph 14 draws the line: improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty. Yield walking inside a qualified window, and tool commissioning to a vendor specification, are skilled and necessary, and they are not R&D. Which costs carry these claims? Staff costs dominate: device, process, integration and test engineers, apportioned on a basis a reader can follow. Agency staff enter as externally provided workers at 65% for unconnected providers, and only so far as their earnings are within UK PAYE and Class 1 National Insurance — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Subcontracted development enters at 65% for unconnected parties. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Wafers, substrates, precursors and process gases consumed in development runs qualify as consumables, except where they are absorbed into something sold in the ordinary course of business; scrap wafers and reclaim sold as waste are unaffected. The power and water the R&D consumes qualify too — apportion cleanroom and tool energy on tool hours or wafer starts, not a round percentage of the site bill. Software, data and cloud costs for simulation, TCAD and EDA can qualify, apportioned where the licences also serve production: see the full cost categories. Fabs, tools and cleanroom build are capital, and capital expenditure does not qualify for R&D tax relief. Capital spending on the R&D itself can attract research and development allowances instead, so the revenue and capital boundary needs setting early. Which scheme fits? Fabless and pre-revenue device companies with heavy engineering payrolls are often exactly the ERIS profile. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure can receive up to 26.97p per £1 of qualifying spend, a £26,970 payable credit on £100,000. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Connected companies are counted on both sides of the ratio. Profitable companies claim the merged scheme, worth £14,700 to £16,200 net per £100,000: £14,700 at the 26.5% marginal rate on augmented profits between £50,000 and £250,000, £15,000 at the 25% main rate, and £16,200 where the 19% small profits rate applies. Loss-makers outside ERIS also receive £16,200, in cash, because the notional tax on their credit is charged at 19% rather than 25%. Payable credits under both schemes are capped at £20,000 plus 300% of relevant PAYE and National Insurance. A merged-scheme excess carries forward as a credit for the next period; under ERIS the credit does not carry forward, so the claim must be sized to the cap to keep the unsurrendered loss. Exemption from that cap needs two conditions together: relevant intellectual property created by the company’s own employees, steps taken towards creating it, or a significant amount of management activity on IP the company holds; and connected-party contractor and worker spend that does not exceed 15% of qualifying R&D expenditure. IP-rich businesses here frequently meet both, but it is argued on the Additional Information Form, not assumed. Start with the claim value calculator or which scheme applies. Sector points worth knowing Grant funding, including Innovate UK programmes, no longer blocks or reduces relief under the current schemes: see the current grant position. Foundry and shuttle-run arrangements raise the contracted-out question: whether the customer intended or contemplated R&D of the sort actually undertaken, which HMRC reads as needing a specific appreciation of what R&D will be done, and therefore the ability to understand and specify it, rather than mere awareness that some R&D will happen. Overseas fab runs need checking against the overseas restrictions: for accounting periods beginning on or after 1 April 2024, conditions necessary for the R&D must be absent in the UK, present where the work is done and wholly unreasonable to replicate here; cost and worker availability are expressly excluded. Maintaining R&D equipment, and feasibility studies informing a specific R&D activity, are qualifying indirect activities in their own right (paragraph 31). Devices built to survive orbit tie this work to space and satellite systems; volume production raises the questions in manufacturing process development. What evidence does a semiconductor claim need? The fab already produces the right material, and it beats anything written a year later: run sheets and lot travellers, split-lot and design-of-experiment matrices, metrology and yield maps, characterisation data and failure analysis reports. A yield map that will not converge across a split describes an unresolved process uncertainty better than any narrative. Tie those records to a project boundary with a stated advance and uncertainty, and give the time apportionment a basis: HMRC accepts an estimated proportion of known expenditure where the estimate is arrived at using evidence and reason, with the methodology recorded. Write the Additional Information Form from those records rather than from memory; it has been mandatory for claims made on or after 1 August 2023, in practice 8 August 2023. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. Every claim is signed off by a chartered adviser, with enquiry support included as standard and the fee agreed before work starts. Two compliance points: first-time claimants, and companies that have not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid, and HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published — see HMRC R&D enquiries. If your company is developing devices, processes or photonic systems, we will give you a straight view on eligibility and scheme fit. Call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — paragraphs 6, 11, 14, 20, 24, 29, 30, 31, 39, 40 and 41. Check what R&D costs you can claim — cost categories, consumables, software and cloud, and the 65% rule. CIRD161000 — the intended-or-contemplated test; CIRD151000 — the s1138A(3)(a) overseas conditions; CIRD151100 — the s1138A(3)(b) exclusion of cost and worker availability. GfC3: Recommended approach to claims and record keeping (part 5) — HMRC on estimates arrived at using evidence and reason, and on recording the methodology. --- # Construction R&D tax credits: what qualifies, who claims URL: https://www.limestonegrey.com/sectors/construction/ Description: Construction R&D tax relief: what qualifies against the competent professional test — ground behaviour, structural form, materials — and who claims. Sectors •10 min read R&D tax relief for construction MJ Matthew Jones ACA CTA Last reviewed September 2026 · Editorial standards Construction and the built environment produce genuine R&D, and they also produce claims that should never have been filed. Both have the same root: the work is hard, and hardness is not the test. The test is whether a competent professional could readily resolve the problem with knowledge already available. Ground that does not behave as the site investigation predicted, a structural form nobody has built at that span, a fabric performance target that standard detailing keeps missing: those are candidates. A demanding programme on a conventional building is not. Construction also runs on layered contracts, and the contract decides who owns the claim. Get that wrong and the technical case never gets read. Construction R&D claims at a glance Claim element | Construction Typical qualifying activities | Ground and foundation conditions standard design methods and published data do not cover; Structural forms and erection sequences established analysis, codes and precedent cannot answer, proved by testing; Materials meeting a combination of load, fire, acoustic, thermal or durability requirements no data covers; Off-site manufacture: tolerance stack-up, jointing, transport loads and installation behaviour at that specification; Retrofit of existing fabric of unknown build-up where the specified approach misses the measured performance; Standard components a competent professional cannot readily deduce how to combine to have the intended function Costs that usually qualify | Staff time apportioned to development, covering site engineers, temporary works designers and supervisors; Agency staff as externally provided workers at 65% for unconnected providers; Unconnected subcontractors at 65%, subject to which side of the contract claims; Materials consumed in test panels, mock-ups, trial pours and rigs that never leave your yard; Software used in the R&D Costs that usually do not | Capital expenditure, rent and patent costs; Materials that end up in the finished works handed to your client; Subcontracted R&D undertaken outside the UK, subject to a narrow exception Where claims go wrong | Whole-project claims drawn around the contract value rather than the qualifying core; Claims written around how difficult the job was rather than what was not known; An established method applied to a new site, since difference between sites is not uncertainty; Leaving the contract question open so both finance teams assume the claim is theirs; Applying Collins and Stage One to periods beginning on or after 1 April 2024 Relief available Most companies claim the merged R&D expenditure credit; a loss-making SME that meets the R&D intensity condition claims ERIS instead. Current and earlier rates are set out in R&D tax relief rates by year. What construction work qualifies as R&D? Work seeking an advance in a field of science or technology through uncertainty a competent professional could not readily resolve. At concept level: Ground engineering and foundations for conditions standard design methods and published data do not cover, where behaviour has to be established by instrumentation, trial and revision rather than deduced. Novel structural methods and forms where established analysis, codes and precedent give no reliable answer, and the connection, the span or the erection sequence has to be proved by testing. Materials performance under constraints, including substitution forced by availability or regulation, where a material must meet a combination of load, fire, acoustic, thermal or durability requirements no data covers. Modern methods of construction and off-site manufacture: tolerance stack-up, jointing, transport loads and installation behaviour of systems not yet produced at that specification. This is process development in the sense our manufacturing page describes. Retrofit and thermal performance where standard practice fails: existing fabric of unknown build-up, where the specified approach cannot be applied or misses the measured performance, and the route to the target has to be developed and tested. Digital and BIM integration, but only on the system uncertainty test: the Guidelines allow uncertainty where a competent professional cannot readily deduce how standard components should combine to have the intended function, while assembly to an established pattern involves little or none. Attempts that failed still qualify: the relief follows the work to resolve the uncertainty, not the outcome. The R&D project ends where the uncertainty is resolved or abandoned, so the qualifying core is usually a small part of a large contract. Claims drawn around that core survive questions; claims drawn around the contract value do not. Design-led firms should also read our engineering page. What does not qualify? Standard builds, however large or tightly programmed. Value engineering, where the object is the same specification at lower cost using known products: commercial gain, not an advance in technology. Applying an established method to a new site, which is most of what the sector does and does well; every site differs, but difference is not uncertainty. Aesthetic and planning-driven design changes. The ordinary difficulty of building to a deadline in the weather. HMRC has warned about unscrupulous agents approaching businesses in sectors where qualifying R&D is rare and offering to file speculative claims for high commission. Construction is not one of those sectors; the technological work here is real. But construction claims attract scrutiny, and the definition does the filtering: whole-project claims covering the cost of a building, written around how difficult the job was rather than what was not known, are the ones that fail. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. Our guide to choosing an R&D tax adviser sets out the other warning signs. Work type | Usually inside the claim | Usually outside the claim Ground engineering and foundations | Conditions standard design methods and published data do not cover, where behaviour has to be established by instrumentation, trial and revision | An established method applied to a new site; every site differs, but difference is not uncertainty Structural methods and forms | A connection, span or erection sequence established analysis, codes and precedent cannot answer, proved by testing | Standard builds, however large or tightly programmed; aesthetic and planning-driven design changes Materials performance | A combination of load, fire, acoustic, thermal or durability requirements no data covers, including substitution forced by availability or regulation | Value engineering: the same specification at lower cost using known products Digital and BIM integration | Standard components a competent professional cannot readily deduce how to combine to have the intended function | Assembly to an established pattern Who owns the claim in a construction contract chain? For accounting periods beginning on or after 1 April 2024 there is a statutory test. The customer claims where it intended or contemplated, when the contract was made, that R&D of that sort would be done. Where it did not, the contractor claims in its own right. A contractor whose customer carries on no trade within the charge to UK tax — an overseas customer with no UK trade, say — can also claim in its own right; a UK sole-trader customer is within the charge to income tax, so that route does not apply there. Read down a contract chain and the answer changes at each link. A client who commissioned a defined programme of development work, described in the contract with its trials, mock-ups or testing regime, intended the R&D and claims it, including 65% of what it pays an unconnected contractor. A specialist subcontractor who took a performance specification priced as a package, with nothing in the tender or the employer’s requirements contemplating technical unknowns, and who then had to resolve genuine uncertainty to meet it, claims in its own right on its own costs. The main contractor between them may hold neither. The value differs with the answer: a customer claiming contracted-out R&D includes 65% of its payments; a contractor claiming in its own right includes its own qualifying costs. The same R&D cannot be claimed twice, so claiming relief that belongs to the other side of the contract is an incorrect claim, with the repayment and penalty exposure that follows if HMRC opens an enquiry. Connected-party subcontracting follows different rules, and for current-scheme periods the work must be undertaken in the UK, subject to a narrow exception. Why the contract wording decides it The test looks at what the customer had in mind when the contract was made, and the evidence of that is documentary: the contract, the employer’s requirements, technical schedules, tender documents and the correspondence around them. No tribunal decisions yet interpret the new wording, so the documented position is the strong one. What no one can safely do is leave the question open and let both finance teams assume the claim is theirs. Our guide to contracted-out R&D works through the scenarios. What about periods before April 2024, and Collins Construction? The old SME scheme had no single definitive test for contracted-out R&D. The First-tier Tribunal confirmed that in Collins Construction Ltd v HMRC, a construction case, and Stage One Creative Services Ltd v HMRC, a creative design and construction business. Neither decision was appealed, and HMRC updated its guidance in February 2025, weighing case by case the contract wording, whether the customer was aware R&D was needed, the contractor’s autonomy, who bore the financial risk and who kept the intellectual property. The tribunals also confirmed that payments under an ordinary commercial contract are not, in themselves, subsidies, a ground HMRC had used to restrict old SME claims where the R&D sat inside work a client was paying for. Tribunal decisions bind only the parties and set no precedent, but where a decision goes unappealed and HMRC rewrites its guidance to match, the practical effect is real. Be clear about the boundary, though: for accounting periods beginning on or after 1 April 2024, the statutory contracted-out test described above replaced the case-law position entirely, so Collins and Stage One do not decide who claims under the merged scheme or ERIS. This is enquiry-defence knowledge now rather than planning law, live for checks into old-scheme claims and for backdated claims covering periods still within the window, which closes in late March 2027. Our article on the tribunal verdicts covers what followed. What is a construction claim worth? Most construction businesses claim under the merged scheme: a 20% expenditure credit, so £100,000 of qualifying spend gives a £20,000 gross credit, netting to £15,000 at the 25% corporation tax rate and £16,200 where the 19% rate applies or the company is loss-making, subject to the PAYE cap. That is 15p to 16.2p per £1 of qualifying spend, and as low as 14.7p where marginal relief applies. A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure can claim up to £26,970 on the same spend through ERIS. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones, so large material and subcontract costs make 30% a high bar. Connected companies are counted on both sides of the ratio. The claim value calculator works either position. Staff costs apportioned to development work cover site engineers, temporary works designers and supervisors, not only the design office. Agency staff enter as externally provided workers: 65% of what you pay an unconnected provider, and only so far as their earnings are within UK PAYE — where any part of a worker’s earnings is UK-payrolled, all of them qualify. Unconnected subcontractors enter at 65% as well, subject to the question above. Connected parties are restricted instead to the lower of the payment and the other party’s own relevant expenditure. Software used in the R&D counts. Capital expenditure, rent and patent costs do not, though capital spending on R&D can attract research and development allowances instead. Materials that end up in the finished works handed to your client fall outside the consumables claim — incorporating them into the structure does not break the transfer — but materials consumed getting there, in test panels, mock-ups, trial pours and rigs that never leave your yard, can still qualify as consumables, and sub-standard output sold only as scrap stays claimable. What evidence does a construction claim need? The sector generates good contemporaneous evidence and then files it against the cost report rather than the claim. Requests for information and technical queries record a question the field could not answer. Variation instructions and day-works sheets record work outside the priced scope, with dates and hours attached. Site diaries, temporary works designs and their revisions, monitoring data, trial panel records and test results, including the failures, show the uncertainty being worked through in real time. Apportionment is the harder half, because people move between the qualifying core and ordinary delivery inside the same week. HMRC’s guidelines for compliance accept that R&D costs are often an estimated proportion of known expenditure, provided the estimate is arrived at using evidence and reason, the amount is based on facts, and the apportionment basis is recorded. Our page on what records an R&D claim needs sets out what to keep. Two deadlines sit alongside it: the Additional Information Form is mandatory for every claim, and a company claiming for the first time, or that has not claimed in the three years ending with the notification deadline, must notify HMRC within six months of the end of the period of account or the claim is invalid. Talk it through with a chartered adviser LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, regulated by ICAEW. If you build, engineer or fit out, we will give you a straight view on whether the work qualifies and on which side of your contracts the claim sits, and we will read the contract before anything is filed. Every claim is signed off by a chartered adviser, enquiry support is included as standard, and the fee is agreed before work starts. Call 0330 223 4 223 or send us a message. Sources Guidelines on the meaning of R&D for tax purposes — the advance, uncertainty and competent professional tests, and the paragraphs on system uncertainty and combining standard technologies. Help to see if your work qualifies as R&D for tax purposes (GfC3) — HMRC’s guidelines for compliance on identifying qualifying activities and the role of the competent professional. GfC3: Recommended approach to claims and record keeping (part 5) — estimates arrived at by evidence and reason, apportionment, and the records a compliance check may request. CIRD161000: contracted-out R&D — the intended-or-contemplated test and customers outside UK corporation tax. CIRD84250: subcontracted R&D, post-tribunal — the case-by-case factors under the old scheme after the First-tier Tribunal decisions. CIRD81650: subsidised expenditure, post-tribunal — commercial contract payments are not, in themselves, subsidies. CTA 2009 s1126A and CIRD81350 — consumables incorporated into items transferred to a customer, the first-of-class analysis applied to goods and services alike, and the scrap and waste position. Check what R&D costs you can claim — the cost categories and the 65% rule for unconnected contractor payments. HMRC’s approach to R&D tax reliefs 2023 to 2024 — the unscrupulous-agent warnings and the compliance coverage behind the one-in-six figure. --- # Case studies | LimestoneGrey URL: https://www.limestonegrey.com/case-studies/ Description: How we prepare and defend R&D tax relief claims for R&D-performing companies, in our clients' own words: the work, the evidence and the outcome. Case studies How we work with R&D-performing companies Midtec Products: an R&D claim sparked by a change in emissions rules How a change in DEFRA emissions rules led Midtec Products to develop a retrofit stove device, and how LimestoneGrey prepared the £40,000 R&D claim. --- # Midtec Products R&D tax credit case study URL: https://www.limestonegrey.com/case-studies/midtec/ Description: How a change in DEFRA emissions rules led Midtec Products to develop a retrofit stove device, and how LimestoneGrey prepared the £40,000 R&D claim. Case study •3 min read Midtec Products: an R&D claim sparked by a change in emissions rules MJ Matthew Jones ACA CTA Last reviewed July 2026 · Editorial standards Midtec Products manufactures chimney cowls and flue terminals in Ammanford, South Wales. When new DEFRA emissions criteria left owners of existing wood-burning stoves outside the improved standards, Midtec’s engineers developed a device that retrofits to those stoves and substantially reduces harmful emissions. LimestoneGrey identified the qualifying R&D, prepared the calculation and technical report, and handled the submission. The claim delivered a £40,000 R&D tax credit benefit. The situation DEFRA published new eco criteria on the clean burning of kiln dried hard wood on domestic stoves, aimed at cutting the harmful emissions generated when the fuel burns. New stoves meet the standards through inbuilt technology. Existing stoves cannot, and the legislation did not require them to. Owners of older stoves were simply left outside the new standard. Midtec read that gap as an opportunity: a product that brought existing stoves up to the new standards would serve environmentally conscious owners the legislation had passed by. Its engineers, whose work already involved continual product development, set out to build one. The R&D The project developed an emissions reduction device capable of being retrofitted to pre-existing solid wood-burning stoves, cutting emissions far enough to meet the new standards. The technical difficulty sat in achieving that reduction on hardware that was never designed for it, and the project presented genuine challenges that took time, effort and money to overcome. That pattern, a defined technical goal with no ready answer, is what the R&D definition is aimed at: a project seeking an advance through resolving technological uncertainty that a competent professional could not readily resolve. Our guide to what counts as qualifying R&D explains the test in full. It is worth noting what triggered the work. Legislative change is one of the most reliable prompts for qualifying R&D. Sometimes new rules force a company to change its products or processes; sometimes, as here, they open a gap a company chooses to fill. Either route can put development work squarely inside the relief, which is why a regulatory change in your industry is a good moment to reassess whether you qualify. How we worked Midtec had claimed R&D tax credits before, so the team recognised the possibility early. We worked alongside their engineers to establish which aspects of the project met the definition and which costs attached to those activities. From there we prepared the R&D calculation and the technical report supporting the claim, and handled the submission to HMRC. Three cost categories carried the claim: staff costs for the engineers doing the development work, agency staff brought in to support it, and the materials consumed in the work. The outcome The claim delivered a £40,000 R&D tax credit benefit. Trefor Jenkins, Director at Midtec Products, commented: “We had excellent advice and support from LimestoneGrey in handling the submission of the claim and guiding us through the process.” Matthew Jones of LimestoneGrey added: “It was a pleasure working with Trefor and the team at Midtec Products. The passion for their craft and their ability to produce quality solutions for gaps in the marketplace is incredible.” This claim was prepared under the R&D schemes in force at the time. The rates and rules have since changed: for accounting periods beginning on or after 1 April 2024, claims run through the merged scheme or ERIS, and the compliance requirements are stricter. The character of the work, finding the qualifying R&D inside an engineering project and evidencing it properly, is unchanged. If a regulatory change has pushed your company into development work, that is exactly the moment to assess whether it qualifies. Talk it through with a chartered adviser, or read how we approach engineering claims or manufacturing claims. Every claim turns on its own facts: a past outcome is not a prediction for your company. --- # R&D tax advice in Cardiff and Wales: Chartered Tax Advisers URL: https://www.limestonegrey.com/rd-tax-advice-cardiff-wales/ Description: LimestoneGrey is a firm of Chartered Tax Advisers specialising in R&D tax relief, based in Cardiff and working with companies across Wales and the UK. Cardiff & Wales R&D tax advice from Cardiff, for Wales and beyond LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, working from South Wales with clients across the UK. One team, one specialism. This page sets out what being a Welsh firm actually means for a company in Wales, and what it does not. Where we are, and why that is worth saying The firm’s office is at 15 Neptune Court, Vanguard Way, Cardiff CF24 5PJ. Visitors are welcome by arrangement, and we meet clients across South Wales and further afield the same way. That is worth stating plainly, because search results for R&D tax relief in Cardiff are thick with pages from national operators whose presence here begins and ends with the page itself. A city name in a title tag is not an office. The questions worth asking any adviser who claims to be local are ordinary ones: is there a street address, and will the person who answers the phone be involved in your claim? Here the answer is straightforward. Matthew Jones ACA CTA founded the firm in Cardiff in 2017 and still leads its claim work: your first conversation is with a qualified adviser, the team you meet is the team that prepares the claim, and every claim the firm submits is signed off by a chartered adviser before it reaches HMRC. There is no delivery team your work gets passed down to. Most work runs on video calls and shared documents, which is why the office has never limited who we can help, but when a meeting in person is the better way to do something, we do that. What a regulated firm on your doorstep is for LimestoneGrey is a member firm of both the Chartered Institute of Taxation and ICAEW, regulated by ICAEW, bound by PCRT, supervised by ICAEW for anti-money laundering and registered with HMRC as a tax adviser. Those are checkable facts rather than claims about ourselves, and regulation and professional standards explains what each layer means in practice, including the independent complaints route to ICAEW if we ever fall short. It matters more than it did five years ago. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and when a claim fails, it is the company that repays, whatever the adviser who filed it said at the time. Enquiry support is included as standard in every LimestoneGrey engagement; HMRC enquiries sets out what that involves. The Welsh innovation ecosystem we work in The firm is a Gold Partner of the Business Wales Accelerated Growth Programme, providing in-kind specialist R&D tax support to companies in the programme. In 2026 LimestoneGrey was shortlisted for Independent Accounting Practice of the Year at the Finance Awards Wales and named a finalist at the One Nucleus Awards for Most Innovative Professional Services Company. Matthew appeared on the “From Brilliant Science to Big Business” panel at the Climb26 Innovation Festival. We are active in MediWales and in the wider UK life sciences networks: One Nucleus, Bionow, BioUK, Medilink Midlands and Medilink South West. That keeps us in the same rooms as the companies we serve rather than reading about them afterwards. We are also affiliate members of AberInnovation, whose campus sits at the meeting point of Welsh agri-tech, food and biotech research. The other thing worth naming is the corridor of R&D-dense manufacturing along the M4. CSconnected, the collective name for the South Wales compound semiconductor cluster, sets out research-intensive universities, specialist prototyping facilities and materials and wafer fabrication capability concentrated in a single region, and reported 3,140 employees, £531 million of annual sales and £436 million of gross value added in its 2025 reporting. We are not going to present that cluster as a client list. It is context. Much of the R&D here is physical and capital-heavy, done by engineers who would not call themselves researchers, and that is the population most likely to read the relief as meant for somebody else. Welsh clients run through the work. Midtec Products, an engineer-led manufacturer in Ammanford, developed a device that retrofits to existing wood-burning stoves and cuts their emissions far enough to meet new DEFRA criteria; the claim delivered a £40,000 benefit across staff, agency and material costs, and the full case study sets out how it was built. Enviro365 first came across us at a Welsh Start Up Convention. Those routes into the client base are not accidents of advertising spend. Welsh public funding, and what it does to a claim Three kinds of Welsh public support reach R&D-active companies here, and they behave differently in a claim. What decides the tax analysis is not which body wrote the cheque but what the money legally is: a grant, an investment, or a contract. Welsh Government innovation funding runs through Business Wales as SMART Flexible Innovation Support, whose streams cover funding, partnerships, intellectual property support and, in the current capital round, equipment. For accounting periods beginning on or after 1 April 2024 a grant costs you nothing in relief. The subsidised expenditure rules were abolished, and the State aid planning that surrounded them has largely fallen away with them, so a company can hold Welsh Government grant money and still claim on the full qualifying spend of the same project. Grant funding and R&D tax relief sets out the current position with a worked example, and does grant funding stop me claiming? gives the short answer. If someone in the Welsh funding community told you otherwise a few years ago, they were right at the time. The Development Bank of Wales, wholly owned by the Welsh Ministers, invests rather than grants: equity and loans into Welsh companies, including seed equity of £100,000 to £350,000 for pre-revenue technology start-ups and university spinouts. Neither equity nor a loan is a grant, and under the current schemes the source of the money does not change the tax analysis in any case. For a pre-revenue company backed this way the live question is which scheme applies, because a loss-making, R&D-intensive company may be looking at ERIS rather than the merged scheme. Welsh public bodies also buy R&D outright. Contracts for Innovation Cymru, formerly the Small Business Research Initiative and now funded and hosted by Welsh Government and NHS Wales, puts a public sector challenge to industry, funds the development work in full and leaves the intellectual property with the business. Because that is procurement and not a grant, the question changes shape. It is no longer how much of the spend was subsidised, but who is entitled to claim it at all, which turns on contracted-out R&D and on the point made in that guide that a customer carrying on no trade within the charge to UK tax — which is what a public body commissioning development work is — leaves the contractor claiming its own costs under the normal rules. A Welsh company can hold all three at once: a SMART grant, Development Bank equity and a public sector development contract. Each needs a different question asked of it. Does Wales under-claim R&D tax relief? Very likely, though the published data is a blunter instrument than the question deserves. HMRC’s annual statistics split claims by region, and the concentration is stark. Companies registered in London took 24% of claims and 31% of the value in 2023-24, and the South East 15% and 20%. Wales’s row in the same table shows 1,440 claims and £115 million of support — on our own arithmetic from HMRC’s regional table, around 3% of UK claims and 1.5% of the value. Welsh claim volumes fell broadly in line with the UK-wide 26% drop that year, and more than half of Welsh claims come from companies registered in South East Wales. Two caveats belong with that figure, and most pages selling Welsh R&D services omit both. The first is that HMRC’s regional split is based on a company’s registered office, and HMRC says openly that a registered office is not necessarily where the R&D happens. A Welsh company registered at its London accountant’s address counts as a London claim. A group with a South East head office counts there, whatever happens at its Bridgend site. The table measures registration, not laboratories. The second is that the claimant population changed shape rather than simply shrinking. Claims fell 26% to 46,950 in 2023-24 while the qualifying expenditure behind them fell 1%, and the exit was concentrated among smaller and first-time claimants: claims below £15,000 fell 34%, faster than the fall overall, though they remain 28% of all claims. Some of those claims should never have been filed. Others were sound claims abandoned because the compliance load started to look heavier than the money. Whether that fell more heavily on Wales than elsewhere is not something the published figures answer, and we are not going to pretend otherwise. Our full reading of the series is in our guide to HMRC’s R&D tax credit statistics. What we hear in conversations here is more mundane than a policy failure: companies that assume the relief is for people in lab coats, companies whose accountant has never raised it, and first-time claimants who lose a valid claim to the claim notification window, which closes six months after the end of the period of account and invalidates the claim outright when missed. Serving Wales, and serving the UK We are a South Wales firm with clients across the UK, and both halves of that are worth saying. There is no branch network, and we do not pretend to one. The work happens by video call and shared documents, with travel when a meeting genuinely beats a call, and that has been true for clients ten minutes away and clients three hundred miles away alike. In this field the technical fit matters more than the postcode. What a claim needs is an adviser who can sit with your competent professionals, follow what they did and frame it against the statutory test. The sectors we work in are a better guide to whether we are right for you than a map is. How to start A scoping call, half an hour or so. You describe what the company builds and where the technical difficulty sat; we give an honest view on whether it looks like qualifying R&D, which scheme applies and what a claim would involve. If we do not think you should claim, we say so on that call. If you go ahead, the fee is agreed before any work starts, as how we work describes. Call 0330 223 4 223 or send us a message. If you would rather do it face to face, say so when you call and we will arrange it. Sources R&D tax credits statistics, September 2025 — the regional analysis (table RD5: Wales 1,440 claims, £115m), the London and South East concentration, and HMRC’s caveat that a registered office “may not be where actual R&D activity is carried out”. Welsh percentage shares are our calculation from the published absolutes; HMRC publishes none by region. HMRC’s approach to R&D tax reliefs 2023–24 — around one in six claims checked in 2023-24, the most recent year it has published. SMART Flexible Innovation Support — the Welsh Government’s current innovation support package through Business Wales, and the streams within it. Development Bank of Wales: seed funding for tech start-ups — equity investment of £100,000 to £350,000 for early-stage Welsh technology companies and university spinouts; the bank is wholly owned by the Welsh Ministers. Contracts for Innovation Cymru — formerly the Small Business Research Initiative, funded and hosted by Welsh Government and NHS Wales; fully funded development contracts under which the business keeps the intellectual property. CSconnected: who we are — the South Wales compound semiconductor cluster’s own description of its capability and its 2025 figures: 3,140 employees, £531m annual sales, £436m gross value added. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # Specialist R&D Tax Advisers | LimestoneGrey URL: https://www.limestonegrey.com/ Description: LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, a member firm of CIOT and ICAEW. R&D tax relief, prepared to withstand HMRC scrutiny We prepare claims under the merged R&D scheme and ERIS, and we defend them if HMRC asks questions. R&D tax relief is all we do. Request a scoping callCheck if you qualify Regulated by ICAEW Bound by PCRT Registered with HMRC as a tax adviser Enquiry support included as standard Practising since 2017 Every claim we prepare is built to be read closely. The technical narrative, the qualifying cost schedules and the return entries, prepared by a regulated chartered practice and signed off by a chartered adviser. Merged scheme 15% What the merged scheme’s 20% expenditure credit is worth per £1 of qualifying spend, net of corporation tax at 25%. It is 16.2% at the 19% rate or where the company is loss-making, and as low as 14.7% where marginal relief applies. ERIS 26.97% What a loss-making, R&D-intensive SME receives in cash per £1 of qualifying spend under ERIS. The payable credit is not taxable. Intensity test 30% The R&D intensity a loss-making SME must reach to claim ERIS, measured against total relevant expenditure, not the R&D alone. Which scheme applies, and what it is worth Two schemes are in force for accounting periods beginning on or after 1 April 2024. Which one applies depends on the company, not the date: ERIS for a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure, and the merged scheme for every other company. R&D tax relief rates and eligibility, accounting periods beginning on or after 1 April 2024. | The merged scheme Companies of every size | ERIS Loss-making, R&D-intensive SMEs Rate | 20% taxable credit on qualifying expenditure | 86% additional deduction and 14.5% payable credit Worth per £1 | 15p net1 at the 25% corporation tax main rate; 16.2p at 19%, or for a loss-maker taking it in cash | Up to 26.97p, tax free1 Who qualifies | Any company with qualifying R&D expenditure | A loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure2 Table notes Payable credits are capped at £20,000 plus 300% of relevant PAYE and NIC. The 30% denominator is broadly the trading costs in the accounts for the period, not just the R&D ones. Correct as at 4 September 2026. Every rate since 2015: R&D tax relief rates by year. Which scheme applies to me?→ Claim value calculator→ Why companies trust us with their claims Because we are accountable in ways many R&D agents are not. The mis-selling era left companies facing enquiries their advisers would not defend. Our answer is a regulated, chartered practice — and has been since 2017, under every version of the rules since. Chartered on both fronts A member firm of both the Chartered Institute of Taxation (CIOT) and ICAEW, led by a dual-qualified founder, with every claim signed off by a chartered adviser. Regulated by ICAEW Including anti-money-laundering supervision, with a published complaints route. Bound by PCRT Professional Conduct in Relation to Taxation governs every position we take. Registered with HMRC Registered with HMRC as a tax adviser, and named on every claim we prepare. Enquiry support included In every engagement as standard. If HMRC opens a compliance check, we handle the response. We stand behind our work We prepare the right claim, defensibly. Read about our regulation and standards. Who we work with Companies whose business is their R&D. Sector by sector, claims trip up in different places — each card names the complication we solve most often. Life sciences Grant stacks, CRO contracts and long pre-revenue phases. Biotech Meeting the 30% intensity test while still pre-revenue. Medtech Where regulatory and clinical work crosses the R&D boundary. Agritech Field trials that seasons, sites and weather complicate. AI and robotics Proving an advance in the field, not just a clever product. Space Long programmes, grant funding and hardware that flies once. Aerospace and defence Contracted programmes and who owns the claim. Cleantech and energy Pilot plant, demonstrators and the consumables boundary. Software Drawing the honest line on where software development qualifies. Engineering Separating qualifying development from routine work. Manufacturing Process trials on live production lines, costed defensibly. All sectors Every sector we work in, including those not shown here. How it works Four steps, one chartered adviser throughout. Your fee is agreed in writing before work starts, with no hidden costs. See the full process 01 Scoping call A conversation about your work and your numbers. If we do not think you qualify, we say so. 02 Technical and financial workstreams We interview your competent professionals, set the project boundaries and build the qualifying cost schedules. 03 Report and return The technical report, the Additional Information Form and the return entries, prepared and filed by us as HMRC-registered agents. 04 Submission and aftercare We submit, track progress with HMRC, and enquiry support is included as standard. Contingent fee, agreed before work starts Signed off by a chartered adviser Enquiry support included as standard Our clients’ words Hear from the R&D-performing companies we act for. More client feedback is on our testimonials page. JellagenLaennec AINeurabotics “We’ve worked with LimestoneGrey for several years and their professionalism, speed and clear approach make them a pleasure to work with. They quickly understand the complexities of our R&D and ensure the claims process is straightforward, fair and accurate.” Sandy Jellagen Limited “Working with LimestoneGrey has been a genuinely positive experience. Their communication is clear and proactive and they are always on hand to answer queries and provide reassurance throughout the process. We have complete trust in their expertise and feel confident that our claims are being handled professionally.” Dr Varghese Laennec AI Limited “We have been very happy with the service provided by LimestoneGrey. In particular, their attention to detail has been exceptional, making the entire process smooth and reassuring for us.” Marcus Neurabotics Limited Recognition Finalist, One Nucleus Awards 2026: Most Innovative Professional Services Company Finalist, Finance Awards Wales 2026: Independent Practice of the Year Business Wales Accelerated Growth Programme Gold Partner Memberships and associations We are members of, and work alongside, the innovation and life-sciences networks our clients operate in, across the UK. Latest thinking Technical analysis and firm news from the team, written by the advisers who prepare the claims. View all insights Read more 13 Aug 2026•Compliance & enquiries A care home's R&D claim reached a tribunal. It should never have been filed. MJ Matthew Jones ACA CTA Founder & Managing Director Read more 12 Aug 2026•Scheme changes & policy Tax advisers have to register with HMRC. You still can't check. MJ Matthew Jones ACA CTA Founder & Managing Director Read more 3 Aug 2026•Sector spotlights The R&D tax rules changed. Most fintech claims haven't caught up. MJ Matthew Jones ACA CTA Founder & Managing Director Talk it through with a chartered adviser A first conversation costs nothing and commits you to nothing. You will speak to a qualified adviser, not a salesperson. Call 0330 223 4 223 Email hello@limestonegrey.com Based Cardiff, serving the UK Request a scoping call --- # About LimestoneGrey: Chartered Tax Advisers URL: https://www.limestonegrey.com/about/ Description: LimestoneGrey, a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief. Cardiff-based; meet the team behind every claim. About About LimestoneGrey LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief: a member firm of both the Chartered Institute of Taxation (CIOT) and ICAEW, based in Cardiff, working with R&D-performing companies across the UK. The firm was founded in 2017 by Matthew Jones ACA CTA, a dual-qualified chartered accountant and chartered tax adviser, and has been regulated since its first day. It does one thing: R&D tax relief. No general accountancy, no audit, no distractions. Why a specialist firm? Because R&D tax relief rewards depth. The rules have changed repeatedly since 2023: a merged scheme, a new intensive support regime, mandatory notification and information forms, and an HMRC compliance operation that checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. A firm that lives in this legislation every day reads those changes earlier and applies them more carefully than a generalist can. Our values in the compliance era The R&D advice market earned its poor reputation. Volume agents filed claims that could not survive scrutiny, then disappeared when HMRC opened enquiries. We built LimestoneGrey around the opposite habits: The right claim, defensibly prepared. We would rather scope a claim down than file a number we cannot stand behind. Honesty about grey areas. Where the law is unsettled, we say so and explain the position we take. Accountability. We are regulated by ICAEW and bound by PCRT, and enquiry support is included in every engagement as standard. Personal involvement. Every claim the firm submits is prepared by the team and signed off by a chartered adviser. The team Matthew Jones ACA CTA, Founder and Managing Director. Dual-qualified with ICAEW and CIOT, Matthew founded the practice and leads its claim work; every claim is signed off by a chartered adviser before it reaches HMRC. He has helped companies of all sizes recover the R&D tax relief they are due. Read Matthew’s full profile. Lisa James, Business and Marketing Director. Lisa has been with LimestoneGrey since its inception, first as a freelance consultant and then as part of the leadership team. She works with clients and referral partners on a relationship basis and leads the firm’s business and marketing plans. Jak Griffin ATT, Assistant Manager. Jak is ATT-qualified and has specialised in R&D tax relief for over five years, working on claim preparation across our client base. Cardiff base, UK-wide clients Our office is in Cardiff and our clients are spread across the UK. Most of the work happens by video call and shared documents, so location has never limited who we can help; when meeting in person works better, we travel. We are active in the UK life sciences ecosystem through networks including One Nucleus, MediWales, Bionow, BioUK, Medilink Midlands and Medilink South West, which keeps us close to the sectors we serve and regularly puts us in the same room as our clients. Recognition in 2026 LimestoneGrey was named a finalist in the One Nucleus Awards (Most Innovative Professional Services Company) and the Finance Awards Wales, and is a Business Wales Accelerated Growth Programme Gold Partner. Matthew also appeared on the “From Brilliant Science to Big Business” panel at the Climb26 Innovation Festival. Start a conversation If you want a straight view on whether your work qualifies and what a claim would involve, get in touch. You will speak to a qualified adviser from the first call. Written by Lisa James. Last reviewed September 2026. --- # Matthew Jones ACA CTA: Founder of LimestoneGrey URL: https://www.limestonegrey.com/about/matthew-jones/ Description: Matthew Jones ACA CTA, founder of LimestoneGrey, is a dual-qualified chartered accountant and chartered tax adviser specialising in R&D tax relief. About Matthew Jones ACA CTA Matthew Jones is the founder and Managing Director of LimestoneGrey, a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief, based in Cardiff. He is dual-qualified: a chartered accountant with ICAEW (ACA) and a chartered tax adviser with CIOT (CTA). He is personally involved in every claim the firm submits, and every technical position published on this site is reviewed and signed off by him. Qualifications and background Matthew holds the ACA from the Institute of Chartered Accountants in England and Wales and the CTA from the Chartered Institute of Taxation, the two benchmark qualifications for UK accountancy and tax practice. Holding both matters in R&D work: a claim is simultaneously a tax computation, a set of accounting judgements and a technical narrative, and errors in any one of the three can sink it. He founded LimestoneGrey in 2017 to practise R&D tax relief as a specialism rather than a sideline, and has helped companies of all sizes claim the relief they are due. His background is in economics — a first-class BSc (Hons) and an MScEcon in Business Economics — and alongside the ACA and CTA he holds ICAEW Business and Finance Professional (BFP) status. He has specialised in R&D tax relief for over a decade. How Matthew approaches claims Every claim starts from the legislation, not the invoice pile. That means testing projects against the DSIT definition of qualifying R&D, interviewing the competent professionals who did the work, and drawing project boundaries that will hold up if HMRC looks closely. Where the law is unsettled, Matthew states the grey area and the position the firm takes, so clients sign off a claim they actually understand. The same standard applies to fees and scope: the fee is agreed before work starts, and if a project does not qualify, the advice is to not claim it. Enquiry work HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, so enquiry capability is not optional. Matthew leads the firm’s HMRC enquiry work, with enquiry support included as standard in LimestoneGrey engagements, and also takes over enquiries on claims that other advisers prepared and then walked away from. Beyond client work Matthew appeared on the “From Brilliant Science to Big Business” panel at the Climb26 Innovation Festival in 2026, and under his leadership LimestoneGrey was named a finalist in the One Nucleus Awards (Most Innovative Professional Services Company) and the Finance Awards Wales. The firm is regulated by ICAEW and bound by PCRT, and is registered with HMRC as a tax adviser. Speak to Matthew If you want a direct, qualified view on your company’s R&D position, get in touch. First conversations are with an adviser, and there is no obligation attached. Written by Matthew Jones ACA CTA. Last reviewed July 2026. --- # How LimestoneGrey Is Regulated: CIOT, ICAEW, PCRT URL: https://www.limestonegrey.com/regulation-and-standards/ Description: LimestoneGrey is a member firm of CIOT and ICAEW, bound by PCRT and registered with HMRC as a tax adviser. What those standards mean for your R&D claim. Regulation and standards Regulation and professional standards LimestoneGrey is a member firm of both the Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants in England and Wales (ICAEW): a firm of Chartered Tax Advisers that is also a firm of Chartered Accountants. We are regulated by ICAEW, bound by Professional Conduct in Relation to Taxation (PCRT), supervised by ICAEW for anti-money laundering, and registered with HMRC as a tax adviser. Much of the damage done in the R&D mis-selling era was done by firms subject to none of these. This page explains what each layer means for you as a client. What does being a CIOT member firm mean? The Chartered Institute of Taxation is the leading professional body in the UK for tax advisers, and the CTA qualification it awards is the benchmark for UK tax practice. As a CIOT member firm, our tax advice is given under the Institute’s professional rules and PCRT. That matters here because R&D tax relief is tax law before it is anything else: the definition of qualifying R&D, the cost categories, the procedural requirements and the enquiry process all come from statute and guidance, and we read them as Chartered Tax Advisers first. What does ICAEW regulation mean for you? It means the firm answers to a professional body, not just to its own marketing. As an ICAEW-regulated firm we are subject to the Institute’s professional standards and disciplinary framework, our anti-money-laundering compliance is supervised by ICAEW, and there is an independent route for complaints if we ever fall short. Our founder, Matthew Jones ACA CTA, is a member of both institutes and bound by their codes of conduct; every claim the firm submits is signed off by a chartered adviser. What is PCRT and why does it matter in R&D claims? PCRT is the professional code that governs tax advice given by members of the main UK accountancy and tax bodies; it is published in full by CIOT and ICAEW, alongside the ICAEW Code of Ethics that binds us as Chartered Accountants, so you can read the rules we work to rather than take our word for them. For R&D work its practical effect is simple: we may only advise a filing position that has a sustainable basis in law, we must not let a fee incentive shape a technical judgement, and we must correct errors when we find them. An agent outside PCRT can file whatever it thinks HMRC will not notice. We cannot, and would not want to. We set out what these standards mean in day-to-day R&D work in professional standards in R&D tax advice. Is LimestoneGrey registered with HMRC? Yes. Under the Finance Act 2026, tax advisers who interact with HMRC on behalf of clients must be registered with HMRC, with anti-money-laundering supervision a condition of registration. The requirement began taking effect in stages on 18 August 2026. We meet both requirements through our ICAEW regulation. When we file your Additional Information Form and deal with HMRC on your claim, we do so as a registered, supervised adviser named on the submission. Why are unregulated R&D agents a risk? Because when a claim goes wrong, the company is the one that repays. HMRC can reach a bad adviser too, but every route to them turns on intent, and none of them reaches one who was simply too optimistic and has since stopped trading. Your directors are responsible for the accuracy of the return, HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and an unregulated agent has no professional body to answer to, no PCRT duties and no complaints route. HMRC’s own estimates show why scrutiny tightened: error and fraud in R&D relief ran at 17.6% in 2021-22 before falling to 6.4% in 2023-24 on random-enquiry evidence, with HMRC putting an illustrative 5.3% on the two years since, as compliance activity increased (HMRC annual report and accounts 2025–26, page 107 and Figure 20). If your current adviser will not defend its work in an HMRC enquiry, that tells you what it thinks of its own claims. LimestoneGrey has been regulated since its inception in 2017: the standards this page describes are not ones we adopted when scrutiny arrived. How our guidance is written and reviewed The same standards apply to what we publish as to what we file. Every guide and article on this site names its author and the month it was last reviewed, and that date means the page was actually re-checked against the current legislation and guidance, not simply re-stamped. Our technical content is written and reviewed by the chartered advisers who prepare claims, under the same PCRT duties that govern our advice: statements of law are cited to their primary sources, gov.uk guidance and HMRC’s CIRD manual, so you can verify them rather than take our word. Rates, thresholds and deadlines are re-verified when the rules change and ahead of each April rule cycle. If we find an error in something we have published, we correct the page and update its review date; we would rather show a correction than defend a mistake. Where we use AI in preparing content, a chartered adviser reviews the output before it is published, as set out in how we use AI. And we publish no statistic about our own performance that we cannot reconcile to our records, which is why you will not find a “success rate” on this site: no honest adviser controls HMRC’s decisions, and no unverifiable number belongs on the website of a regulated firm. One distinction matters alongside all of this: our guides are carefully prepared general information, not advice on your circumstances, as our terms explain. Advice comes through an engagement, where it carries the professional protections described on this page. What happens if you have a complaint? Raise it with Matthew directly and we will deal with it quickly and openly. If you are not satisfied with our response, you can escalate the matter to ICAEW, which independently handles complaints about the firms it regulates. Few R&D agents can offer that second step; we regard it as basic client protection. Our commitments to every client The right claim, defensibly prepared: we file nothing we cannot stand behind. Every claim is prepared or reviewed by a chartered adviser before it is submitted. The fee is agreed before work starts, with no hidden costs. Enquiry support is included as standard. Where the law is unsettled, we tell you so and explain the position we take. We are open about our methods, including how we use AI in our work. If these standards match what you are looking for in an adviser, start a conversation with us or read how we work. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # Our AI Policy: How LimestoneGrey Uses AI URL: https://www.limestonegrey.com/ai-policy/ Description: How we use AI in R&D tax work: drafting, research and production support, with every judgement and submission signed off by a chartered adviser. Our AI policy How we use AI LimestoneGrey uses AI tools in parts of our work, and this page says exactly where. We think clients of a tax firm are entitled to know how their adviser produces its advice, so here is the position in plain terms: AI assists with drafting, research and production; qualified humans make every judgement that matters. What we use AI for We use AI tools to support drafting (first drafts of documents that a qualified adviser then reworks and verifies), research (locating and summarising legislation, guidance and case material for human review) and production (formatting, consistency checking and the mechanics of preparing documents). Used this way, AI removes typing time, not thinking time. It lets our advisers spend more hours on the parts of a claim that need professional judgement. We describe these as categories of tool rather than naming particular products. The specific software changes as better tools appear, and we would rather commit to how we use AI, and how we protect your information, than to any one provider. The principle stays constant whichever tool is in front of us. What AI never does It never decides whether a project qualifies as R&D. Eligibility judgements are made by a qualified adviser applying the DSIT definition to what your competent professionals tell us. It never determines your figures. Cost qualification and the claim computation are prepared and checked by people. It never communicates with HMRC on its own. Every submission and every letter is reviewed and approved by a named adviser before it goes anywhere. It never publishes unreviewed content. Every technical position on this site is reviewed and signed off by a chartered adviser before publication. Put plainly: no decision that affects you is made solely by automated processing. Every judgement that carries professional or financial weight is made by a chartered adviser, who retains authority over the work and signs it off. Who is accountable? Responsibility for our work rests with the firm and its regulated advisers, never with a tool. Everything we deliver is reviewed and signed off by a chartered adviser, whatever tools were used to produce it. The practice is founded and led by Matthew Jones, a chartered accountant and chartered tax adviser. Our professional obligations, including PCRT and ICAEW regulation, apply to everything we deliver. A tool cannot carry professional responsibility; a regulated adviser can, and at LimestoneGrey one always does. What about your information? Client and enquiry information is handled under our confidentiality and data protection obligations whatever tools we use. Those duties are set by law and by our professional rules, and they do not relax because software is involved. Two assurances matter most. Your information is processed under appropriate confidentiality and security controls. And it is not used to train any third-party AI model; the tools we use are engaged on terms that prevent it. You can ask us at any time to limit or stop our use of AI in handling your information. We will accommodate that where it is reasonably practicable, though it may affect how quickly and at what cost we can work. Our privacy policy explains how we handle personal data more generally, including where any processing takes place outside the UK and the safeguards that apply. If you have questions about any of this, ask us directly. We would rather explain our methods than have you wonder about them. Written by Matthew Jones ACA CTA. Last reviewed July 2026. --- # R&D tax advisers and consultants: a firm of Chartered Tax Advisers URL: https://www.limestonegrey.com/rd-tax-advisers/ Description: A firm of Chartered Tax Advisers doing one thing: R&D tax relief. What the engagement covers, who signs it off, who does the work and how to start. Our service R&D tax advisers: what we do and how we work LimestoneGrey is a firm of Chartered Tax Advisers and Chartered Accountants specialising in R&D tax relief. It is the only thing the firm does, and it has been since Matthew Jones ACA CTA founded it in 2017 — before the current schemes existed, through the reforms that replaced them and through the compliance drive that followed. This page sets out what an engagement actually involves. If you are still deciding who to appoint rather than what to ask us, start with how to choose an R&D tax adviser. It sets out what can be verified about anyone you are considering, including us. What the engagement covers An R&D claim is two jobs bolted together, and we do both. The first is the technical case. Someone has to sit with the people who did the work, follow what they were trying to achieve and frame it against a statutory test that asks about advances in science or technology and uncertainties a competent professional could not readily resolve. That is an interviewing and writing job, and it is done by someone who can hold the conversation with your engineers without either side losing patience. The second is the tax. Which scheme the period falls under, what qualifies as a cost and in what proportion, how the credit runs through the corporation tax computation, whether the PAYE cap bites, and whether a claim notification was needed and filed in time. Get that wrong and the technical case never gets read, because the claim is invalid before anyone reaches it. We prepare the computations, the report and the Additional Information Form, and we file as registered tax agents rather than handing you a pack and leaving the submission to someone else. How we work walks through the sequence from scoping call to submission. Who does the work Your first conversation is with a qualified adviser rather than a salesperson, and it is the same team that goes on to prepare the claim. There is no delivery department the file gets passed down to once the engagement is signed. Every claim the firm submits is signed off by a chartered adviser before it reaches HMRC. That is the part worth pinning down with any firm you speak to, because it is where responsibility actually sits. We file as registered tax agents without taking a 64-8, so if you have an accountant, their authorisation for your wider tax affairs is untouched and their relationship with you is unchanged. Many accountants send this work to us for that reason; working with accountants covers how that arrangement runs. Fees, and what happens when HMRC asks Our fees are contingent: what you pay depends on the outcome of the claim, and the fee is agreed in writing before any work starts. There are no hidden costs, and we set out the exact fee for your situation at the end of the scoping call, so you decide with the number in front of you. How our fees work sets out the model in full. Because the fee is tied to the outcome, the incentive question is a fair one to put to us, and the answer is that we will tell you on the first call if we do not think you should claim. That is a cheaper conversation for both of us than an enquiry two years later. Enquiry support is included as standard in every engagement, written into the engagement letter rather than offered as goodwill. HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, so this is not a remote contingency. HMRC enquiries sets out what the support involves. If the claim under enquiry was prepared by someone else, HMRC enquiry defence covers that as a standalone engagement. What being regulated means here LimestoneGrey is a member firm of both the Chartered Institute of Taxation and ICAEW, regulated by ICAEW, bound by the Professional Conduct in Relation to Taxation code, supervised by ICAEW for anti-money laundering and registered with HMRC as a tax adviser. Regulation and professional standards explains what each layer means, including the independent complaints route to ICAEW if we fall short. Two of those are legal requirements rather than credentials, and it is worth knowing which. Anti-money-laundering supervision is compulsory for any firm advising on tax affairs, and trading without it is a criminal offence. Under Part 7 of the Finance Act 2026, anyone paid to deal with HMRC on a client’s behalf must also be registered with HMRC as a tax adviser, a registration HMRC can refuse, suspend or withdraw. That requirement began taking effect in stages on 18 August 2026 — does my R&D adviser have to be registered with HMRC? covers the dates and what you can and cannot check. Neither of those puts a qualification behind the advice. “Tax adviser” remains an unprotected title, and so does “R&D tax consultant”, which the market uses interchangeably with it. No exam is required to use either, and there is no public register a prospective client can search. The checkable things are the professional bodies’ own registers, and those only help where the adviser is actually a member of one. Whether we are the right fit Probably yes if your R&D is genuinely technical, if you want the person who understands the claim to be the person who defends it, and if you would rather be told early that something does not qualify than find out during an enquiry. Probably not if what you want is the largest number anyone will put on a form. That market exists. We are not in it. The sectors we work in are a better guide to technical fit than geography. Most of the work runs on video calls and shared documents, which has been true for clients ten minutes from the office and three hundred miles away alike. If you are in Wales, R&D tax advice from Cardiff covers what being a Welsh firm does and does not mean. If you already claim and want a second opinion rather than a new adviser, our free claim review is a confidential read on a claim that has already been filed. A paid claim is not an approved claim. How to start A scoping call, half an hour or so. You describe what the company builds and where the technical difficulty sat; we give an honest view on whether it looks like qualifying R&D, which scheme applies and what a claim would involve. It costs nothing and commits you to nothing. Call 0330 223 4 223 or send us a message. Sources Finance Act 2026, section 223 — the requirement for a tax adviser to be registered with HMRC before interacting with HMRC on a client’s behalf. The Finance Act 2026 (Registration of Tax Advisers) (Appointed Days and Transitional Provision) Regulations 2026, SI 2026/807 — regulation 4, the appointed days on which the registration requirement takes effect for each tranche, starting 18 August 2026. Check if and when you need to register as a tax adviser with HMRC — HMRC’s guidance, giving the date each registration window opens. Anti-money laundering registration — supervision as a legal requirement: “You’re breaking the law if you carry on a business activity covered by the regulations but do not register with a supervisory authority.” The Money Laundering Regulations 2017, regulation 86 — trading without required registration as a criminal offence. HMRC’s approach to R&D tax reliefs 2023 to 2024 — compliance coverage of 17% of claims in 2023-24, the most recent year published. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # How We Work: The LimestoneGrey R&D Claim Process URL: https://www.limestonegrey.com/how-we-work/ Description: How we prepare an R&D tax relief claim, from scoping call to submission, with fees agreed up front and HMRC enquiry support included as standard. How we work How we work Every LimestoneGrey engagement follows the same path: a scoping call, a clear eligibility view, parallel technical and financial workstreams, filing handled by us as HMRC-registered tax agents, and support that continues after submission. The fee is agreed before any work starts, and if HMRC opens an enquiry, enquiry support is part of the engagement as standard. Step 1: scoping call We start with a conversation about what your company builds, where the technical difficulty sits and what your numbers look like. From that call you get an honest view: whether your work looks like qualifying R&D, which scheme applies, and roughly what a claim could be worth. If we do not think you qualify, we tell you on that call and you have lost nothing but half an hour. Step 2: deadlines and scheme position first Before any drafting, we check the compliance clock. First-time claimants (and companies that have not claimed in the three years ending with the notification deadline) must submit a claim notification within six months of the end of the period of account, and missing that window invalidates the claim entirely. We also confirm your scheme position: the merged scheme for most companies, or ERIS if you are a loss-making SME whose relevant R&D expenditure is at least 30% of total relevant expenditure. Step 3: the technical workstream We interview your competent professionals, the people who actually wrestled with the science or the code. Those conversations establish the advance sought, the uncertainties faced and the project boundaries, framed against the DSIT definition HMRC applies. We then draft the technical narrative and check it back with your team, so the narrative HMRC reads is one your engineers would recognise. Step 4: the financial workstream In parallel, we build the cost side: staff time apportionments, externally provided workers, subcontractors, consumables, software, data and cloud. Each category has its own rules, set out on our qualifying costs page, and we apply the correct treatment rather than a flat percentage guess. We also test the PAYE cap and any grant or contract complications before they become problems. Step 5: filing, handled by us We are registered with HMRC as tax agents, so we do not hand you a pack of numbers and leave the filing to someone else. We prepare the Additional Information Form, which is mandatory for every claim and must be submitted before or with the CT600, and we submit the corporation tax return containing the claim ourselves, or amend the return if it has already been filed. Our preference is to own the whole sequence from first interview to submission, because sequencing errors are one of the easiest ways for a valid claim to fail. If you have an accountant, they keep their role: year-end accounts and wider tax planning carry on as normal, and we keep them informed at every step. We do not apply for a 64-8, so agent authorisation for your wider tax affairs stays where it is. Many accountants refer this work to us for exactly that reason; see our page for accountants. Step 6: submission and what happens after Once you have reviewed and approved everything, we submit and track the claim with HMRC. If HMRC opens a compliance check, handling the response is part of the original engagement. Our approach to enquiries, how far that support extends and what to expect from one, is set out on our HMRC enquiries page. How long does a claim take? It depends mostly on how quickly information flows. Clean cost records and available technical staff make for a fast claim; missing records slow it down. We agree a timetable at the start, built around your filing deadlines and any notification window, and we keep you informed at every stage rather than going quiet for months. What we need from you Three things: access to the people who did the technical work, cost information (payroll, subcontractor invoices, grant and customer contracts), and timely review of drafts. We keep requests specific and batched, because you have a company to run. What about fees? Our fees are contingent: what you pay is tied to the outcome of the claim, and the fee is agreed in writing before work starts. There are no hidden costs, and enquiry support is included as standard. We will set out the exact fee for your situation at the end of the scoping call. How our fees work explains the model in full, including what stops a contingent fee inflating a claim. If you are still comparing advisers, how to choose an R&D tax adviser sets out what to verify about anyone you appoint — including us — and specialist or accountant covers whether you need a specialist at all. For who does the work here and who signs it off, see what we do. Ready to start? Get in touch and we will book the scoping call. Written by Lisa James. Last reviewed September 2026. --- # R&D Tax Partner for Accountants | LimestoneGrey URL: https://www.limestonegrey.com/accountants/ Description: We partner with accountancy practices as a specialist R&D tax arm. Referral or white-label support, PCRT aligned, client relationship protected. For accountants R&D tax support for accountants and their clients LimestoneGrey works alongside general accountancy practices as the specialist R&D arm they choose not to build in-house. Because R&D tax relief is all we do, there is no conflict of interest: we will never pitch your client for accounts, audit, payroll or anything else. You keep the client relationship; we handle the R&D claim to a chartered standard, from first interview through to submission to HMRC. This page is written for accountants. If you are a company looking for an adviser of your own rather than a practice looking for a partner, R&D tax advisers is the page you want. Why do practices refer R&D work out? Because the compliance burden has outgrown the sideline model. Claim notification windows, the Additional Information Form, the merged scheme and ERIS rules, contracted-out R&D tests and HMRC checking around one in six R&D claims (17%) in 2023-24, the most recent year it has published: keeping current takes daily immersion. Referring to a regulated specialist protects your client and your own PCRT position, since advising on a filing position you cannot fully support is a risk to your practice as well as to them. How does working together work? Two models, and you choose per client: Referral. You introduce us, we engage the client directly, and we keep you informed throughout. Your client deals with a named chartered adviser, and you see everything before it is filed. White-label support. You keep the client-facing role and we do the specialist work behind the scenes: eligibility assessment, competent professional interviews, the technical report, cost schedules and the AIF, delivered ready to file, or submitted by us as HMRC-registered agents if you would rather hand the whole sequence over. Practices with in-house R&D capability also use us ad hoc, for a complicated contracted-out position, a grant interaction or a second opinion on a marginal project. Commercial terms are agreed with your practice before any client work starts. What do you keep doing? Everything you do now. You remain the accountant: year-end accounts, wider tax planning and the day-to-day relationship. We do not apply for a 64-8, so agent authorisation for your client’s wider tax affairs stays with you. The R&D claim itself we prefer to take end to end: the computations, the technical report, the Additional Information Form and the submission to HMRC as registered tax agents, usually by amending the return, with everything sighted by you before it goes in. The process is the same one described on how we work. Where the credit lands in the client’s accounts — and the presentation questions worth settling with the auditor before year end — is covered in accounting for the merged credit under FRS 102, written for exactly this conversation. Clients on FRS 105 or IFRS have their own page: R&D tax credits under FRS 105, IFRS and FRS 101. And where a client is genuinely asking whether they need a specialist at all, our published comparison — specialist or accountant: who should prepare the claim? — is written to be shared, including the cases where the honest answer is that you have it covered. What happens if HMRC opens an enquiry? We stand behind the claim if HMRC asks questions, as part of the original engagement, and enquiry support is included as standard. We also take on enquiries into claims that other advisers prepared, which is often how new practice relationships begin. Why LimestoneGrey? We are a member firm of both CIOT and ICAEW: regulated by ICAEW, bound by PCRT and registered with HMRC as a tax adviser, led by a dual-qualified chartered accountant and chartered tax adviser, with every claim signed off by a chartered adviser. When you refer a client to us, you are lending us your reputation, and we treat it that way. “In working with LimestoneGrey we’ve not only been able to refer clients to a reputable agency for a very important topic, but it’s also allowed us to become more educated on the topic as a result.” Jamie, Cennen Solutions Limited Start the conversation If you have a client who might qualify, or you want a standing arrangement for your practice, contact us or call 0330 223 4 223. We are happy to start with a single claim and let the work speak for itself. Written by Lisa James. Last reviewed September 2026. --- # R&D Tax Adviser Fees: How Ours Work | LimestoneGrey URL: https://www.limestonegrey.com/fees/ Description: How we charge for R&D tax relief work: a contingent fee, agreed in writing before any work starts, with no hidden costs and enquiry support included. Fees How our fees work Our fees are contingent: what you pay is tied to the outcome of the claim, and the exact figure for your company is agreed in writing before any work starts. There are no hidden costs, enquiry support is included as standard, and the scoping call that comes first is free. You get the fee quoted at the end of that call, so you decide with the number in front of you. What does a contingent fee mean here? The fee is calculated by reference to the outcome of the claim rather than billed by the hour, and the engagement letter governs it: the basis, the amount, when it falls due and what it covers, all agreed in writing before we start. Nothing is added afterwards. The fee is calculated as a percentage of the benefit the claim actually produces — the gross credit the claim generates, whichever scheme applies — so if the claim produces nothing, there is no percentage to charge. It is the same basis for a first claim and for every year after it. Fees are plus VAT, and a minimum applies, quoted alongside the percentage so there are no surprises at either end of the range. If you would rather have a fixed fee than a contingent one, we offer that too: say so on the call. We do not publish the rate itself, because claims differ too much for a headline figure to mean anything. A two-project claim with clean payroll records is a different job from a twelve-project claim spanning grants, subcontracted work and a PAYE cap test. What if it turns out you do not qualify? Then there is no claim and no fee. Reaching that conclusion is part of the job, not a failure of it: if our honest reading of your projects is that they do not meet the definition, we tell you, the engagement ends there, and you owe us nothing for hearing it. The scoping call and the eligibility checker exist to reach that answer as early as possible, before anyone has committed to anything. When is the fee payable? Once HMRC has processed the claim — not when you decide to go ahead, and not on submission. One honest detail worth knowing: processing is not always the same as cash arriving, because where a company owes HMRC elsewhere, the credit can be used to settle that debt instead of being paid out. The benefit to the company is the same either way, so the fee follows processing rather than the bank transfer. The engagement letter sets all of this out in full before you sign anything. If the fee is contingent, what stops us inflating a claim? A fair question, and our own guidance on choosing an adviser tells you to put it to every firm you consider, us included. Five things answer it: A chartered adviser signs off every claim. No claim leaves this firm without that sign-off, and the adviser giving it has a professional standing to lose. The conduct rules prohibit exactly this. As a member firm of CIOT and ICAEW we are bound by Professional Conduct in Relation to Taxation: we may only advise a filing position that has a sustainable basis in law, and we must not let a fee incentive shape a technical judgement. An agent outside the professional bodies is bound by none of that. We say no, and we say it in public. If we do not think you should claim, you hear it on the first call. Our eligibility checker does the same without a conversation: it tells you when a claim looks unlikely, which is the point of it. We defend what we file. Enquiry support is included as standard, written into the engagement letter rather than offered as goodwill. An adviser who will be answering HMRC’s questions in two years’ time has a reason to keep the claim answerable now. Our name goes on the submission. Every agent involved in a claim is named to HMRC on the Additional Information Form, so what goes into your claim is attached to this firm’s record as well as your company’s. Naming the incentive does not make it disappear; what it runs into is a set of controls that cost more to breach than any fee is worth. How we are regulated sets out the standards behind them. What does the fee cover? The whole engagement, from first interview to what happens after submission: the eligibility and scheme view, and the claim notification check that comes before anything else; the technical work and the costs: interviews with your competent professionals, the narrative drafted from them, staff apportionments, the PAYE cap and any grant or contract complications; the Additional Information Form and the corporation tax return containing the claim, both filed by us as HMRC-registered tax agents rather than handed back to you as a pack; enquiry support, included as standard: we handle the response to a compliance check as part of the engagement, and if a case escalates to review, ADR or beyond, we agree that further work with you before it begins. How we work walks through the sequence step by step. What will we not do? We will not inflate a claim to raise the fee. Where something you hoped would qualify does not, it comes out and we explain why, whatever that does to what we are paid. We are not in the market for the largest number anyone will put on a form. And we will not charge for the first conversation. The scoping call costs nothing and commits you to nothing; if we do not think you qualify, you have lost half an hour. If you already claim through another adviser, our claim review is a free second opinion on a filed claim, under a mutual NDA. How do you get a number? Book the scoping call. Half an hour on what the company builds and where the technical difficulty sat, and you get an honest view on whether it looks like qualifying R&D and which scheme applies. The fee is quoted at the end of that call, then confirmed in writing, then set in the engagement letter that governs the work. Nothing starts until you have said yes to all three. If HMRC has already opened an enquiry into a claim someone else prepared, HMRC enquiry defence is a separate engagement, priced the same way. Call 0330 223 4 223 or send us a message. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # Free R&D Claim Review, Under NDA | LimestoneGrey URL: https://www.limestonegrey.com/claim-review/ Description: A free, confidential second opinion on your R&D tax relief claim from a firm of Chartered Tax Advisers. A paid claim is not an approved claim. Claim review A free second opinion on your R&D claim If your company already claims R&D tax relief, we will read your most recent claim and give you a straight professional opinion on it, free of charge and in confidence, under a mutual NDA as standard. If the claim looks sound, we will tell you so. If something looks wrong, we will explain what and why, and set out the routes for putting it right. The decision on what happens next stays with you: we will not chase you, and nothing goes to HMRC on your behalf without your instruction. Why review a claim HMRC has already paid? Because payment is not approval. HMRC processes most R&D claims when they are filed and asks its questions afterwards, sometimes long after the money has been received and spent. A company that has been paid year after year can reasonably conclude its claims must be sound. That conclusion does not follow, and it is one of the most expensive misunderstandings in R&D tax: HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published, and when an enquiry opens, problems that were invisible for years surface all at once. Relief that should not have been claimed can be repaid with interest, and in some cases with penalties, years after the event. A review now costs you nothing and tells you where you actually stand, while there is still time to put things right calmly under proper advice, or simply to know your position is defensible. What we look for The problems in R&D claims run in both directions. Some claims include too much; others leave money behind. We read for both: Whether the projects described actually meet the definition of qualifying R&D, or whether commercial development has been dressed up as research Whether the technical narrative demonstrates an advance and genuine uncertainty, or reads like marketing copy, which is a common trigger for HMRC questions Costs that should not be there: ineligible categories, misclassified subcontractors and workers, grant and contracted-out complications Qualifying expenditure that has been missed, which is more common than most companies expect Procedure: claim notification, the Additional Information Form, the scheme position and the PAYE cap How it works Confidentiality first. We sign a mutual NDA before we see anything, your information is handled under it throughout, and we will not contact your current adviser at any stage. A short set of terms sets the basis. The review is free, so the terms and the NDA record what it is: a high-level professional opinion on the documents you provide, for your information, not a re-preparation of the claim. You send the claim pack. Typically the technical report, the cost schedules and the Additional Information Form from your most recent claim. You receive a written summary, signed off by a chartered adviser, and a call to walk it through. Plain answers on one or two pages: what looks sound, what concerns us and why, and where each concern comes from. You will usually have it within two weeks of sending the pack. What happens after Whatever you decide. Raise what we found with your current adviser; if you want to share the written summary with them, ask us and we will normally agree. If you would rather we handled your next claim, or an enquiry that is already open, we will set out exactly what that involves and what it costs before you commit to anything. And if the review leaves you choosing a new adviser, how to choose an R&D tax adviser sets out what to verify about anyone you appoint, including us, and changing your R&D tax adviser covers how the move itself works. And if the claim is in good shape, you will hear that too: reassurance is a perfectly good outcome for both of us. Why we do this without charging Because it is the most honest way to show you how we work. Some companies who ask for a review become clients; that is the commercial logic, and we would rather state it than pretend otherwise. Others leave reassured about the adviser they already have. Both outcomes are fine with us, and you will get the same straight answer either way. The basis of the review So there is no small print to hunt for, this is the deal: the review is a high-level professional opinion based on the documents you give us. It is not formal tax advice, it does not re-perform the claim, and it does not replace your existing adviser’s engagement. The short set of terms and the mutual NDA you receive at the start set this out properly. Confidential under the NDA, free, and without obligation. If you claim R&D tax relief and have never had an independent pair of eyes on it, get in touch or call 0330 223 4 223 and mention the claim review. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # What clients say about LimestoneGrey URL: https://www.limestonegrey.com/testimonials/ Description: What clients in biotech, AI, robotics, medtech and manufacturing say about working with LimestoneGrey, reproduced word for word as they gave it. Testimonials Client testimonials Every quotation on this page is reproduced word for word, exactly as the client gave it. We do not polish testimonials, for the same reason we do not polish claims: the record should say what actually happened. We specialise in R&D-intensive and deep tech companies across sectors including life sciences, AI, robotics and medtech, and we work just as carefully with clients in engineering and manufacturing, and with the accountants who refer them. The awards and partnerships that sit alongside these testimonials are on our about page. Life sciences and biotech “We’ve worked with LimestoneGrey for several years and their professionalism, speed and clear approach make them a pleasure to work with. They quickly understand the complexities of our R&D and ensure the claims process is straightforward, fair and accurate.” Sandy, Jellagen Limited AI and machine learning “Working with LimestoneGrey has been a genuinely positive experience. Their communication is clear and proactive and they are always on hand to answer queries and provide reassurance throughout the process. We have complete trust in their expertise and feel confident that our claims are being handled professionally.” Dr Varghese, Laennec AI Limited Robotics “We have been very happy with the service provided by LimestoneGrey. In particular, their attention to detail has been exceptional, making the entire process smooth and reassuring for us.” Marcus, Neurabotics Limited Medtech “Having LimestoneGrey’s expertise to guide us through each step made a huge difference. The process was explained clearly and handled with professionalism, ensuring everything met the required legislative standards. We’ve built a genuine partnership with LimestoneGrey and value their ongoing advice and shared commitment to innovation.” Med-Tech client Engineering and manufacturing “We had excellent advice and support from LimestoneGrey in handling the submission of the claim and guiding us through the process.” Trefor Jenkins, Director at Midtec Products Across our client base “After finding out about LimestoneGrey at a Welsh Start Up Convention, we were very interested in their services around R&D tax credits. As a business, it’s very difficult to get top level consultants that you can rely on but LimestoneGrey has proven to be efficient, understanding and professional in their approach.” Tony, Enviro365 Limited “I cannot praise the team at LimestoneGrey highly enough. Their knowledge on R&D tax credits is exceptional and their ability to breakdown the complexity of the relief has been very welcomed.” Robert, Dirt Driver Limited Referral partners Accountants and other professionals refer clients to us because R&D tax relief is all we do, so there is no conflict with their own services. More on how we work with accountants. “In working with LimestoneGrey we’ve not only been able to refer clients to a reputable agency for a very important topic, but it’s also allowed us to become more educated on the topic as a result. Our business is grounded in some strong values and we work with a very credible client base. LimestoneGrey matches our values and credibility expectations – it’s wonderful to have a relationship with such a professional and friendly associate!” Jamie, Cennen Solutions Limited If you would like to know what working with us feels like at first hand, get in touch or read how we work. We will give you a straight view on eligibility and value, and the fee is agreed before any work starts. Written by Lisa James. Last reviewed July 2026. --- # Contact LimestoneGrey: Chartered Tax Advisers URL: https://www.limestonegrey.com/contact/ Description: Contact LimestoneGrey, Chartered Tax Advisers specialising in R&D tax relief, in Cardiff. Call 0330 223 4 223 and a qualified adviser will reply. Contact Contact LimestoneGrey Whether you are claiming for the first time, unhappy with a current adviser or facing an HMRC enquiry, the quickest way to a straight answer is a short conversation with a qualified adviser. Phone: 0330 223 4 223 Email: hello@limestonegrey.com What happens after you get in touch A member of the team will come back to you to arrange a scoping call. On that call you get an honest view: whether your work looks like qualifying R&D, which scheme applies and what a claim would involve. There is no obligation, and if we do not think you should claim, we will say so. If you decide to go ahead, your fee is agreed before any work starts, exactly as described on how we work. Accountants with a client to refer are equally welcome; see our page for accountants or just call. Where to reach us Cardiff 15 Neptune Court, Vanguard Way, Cardiff, CF24 5PJ We serve the whole UK, most first meetings happen by video call, and visits are by arrangement. Send us a message Tell us briefly what your company does and what prompted you to get in touch, and we will take it from there. Written by Lisa James. Last reviewed July 2026. Full name* Email* Company name* Company size* Select… 1–19 20–99 100–499 500–999 1,000+ Phone number +44+353+1+33+49 How did you hear about us? Select… Search engine Recommendation Social media Event Other How can we help? Send enquiry We use your details only to respond to your enquiry: see our privacy policy. --- # HMRC R&D enquiry defence and support URL: https://www.limestonegrey.com/hmrc-enquiry-defence/ Description: We take on HMRC enquiries into R&D claims, including claims other advisers prepared. Correspondence-stage defence, with fees agreed before any work starts. Our service HMRC enquiry defence for R&D claims A compliance check into an R&D claim is a demand to evidence what was filed: the projects against the statutory definition, and the costs against the records behind them. We take those on as standalone engagements, including claims other advisers prepared. We start by forming a view on whether the claim can be defended. Where it can, we defend it. Where it cannot, we say so, early enough for that to be worth something to you. If we prepared your claim, this is not the page you need. Enquiry support is included as standard in every LimestoneGrey engagement, written into the engagement letter rather than offered as goodwill: handling the response to a compliance check is part of the engagement. What follows is for companies whose claim someone else prepared, and for anyone instructing us on an enquiry alone. What we do when HMRC opens an enquiry into your claim The work is correspondence-stage defence: the written case put to HMRC, the evidence assembled behind it, and the dealings with the caseworker holding your file. That starts with reading the claim as filed before answering anything: the first response sets the scope and the tone of everything after it. Information requests can be broad, and part of a good defence is settling a sensible scope rather than sending everything and hoping. The technical case then goes back in the form the legislation asks for — an advance in a field of science or technology, uncertainties a competent professional could not readily resolve, the reasoning of the people who did the work — with the cost workings reconciled to the accounts. A competent professional, in HMRC’s sense, is the engineer or scientist who led the work and can explain why it was hard. Your competent professionals are prepared to answer HMRC directly, because HMRC may want to hear from them rather than only from an adviser. We say defensible rather than guaranteed. No honest adviser can promise you an outcome with HMRC, and a firm that offers you one has told you something useful about itself. Claims we did not prepare Enquiries into claims we did not prepare are a standing part of the work, and some arrive because the firm that filed the claim is no longer around to answer for it. We do not take on every case. The first step is a conversation about HMRC’s letter and what was claimed, which costs nothing and usually tells us both whether this is worth taking further. Where the claim needs reading properly before anyone can honestly say which parts are defensible, which are weak and which should be conceded — the norm on a large or untidy claim — that assessment is a fixed fee, agreed before it starts. We tell you where we land either way. A claim with real technical substance and untidy evidence is usually worth defending; untidy evidence is the ordinary condition of a company that was busy doing the work. A claim written for the file by someone who never spoke to the engineers is a different proposition. Where part of a claim is wrong, conceding that part early is normally the cheapest route available, because the quality and timing of disclosure affects any penalty: coming forward promptly and cooperating fully reduces the amount, and holding out does the opposite. What penalties HMRC can charge sets out how the amount is arrived at, and can HMRC make me pay back an R&D tax credit? covers repayment and interest. LimestoneGrey is a member firm of both the Chartered Institute of Taxation and ICAEW, regulated by ICAEW, bound by the Professional Conduct in Relation to Taxation code, supervised by ICAEW for anti-money laundering and registered with HMRC as a tax adviser. Telling a company that its claim will not hold up is what those obligations are for. There is a market that will take any brief and bill for the argument. We are not in it. One point specific to older periods. For accounting periods beginning before 1 April 2024, two First-tier Tribunal decisions — Collins Construction and Stage One Creative Services — changed the position on subsidised and contracted-out expenditure. Neither decision was appealed, and HMRC updated its guidance manual in February 2025. If your enquiry turns on those grounds, that history is part of your defence. How a defence actually runs Five stages, in practice: an opening letter setting questions and a deadline; a round of information and documents; written questions testing the technical case, sometimes with a call or meeting involving your competent professionals; HMRC’s view, which is acceptance, adjustment or rejection with reasons; then resolution, by agreement or escalation. Our guide to HMRC R&D enquiries walks each stage through, and what HMRC asks for lists the evidence requested. Timing is months rather than weeks. There is no fixed timetable, correspondence moves in rounds with weeks between letters, and contested cases can run well beyond a year. While a check is open, any payable credit for the period is unlikely to be paid, so the practical cost is cash flow and management time even where the claim survives intact. None of this is unusual now: HMRC checked around one in six R&D claims (17%) in 2023-24, the most recent year it has published. How far we take it If a case is not resolved by agreement, three routes exist beyond the correspondence stage: a statutory review by an officer not previously involved; alternative dispute resolution (ADR), where an HMRC officer trained in mediation acts as a neutral mediator between you and the case officer; and an appeal to the First-tier Tribunal. We will tell you plainly where a case sits and what each route would involve. Most enquiries are settled in correspondence, and that is where our work is concentrated. Appeals to the tribunal are rare, and we do not hold ourselves out as litigators. If a case looks like heading that way we will tell you early and set out the options with you, which may mean working alongside specialist litigators or handing over a file they can pick up cleanly. It is a decision we take with you, and we scope that work separately if it arises. What it costs Fees are agreed before any work starts. Enquiry defence is scoped from HMRC’s letter and the claim as filed rather than quoted blind, so the first step is a conversation, which costs nothing and commits you to nothing. Reading the claim itself is the assessment, and on anything sizeable that is a fixed fee agreed before it starts. If a case moves past correspondence into a statutory review, ADR or beyond, that further work is scoped and agreed separately, before it begins rather than after. What to bring to a first conversation Five things, none of which needs assembling first: HMRC’s letter, with its date and any deadline it sets. The claim as filed: the Additional Information Form setting out the projects and costs, the computations and any technical report. Who prepared it, and whether that firm is still involved. The competent professionals behind each project, and whether they are still with the company. Whatever the projects generated while they were running — notes, plans, test results, commits. Gaps are not a reason to delay the call. What is missing is part of the assessment. If the letter has arrived The opening weeks matter disproportionately, because the first response frames the scope and often the outcome. If a compliance check letter about an R&D claim has arrived, whoever prepared it, get in touch and we will tell you straight where you stand. If no enquiry has arrived and you would like to know how a filed claim would hold up, our free claim review is a confidential second opinion, including on claims prepared elsewhere. If you are choosing who prepares your next claim, what we do and how we work sets out the engagement end to end. Call 0330 223 4 223 or send us a message. Sources HMRC’s approach to R&D tax reliefs 2023 to 2024 — around one in six claims checked in 2023-24, the most recent year published. CIRD84250: subcontracted R&D, post-tribunal — the case-by-case factors after the First-tier Tribunal decisions. CIRD81650: subsidised expenditure, post-tribunal — commercial contracts are not subsidies. Use alternative dispute resolution to settle a tax dispute and CC/FS21 — the mediator as a neutral and impartial HMRC officer, and that ADR does not affect the right to appeal or to ask for a review. Written by Matthew Jones ACA CTA. Last reviewed September 2026. --- # Changing R&D Tax Adviser: How It Works | LimestoneGrey URL: https://www.limestonegrey.com/changing-rd-tax-adviser/ Description: You can change R&D tax adviser at any point, including mid-claim and mid-enquiry. What the handover involves and what to gather beforehand. Changing adviser Changing your R&D tax adviser You can change R&D tax adviser at any point: part-way through a claim, after a claim has been filed, and while HMRC has an enquiry open. Nothing in the tax rules ties your company to the firm that prepared the last claim, and the handover involves less than most directors expect. Comparing offers is easier once you know what an R&D tax adviser’s engagement covers. Which route makes sense depends on where you are. Three situations cover most of the ground, and the right next step differs in each. What if you are uneasy but nothing has obviously gone wrong? Start with the free claim review. We read your most recent claim — including one that another adviser prepared — and give you a straight professional opinion on it, free of charge and in confidence, under a mutual NDA as standard. You are not committing to anything by asking: we will not contact your current adviser at any stage, we will not chase you, and nothing goes to HMRC on your behalf without your instruction. You will usually have the written summary, signed off by a chartered adviser, within two weeks of sending the claim pack. Some directors come away reassured about the firm they already have, and that is a perfectly good outcome. The free claim review sets out what we look at. What if HMRC has opened an enquiry into a claim someone else prepared? Then the enquiry is the urgent thing, so the change of adviser and the response to HMRC are handled together rather than in sequence. We take enquiries on as standalone engagements, including claims other advisers prepared. The first step is a conversation about HMRC’s letter and what was claimed, which costs nothing and usually tells us both whether this is worth taking further. Do not sit on it. The deadline on HMRC’s letter keeps running while you decide, and the first response frames the scope of everything after it. HMRC enquiry defence sets out what the work involves, what to bring and how the fee is agreed. What we will not do is promise you an outcome, because no honest adviser can. What if you now think a past claim was wrong? Say so early, in confidence, before anything goes to HMRC. Where part of a claim should not have been made, correcting it voluntarily normally leaves you in a better position than waiting to be asked, because the timing and quality of any disclosure affects the penalty. What that looks like turns on how old the claim is, how the return was filed, and how much of it is affected. Our guide to voluntary disclosure sets out what telling HMRC yourself involves; HMRC R&D enquiries covers the penalty position, and what penalties HMRC can charge explains how the amount is arrived at. Do you need your old adviser’s permission to leave? No. You engage whoever you choose, and the firm that prepared the last claim has no say in who prepares the next one. Here is who actually does what. You decide, and you tell your current adviser when you are ready. Nothing in the tax rules sets a notice period; your engagement letter with them might, so read it before you give notice. You control HMRC agent authorisation, which sits between your company and HMRC rather than between two advisers. If your outgoing adviser acts for you as an agent, you can remove that authorisation yourself, naming each tax service it should be removed from, either through your business tax account or by writing to HMRC’s Central Agent Authorisation Team. We file as registered tax agents without taking a 64-8, so if you have an accountant, their authorisation for your wider tax affairs is untouched and their relationship with you is unchanged. We prepare the claim and submit it to HMRC ourselves, usually by amending the return. Nobody writes to your previous adviser without your say-so. If you would rather we handled that exchange once you have decided, we will. What should you gather? Copies, not originals, and none of it needs chasing before the first call: The Additional Information Form for the most recent claim, which sets out the projects and costs as HMRC received them. The technical narrative or report behind it. The cost schedules, and the computations if you have them. Any correspondence with HMRC about the claim, including the compliance check letter and its deadline where one has arrived. Who prepared the claim, and whether that firm is still involved. Your accountant usually holds most of this even where a separate adviser prepared the claim. If some of it is missing, say so when we speak. Gaps are not a reason to delay the call: what is missing is part of the picture. Do the deadlines wait while you decide? No. Statutory deadlines run on their own timetable whoever is advising you, and two of them can be missed during a change of adviser. If your company is a first-time claimant, or has not made an R&D claim in the three years ending with its notification deadline, the claim notification window can close while the question of who prepares the claim is still open, and there is no way to make that one late. If you are looking at an earlier period, both matter. The two-year amendment window sets how far back you can amend a filed return, and a notification that was required and not made closes the period regardless of it. Backdated claims sets out both, including the periods that are already closed. Check both dates before you spend a month deciding. Will we tell you your current adviser got it wrong? We will tell you what we find, once we have read enough to know. We do not condemn another firm’s work sight unseen. Untidy evidence is the ordinary condition of a company that was busy doing the work, and it is not the same as a wrong claim. What you get is a straight professional read of where the claim stands: what looks sound, what concerns us and why, and where each concern comes from. Sometimes the answer is that the claim is sound and HMRC is asking ordinary questions. On fees: the first call is free and commits you to nothing, and the claim review is free whether or not you take it further. Where an enquiry is open, nobody can say honestly which parts of a claim are defensible without reading it properly first. That reading is an assessment in its own right, and on anything sizeable it is a fixed fee agreed before it starts. Everything beyond it is agreed in writing before work begins, and enquiry work is scoped from HMRC’s letter and the claim as filed rather than quoted blind. How our fees work sets out the basis, and HMRC enquiry defence covers the enquiry route specifically. If you are weighing up a change, get in touch or call 0330 223 4 223 and tell us where you have got to. How to choose an R&D tax adviser sets out what to verify about any firm you appoint next, including us. Sources Change or remove your tax agent’s authorisation — removal through the business tax account, and by post to the Central Agent Authorisation Team. Tell HMRC you plan to claim R&D tax relief — the six-month notification window and the three-year test. CIRD81800: SME claim time limits — the two-year amendment window. FA 1998, Schedule 18, paragraph 83E — the time limit for making, amending or withdrawing an R&D claim: two years from the end of the period of account. Written by Matthew Jones ACA CTA. Last reviewed September 2026.