Research & Development (R&D) Tax Safeguards

Research & Development (R&D) Tax Safeguards

After several years of reform, shifting rules and heightened scrutiny, the government’s decision at the last Budget to keep research and development (R&D) tax relief policy largely unchanged for a second consecutive year sent a clear message to industry: the system seems to have entered a more predictable phase.

For innovative businesses, particularly SMEs, this stability matters. It rebuilds confidence, encourages investment, and signals that the UK intends to remain a competitive home for R&D.

Alongside this, the government has shown renewed commitments in the Entrepreneurship Prospectus to making the UK one of the most supportive environments globally for founders and innovators.

HMRC’s latest efforts to raise standards across the R&D tax relief landscape, including the new Research and Development Expert Advisory Panel (RDEAP), project eligibility tool and the forthcoming advance assurance pilot, should all be seen as part of a wider direction of travel.

For advisers and claimants alike, these initiatives point towards a more collaborative and transparent approach from HMRC.

The RDEAP panel

The creation of RDEAP, which brings experts from the fields of AI, technology, life sciences and advanced manufacturing, together with HMRC and government departments, represents a shift most believe in the right direction.

For the first time, independent technical experts will input directly into HMRC’s understanding of R&D across different industries. Although the panel will not have decision-making power, taken in the broader context of the government’s push to rebuild trust in the regime, its formation is encouraging.

The expertise assembled suggests HMRC is serious about basing its decisions on real-world R&D practice. However, the panel will only meet quarterly and will not review individual claims. Its impact, therefore, will likely be strategic rather than operational. The real test will be how, and the speed at which, its insights find their way into publicly accessible guidance.

Visibility of meeting minutes will be useful if they are made publicly available. A greater window into HMRC’s thinking could help to reduce disputes and encourage more consistent decision-making across enquiries.

The R&D eligibility tool

HMRC’s new eligibility tool is an additional resource for businesses evaluating their potential to claim the relief and is a further attempt at providing greater clarity for businesses at an early stage. It offers an additional mechanism for determining whether a project qualifies as R&D, complementing the wider effort for increased transparency.

But it is not without its limitations. The checker offers a high-level overview only and does not account for technical nuance, project context or interpretation. It simply asks a series of ‘yes or no’ questions in relation to different sections of the guidelines and asks that a competent professional inputs into the responses.

As a result, it has the potential to return a false negative or inconclusive result, potentially deterring businesses with a qualifying R&D project. It cannot then be relied on in isolation, or as a replacement for professional R&D advice.

Advance assurance pilot

The recent standout development was the announcement on Budget Day of a new advance assurance pilot launching in spring 2026. This follows a consultation on how to offer earlier clarity to SMEs on their eligibility to claim, and its scope is encouraging.

Crucially, the pilot is open to any SME planning to claim R&D tax relief, including those that have claimed before. This is a significant improvement on the narrow eligibility of the legacy advance assurance scheme, which was available to only a small proportion of the market.

Even more promising is its issue-based structure, which focuses on four areas where uncertainty, disputes and misunderstandings are common:

• whether the project meets the definition of R&D.
• how overseas expenditure should be treated.
• which party can claim when work is contracted out.
• whether the claimant qualifies for exemption from the PAYE/NICs cap

These issues sit at the heart of the new regime. If HMRC can provide clear and timely guidance at the outset, it has the potential to prevent months, and sometimes years, of avoidable friction later.

Where the pilot really has the potential to be transformative for businesses is in the sharing of insights. If HMRC collates responses to the pilot and uses anonymised examples to update formal guidance, the benefits would extend far beyond those who participate in the pilot. They would provide meaningful guidance on new areas of practice and would help build confidence for the future.

Kennedys Accounting has been undertaking R&D work for over a decade and would be pleased to discuss any potential claims you believe you may have.