Compliance & HMRC scrutiny: Understanding the new requirements

The merged scheme does more than redefine eligibility for claims, it also ushers in a new era of compliance and administrative oversight for businesses wanting to benefit from R&D incentives. To ensure claims are genuine and to improve transparency, HMRC has introduced additional checks and forms that businesses must now navigate.

Advance notification

One of the key procedural changes is the advance notification requirement. Under the new rules, any company intending to make an R&D tax relief claim for the first time, or after a gap of a few years, must notify HMRC within six months from the end of the accounting period in which the qualifying R&D activities took place. Missing this deadline can mean losing the right to claim for that period. For instance, if a company’s year-end is 31 March 2025, and it has never claimed R&D tax relief before, it must alert HMRC by 30 September 2025 to be eligible to make the claim (even though the deadline for the claim itself is 31 March 2027).

Additional information form (AIF)

Alongside the traditional tax return submission, claimants must now complete and provide an Additional Information Form before filing their R&D tax relief claim. This form asks for detailed project descriptions, including the nature of the scientific or technological advancements pursued, the uncertainties addressed, and details on which personnel and costs were involved. HMRC uses this information to assess the claim’s validity, reinforcing the move toward more robust scrutiny.

By understanding these new obligations and adjusting internal systems to meet them, companies can avoid unnecessary pitfalls and continue to secure the benefits of R&D tax relief under the merged scheme. Engaging with professional advisers and training staff in the new procedures is recommended to ensure ongoing compliance and to respond confidently to HMRC’s enhanced scrutiny.

HMRC enquiry activity: What to expect

HMRC has significantly increased its scrutiny of R&D tax relief claims in recent years. This is driven by a need to tackle error and fraud, which previously reached rates as high as 17.6% under the old small or medium enterprise scheme. Recent reforms, including the introduction of the AIF and advance notification, set out above, have helped reduce the overall error and fraud rate.

Key features of HMRC’s current approach include:

• Mandatory random enquiry programme: HMRC now randomly selects claims for detailed review, regardless of size or sector, to monitor compliance and identify risk areas

• Targeted enquiries: Sectors with historically high non-compliance, such as construction, care homes, and software, are seeing more frequent and in-depth enquiries

• Faster processing, more checks: While 90% of claims are processed within 40 days, the compliance framework is now much more robust, and poorly prepared or under supported claims are more likely to be challenged or rejected

Key steps

To navigate the new compliance landscape, companies should review and update their internal processes for R&D claims, ensuring that all notification and documentation requirements are met. It’s essential to keep detailed records of R&D activities, costs, and decision-making, and to prepare for the possibility of an HMRC enquiry, even for routine claims. By embedding these practices and staying proactive, businesses can minimise the risk of delays or challenges and continue to benefit from R&D tax relief with confidence.

To download the full merged R&D tax relief scheme document, please click here. 

If you wish to discuss this in further detail, please contact one of our Business Tax experts here.