At DNA Accountants, we’ve seen a worrying pattern lately: clients who were encouraged by so-called Research & Development (R&D) “specialist” firms to make claims they never should have submitted. The result? HMRC is now knocking on the door, asking for the money back – and in some cases, charging penalties on top.
R&D tax relief can be a fantastic incentive for genuine innovation – but the rules are strict, and HMRC has become increasingly aggressive in tackling misuse. If you’re thinking about claiming R&D, it’s vital to understand whether your work really qualifies.
Innovation Isn’t Always R&D
We’ve recently had a few conversations with clients doing genuinely thoughtful and impactful work – especially in areas like consultancy, data analysis, or developing new frameworks within their sector. Often, they’ve been told by peers (or “Dave down the pub”) that their project must qualify for R&D tax relief.
But that’s not necessarily the case.
What Actually Counts as R&D (According to HMRC)?
To qualify for R&D tax relief, your work must:
- Aim to make an advance in science or technology, not just within your own industry or field;
- Involve technical uncertainty – challenges that couldn’t be resolved by a competent professional without trial and error;
- Be systematic and methodical, with documented processes and outcomes;
- And ideally, involve technical specialists, such as developers, engineers, or scientists, working hands-on to solve those problems.
If your project is commercially or operationally innovative – but not technically challenging in this way – it’s unlikely to qualify.
Common Pitfalls We See
The kinds of work that often fall into a grey area include:
- Sector-specific innovation (e.g. a new way of delivering services or using existing tools);
- Advisory or consultancy work that feels cutting-edge, but doesn’t involve deep technical development;
- Projects using existing platforms, data tools, or off-the-shelf software in new ways.
These may be smart, strategic, even game-changing – but unless there’s a genuine technical breakthrough or challenge being overcome, HMRC is unlikely to accept a claim.
When It Might Be Worth Revisiting
If your work evolves to include significant technical development – for example, creating new software, algorithms, or data processing techniques – then it could be worth a closer look. But even then, claims should be approached carefully, with strong documentation and ideally support from a reputable adviser.
To find out more about what qualifies, HMRC provides an R&D tax relief guide here.
Avoid the Cowboys
If a firm is encouraging you to submit a claim without properly understanding your work, or offering a “no win, no fee” deal with sky-high success fees – be cautious. Many of these operators are now being investigated, and it’s the client (not the adviser) who ends up liable if HMRC rejects the claim.
Thinking About R&D? Let’s Talk First
R&D tax relief can be brilliant when used correctly – but painful if misapplied. If you’re not sure whether your project qualifies, please do get in touch. We’d far rather help you get it right than deal with a clawback later on.