Last month, we hosted an exclusive roundtable breakfast for finance and operational leaders, focused on the changing R&D tax relief landscape. Ahead of the event, we were hearing the same thing from many of our clients: the process is increasingly complex, is incredibly time-consuming and the worry of getting the claims process wrong is putting people off.

At the roundtable, attendees shared that experience: they want the R&D tax credit scheme to work, but the current experience feels operationally challenging. Delays, repeated enquiry questions, and post-closure repayment issues are creating real cashflow strain and increasing uncertainty.

This highlights a growing tension at the heart of the UK R&D landscape: the scheme remains valued, but confidence in how it operates is being eroded by practical experience.

Compliance checks: the process is becoming the problem

A major theme was the time and friction involved in enquiries. Attendees described extended timelines to reach resolution, with repeated questions from HMRC that did not always feel focused on a clear risk or technical issue. Several noted that claims can feel insufficiently reviewed, creating the sense of a box being ticked a rather than a focused investigation looking into specific risks in the claim.

Concerns also centred on what happens after an HMRC enquiry is formally closed. A particular concern was raised around delays in repayments following a closure notice, and instances where the final statement on account was not correct. Where errors arise, participants found them difficult to resolve via helplines or standard routes, compounding the administrative burden, and prolonging the delays of receiving the final cash credit.

The commercial impact of these delays isn’t theoretical: one attendee noted cases where delayed outcomes contributed to businesses scaling back activity, or in extreme cases causing start-ups to fail entirely. Others reported that some companies have simply stepped away from the scheme because it feels too complex and too uncertain, despite wanting the support in principle.

What HMRC wants: clearer separation and stronger context

We discussed the practical challenge of preparing an R&D claim. One issue that was noted is the challenge of separating qualifying R&D from routine development. Attendees flagged that some guidance, particularly around developer contribution, can feel unclear. In response, businesses are often narrowing claims to “pure” R&D, rather than including applied development work that may still qualify, because of perceived risk (and recent horror stories about software development being challenged).

We also returned to a familiar question: what makes a technical narrative effective? It was highlighted that establishing a clear baseline is essential. It helps an inspector quickly understand where the product sits in the market, what comparable solutions can already do, and why the work went beyond routine implementation.

Capturing costs: pragmatic approaches now, better tooling later

On cost capture, the “ideal” remains timesheets or robust time writing, but many businesses are not set up for that level of granularity. The discussion therefore focused on practical options: capturing costs by project where possible and considering whether project accounting is needed for scale and auditability.

AI also featured as a potential game changer in the future, particularly the prospect of capturing evidence in near real time, even where businesses operate with more generalised bookkeeping. The consensus was that this is promising, but still evolving, and not yet a complete answer.

Grants and funding: the scale-up gap is widening

Innovate UK was discussed briefly, with the view that it is moving towards supporting scale-ups rather than backing earlier-stage projects. Attendees felt this may help businesses bridging towards Series A funding, but it could leave a gap for start-ups unless the new approach is explained with greater certainty. Bank funding was also touched upon, alongside the types of businesses most likely to access it.

A bigger question: what is the scheme trying to achieve?

Underlying many points was a strategic concern: is the scheme primarily about increasing R&D spend, or should it be framed as a productivity and growth tool? Attendees noted that SMEs are constrained by funding; they often cannot simply “spend more” on R&D. Instead, the relief extends runway and helps them survive the cashflow-intensive period of scaling, protecting UK innovation against overseas competitors. If the scheme continues to feel unreliable, more UK businesses may fail before they reach scale.

Looking for more information?

If you have a query about any of the topics mentioned above, including enquiry support, claim readiness, evidence expectations, or pragmatic approaches to cost capture, please fill in the form below and one of our team will be in touch.