R&D Tax Credits: The Most Common Mistakes That Cost Companies Money

R&D Done Right — Episode 10 (Finale)

The UK’s R&D tax relief rules haven’t suddenly become harsher — HMRC’s approach has changed.

Today, claims are reviewed using data, benchmarking, and automated risk scoring, not just the narrative.

That means the most common failures aren’t scientific — they’re process-driven.

Here are the most frequent mistakes we see in 2025/26:

1. Treating R&D as a box-ticking exercise

HMRC wants to see technical ownership, not generic descriptions.

If the narrative looks like it was written by finance or a third party, it raises doubts.

2. Chasing percentages instead of defensibility

Staff apportionments are now the first thing HMRC checks.

Flat percentages, repeated patterns, or round numbers look like guesses — not evidence.

3. Over-claiming director time

Director time is one of the biggest triggers for adjustment.

Leadership and strategy don’t count as R&D time unless it’s direct technical contribution.

4. Poor project boundaries

Projects without clear start/end dates or mixed with routine work are hard to defend.

Strong claims clearly separate normal development from experimental R&D.

5. Misunderstanding grants and subsidies

Grants no longer automatically “taint” claims, but they can create state aid and control issues if not handled correctly.

6. Ignoring overseas expenditure rules

For periods starting after April 2024, overseas subcontractors and EPWs are generally disallowed.

This mistake costs companies money every year.

7. Treating the AIF as paperwork

The Additional Information Form is now the gatekeeper.

If it doesn’t match your claim, HMRC will flag or remove your R&D figures.

8. Oversharing during enquiries

Giving too much information can create new inconsistencies.

HMRC compares your response to the original claim — consistency matters more than volume.

9. Using advisers who haven’t adapted

The old approach focused on maximising the claim.

Now, strong advice is evidence-led, conservative, and enquiry-ready.

What good claims do differently

Strong claims are:

• consistent
• evidence-based
• aligned with reality
• designed to survive scrutiny

R&D relief still works — but it now rewards companies that treat it as a compliance process, not a marketing tool.