Strategic planning tips for maximising your claim and reducing risk under the new R&D tax relief merged scheme

Strategic planning tips

As we conclude this series on the new merged R&D tax relief scheme, it’s clear that the landscape for innovative businesses claiming tax relief has shifted significantly. While this unified framework is designed to streamline R&D incentives, it also brings fresh challenges and additional compliance obligations. In this final article, we provide strategic guidance to help organisations optimise their claim and effectively manage the risks introduced by these latest changes.

1. Understand the new merged scheme

The first step to a successful claim is developing a thorough understanding of the merged R&D tax relief scheme. Familiarise yourself with the qualifying criteria, eligible activities, and the documentation now required. The scheme may have redefined what counts as R&D, and it is essential to keep abreast of any sector-specific guidance or updates from HMRC.

2. Confirm your R&D intensity

With the introduction of the Enhanced R&D Intensive Support scheme, it is crucial for loss-making small or medium enterprises to calculate their R&D intensity early in the process. Meeting the 30% threshold could unlock higher rates of relief, so understanding your eligibility from the outset ensures you can plan your projects and claims with confidence and avoid missing out on valuable support.

3. Review supply chain and contractual arrangements

It is essential to review your supply chain and contractual arrangements considering the new statutory definition of contracted-out R&D. Only one company in a supply chain can claim for a given set of R&D activities, so businesses should carefully examine their contracts to clarify who is entitled to claim. Agreements should clearly set out roles, responsibilities, and the intention behind any R&D activities. Proper documentation and precise contract wording are now more important than ever to avoid disputes and to maximise your claim.

4. Plan for overseas restrictions

The merged scheme introduces strict limits on claiming for R&D carried out overseas. If your business relies on overseas R&D, you should review your arrangements and gather robust evidence to justify any non-UK work. The statutory exception only applies where it would be wholly unreasonable to replicate the necessary conditions in the UK. You should carefully assess whether the services provided by your overseas third parties are genuinely specialist or bespoke, and whether such expertise or facilities are unavailable within the UK. Documenting the unique value or necessity of these overseas contributions will be crucial for compliance and for protecting your claim.

5. Review and update internal processes

Beyond these headline changes, it is important to audit your existing R&D tax relief claim processes and adapt them to fit the merged scheme’s requirements. This may involve updating project tracking systems to capture detailed records of R&D activities and expenditure, aligning finance and technical teams on definitions and evidence gathering requirements, and implementing regular reviews to identify qualifying projects in real time rather than retrospectively.

6. Maximise eligible expenditure

Review your cost allocation to ensure all eligible expenses are included. Common qualifying costs include staff salaries, externally provided workers, consumables, software, and subcontracted R&D. The merged scheme may have introduced changes to what is allowable, so be diligent in checking all categories and don’t overlook indirect costs that may now be eligible.

7. Strengthen record keeping and evidence gathering

Robust documentation is key to both maximising your claim and reducing risk of enquiry or clawback. Best practices include maintaining contemporaneous project notes, timesheets, and technical justifications for all claimed activities. As well as storing supporting evidence such as emails, design documents, and test results. Retaining records for the statutory period, in case of future enquiries, is also vital.

8. Engage cross-functional teams early

Collaboration between finance, technical, and project management teams ensures that claims are both comprehensive and compliant. Technical leads should be involved in identifying qualifying activities, while finance teams should ensure costs are correctly allocated and documented. Regular communication reduces errors and uncovers additional claimable work.

9. Monitor legislative and guidance updates

The merged R&D tax relief scheme is new and may evolve as guidance is clarified and case law develops. Appoint someone to monitor HMRC updates or subscribe to industry newsletters to stay informed of changes that could affect your claim.

10. Consider professional advice

Given the complexity and potential for significant financial benefit, consulting with R&D tax specialists or qualified advisors can be invaluable. They can review your processes, help interpret grey areas, and provide support during HMRC enquiries, ultimately reducing risk and maximising your claim.

11. Plan for enquiry readiness

Even well-prepared claims may be subject to HMRC review. Prepare for this possibility by ensuring all claims are defensible with clear, well-organised evidence. Respond promptly and professionally to any queries, and keep your advisors informed.

Conclusion

The new R&D tax relief merged scheme presents both opportunities and challenges for innovative businesses. By adopting a strategic approach, rooted in understanding the rules, implementing robust processes, and proactive risk management, you can maximise your claim and safeguard your business. Start by reviewing your current practices, seek expert guidance where needed, and stay agile as the new regime beds in.

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.