Research and development tax relief can provide valuable support to companies investing in advances in science and technology.
However, preparing a compliant claim involves much more than identifying a few innovative projects and calculating the associated costs.
A robust claim requires an understanding of tax legislation, HMRC guidance, project eligibility, technical evidence and financial methodology.
The applicable rules for R&D tax relief claims can also vary according to the company’s accounting period and circumstances.
For accounting periods beginning on or after 1 April 2024, the merged R&D expenditure credit scheme and enhanced R&D intensive support replaced the previous RDEC and SME schemes.
Older accounting periods may therefore still fall under the former rules.
Against this background, relying on an advisor without specialist R&D tax experience can expose a company to unnecessary financial and compliance risks.
What Are The Risks Of Using Non-Specialist Advisors For R&D Tax Relief Claims?
Are you avoiding a specialist consultation for R&D tax relief claims citing expenses?
Here are the risks you are exposing yourself to.
1. Misinterpreting The Definition Of R&D
One of the most important parts of an R&D claim is establishing whether a project qualifies for tax purposes.
Commercial innovation is not automatically qualifying R&D.
A project generally needs to seek an advance in science or technology and address scientific or technological uncertainty.
This means that a product can be new to a business or commercially valuable without necessarily meeting the requirements of the relief.
A non-specialist advisor may rely too heavily on broad descriptions such as “innovative”, “bespoke” or “industry-leading”.
These descriptions can help explain the commercial context, but they do not establish the technical basis of a claim.
An experienced R&D tax consultant should be able to distinguish between routine product development, ordinary commercial problem-solving, and activities that may qualify as R&D for tax purposes.
That distinction reduces the risk of including unsupported projects or overlooking genuinely eligible work.
2. Including Costs That Do Not Qualify
Identifying a qualifying project is only the first stage.
The company must then determine which costs relate to qualifying R&D activities and how those costs should be apportioned.
Potential claim categories can include staffing costs, software, consumable items, subcontracted work and externally provided workers.
However, eligibility depends on the relevant scheme and the circumstances in which expenditure was incurred.
Restrictions can also apply to certain overseas expenditure.
A general accountant may understand the company’s financial records but lack detailed knowledge of how R&D expenditure rules apply to individual projects.
This can lead to:
- Including expenditure that is not connected to qualifying activities
- Applying unsupported staff-time percentages
- Claiming for routine production or commercial work
- Mishandling subcontractor and externally provided worker costs
- Missing eligible expenditure hidden within broader nominal accounts
- Applying rules from the wrong accounting period or scheme
Both overclaiming and underclaiming create problems.
An overstated claim can result in HMRC intervention, repayment demands and possible penalties.
An understated claim means the company may fail to receive the full relief to which it is entitled.
3. Producing Weak Technical Narratives
A credible R&D claim should explain what technical work was undertaken and why it may qualify.
This often requires meaningful input from engineers, developers, scientists, product teams, or other competent professionals involved in the project.
A weak narrative may focus on:
- The commercial benefits of the product
- General business challenges
- Customer requirements
- Tight deadlines or budget constraints
- Features developed during the period
- Statements that the work was difficult or innovative
These points do not necessarily explain the scientific or technological advance being sought.
They do not address the uncertainties encountered, why those uncertainties were not readily deducible, or how the project attempted to resolve them.
Non-specialist advisors may struggle to interview technical teams effectively or translate complex project information into a clear tax narrative.
The result can be a generic report that fails to demonstrate the technical substance of the claim.
4. Failing To Meet The Additional Information Requirements
Companies making R&D tax relief claims must submit an additional information form for each relevant accounting period.
The form must be submitted before, or on the same day as, the Company Tax Return containing the claim.
If both are submitted on the same day, the additional information form must be sent first. HMRC states that a claim may be rejected if these requirements are not followed.
The form asks for information about the company, qualifying expenditure and the projects included in the claim.
Depending on the claim, details may also be required concerning connected companies and R&D intensity.
An advisor unfamiliar with the current process could:
- Miss the submission requirement
- Submit the form in the wrong order.r
- Provide an incomplete project description.
- Enter figures that do not reconcile with the tax computation.
- Use inconsistent information across different claim documents.
- Fail to prepare separate information for the relevant accounting periods.
These are not minor administrative issues. They can affect whether the claim is accepted.
5. Using Outdated Rules
The UK R&D tax relief regime has undergone significant reform.
The merged RDEC scheme and enhanced R&D intensive support apply to accounting periods beginning on or after 1 April 2024, while the previous SME and RDEC rules may still apply to earlier periods.
An advisor who only deals with R&D claims occasionally may rely on assumptions that were correct under previous rules but are no longer appropriate.
This is particularly risky when considering:
- Which relief applies
- The treatment of contracted-out R&D
- Overseas expenditure restrictions
- R&D intensity calculations
- PAYE cap rules
- Claim notification requirements
- Additional information obligations
The accounting period is especially important.
The correct treatment cannot always be determined simply by looking at the date on which the claim is submitted.
6. Increasing The Risk Of HMRC Scrutiny
No advisor can guarantee that HMRC will not review a claim. However, poorly prepared claims can create avoidable warning signs.
Examples include inconsistent figures, vague technical descriptions, unusually high staff allocations and claims that do not reflect the company’s actual activities.
A non-specialist advisor may also be less equipped to respond if HMRC asks detailed questions about the technical or financial basis of the submission.
HMRC warns that companies may face a penalty when making an ineligible R&D claim.
A compliance check can also require considerable management time, particularly if the supporting evidence was not collected when the claim was prepared.
7. Leaving The Company Without An Effective Evidence Trail
The value of an R&D claim is not determined solely by the final calculation. The company should also be able to explain how it reached its conclusions.
Useful records may include:
- Project plans and technical specifications
- Development logs and test results
- Records of unsuccessful approaches
- Timesheets or documented staff-time estimates
- Payroll and cost reports
- Subcontractor agreements
- Invoices and procurement records
- Emails or meeting notes showing technical decisions
- Reconciliations between the claim and statutory accounts
A non-specialist advisor may calculate a headline figure without establishing a clear audit trail.
If HMRC later asks how a percentage, project boundary or cost category was determined, the company may find it difficult to reconstruct the reasoning.
Choosing The Right R&D Advisor
Businesses should carry out appropriate due diligence before appointing someone to prepare an R&D claim. Useful questions include:
- How much of your work is dedicated to R&D tax relief?
- Who will assess the technical eligibility of our projects?
- How do you calculate and document cost apportionments?
- How do you keep up with changes to HMRC guidance and legislation?
- Will you prepare and review the additional information form?
- What quality-control process is applied before submission?
- How would you support us during an HMRC compliance check?
- Do you carry appropriate professional indemnity insurance?
- Are your fees and responsibilities clearly explained?
- Will we receive a complete copy of the calculation and supporting evidence?
Businesses should be cautious of providers that promise guaranteed claims, focus only on maximising the value, or show little interest in speaking to the people who carried out the technical work.
Specialism Is About More Than Claim Size
The purpose of using a specialist is not simply to produce the largest possible claim.
It is to arrive at a claim that is accurate, supportable and appropriate for the company’s circumstances.
A strong R&D advisor should combine technical understanding with tax knowledge, financial accuracy and clear documentation.
They should also be willing to challenge weak projects or unsupported costs rather than including them to increase the headline benefit.
Choosing a non-specialist may initially appear cheaper or more convenient.
However, the potential cost of an invalid claim, missed expenditure, repayment, penalty or lengthy HMRC enquiry can outweigh any short-term saving.
For companies investing seriously in research and development, specialist advice can therefore be an important part of protecting both the value and the integrity of an R&D tax relief claim.
