How should founders approach R&D tax relief claims given recent HMRC enforcement and stricter eligibility rules?

HMRC has significantly tightened R&D tax relief scrutiny in recent years and is actively auditing claims, particularly targeting smaller businesses. Members report a shift from a generous, post-claim-payment model to stricter pre-payment validation.

**Key risks and changes:** - HMRC's enforcement mandate has intensified; the agency now requests detailed information and challenges claims more frequently, sometimes with generic responses that don't adequately address detailed counterarguments - Claims are essentially self-assessed (HMRC pays first, audits later), making them vulnerable to retrospective challenge - Eligibility rules have become "considerably less lenient" — what qualified in previous years may not now - Smaller businesses face disproportionate audit risk, while larger firms with dedicated R&D departments and professional advisors (PWC, KPMG, Deloitte) face less scrutiny - Claims on operational staff who are not 100% R&D-focused attract particular scrutiny

**Practical recommendations:** - Work with a specialist R&D tax relief advisor; members report claims can be substantially optimised (one founder's £10k expectation was increased to £45k) at competitive rates - Be conservative with claim scope; one founder reduced anticipated claims significantly in anticipation of stricter scrutiny - Ensure robust documentation of qualifying work to withstand HMRC challenge

**Caveat:** Members emphasise caution is now warranted. One founder is in active dispute with HMRC over a 2021 claim (£33k) that was challenged mid-year with limited explanation.