In recent years, the UK’s R&D tax relief landscape has undergone significant transformation. From HMRC tightening documentation requirements, to the introduction of the new merged scheme legislation, these updates continue to reshape the way claims are prepared and submitted.

It’s become more important than ever for businesses to stay informed, because an error can result in your claim being queried or rejected.

In our experience, there are some common pitfalls we often see claimants making, which can impact the amount of relief they are able to claim. These include missing the claim notification window, different entities within group structures claiming tax relief incorrectly, poor record-keeping, not submitting Additional Information Forms, and not tying R&D work back to your financial accounts.

So how can your company avoid these common pitfalls?

Don’t miss the claim notification window

For accounting periods beginning on or after 1 April 2023, companies planning to claim R&D tax relief may need to submit a Claim Notification Form. This form will be mandatory if it’s your first claim, if your last claim was over three years ago, or if your last claim was made in circumstances that mean it doesn’t count for notification purposes. The definition of a valid claim in prior years is complicated, and companies should get advice if they are uncertain whether they are exempt from submitting a claim notification form.

The deadline for submission of this form is linked to your company’s period of account (the period covered by the financial statements) and ends six months after. If the deadline is missed, the claim will be invalid. Missing the deadline is not a valid excuse, and therefore not tracking this deadline could result in a costly mistake.

In practice, we find that many companies only discover they needed to complete the notification form when they come to submit the claim, and by then it can be too late.

To avoid losing out on a year’s worth of R&D benefit, build the notification check into your year-end accounting and tax timetable. Where submission is required, the Claim Notification Form is submitted via HMRC’s online portal and includes:

• Company details

• Period of account dates

• Senior R&D contact details

• A short summary of the planned R&D activities

A record of submission should be retained in case of any challenges later down the line.

What complexities can arise in this process?

Even in group structures where one company has claimed R&D previously, each entity intending to claim qualifying R&D costs must assess its own requirement to notify. Changes like moving R&D activity into a new company, or changing accounting period duration, can also create a risk of missing the deadline.

Because you can claim R&D relief up to two years after an accounting period ends, many businesses previously delayed starting the claim review process. Given that the time window to submit a claim notification is only 6 months after the accounting year end, early planning is essential to avoid missing out. We can help you confirm whether you need to notify and by when, and ensure your form is submitted correctly and on time.

Better record-keeping matters more than ever

With HMRC increasing scrutiny around R&D tax credit claims, robust record-keeping is more important than ever. From times records and project roadmaps to third-party contracts, companies must be ready to evidence their R&D activities when asked. Failure to do so is increasingly becoming a point of dispute once a compliance check is raised, so planning is essential.

In addition to project racking records, HMRC will ask for a range of additional details. For accounting periods starting on or after 1 April 2023, claims can now include cloud computing and data licence costs, but only the portion used for qualifying R&D. While not required upfront, HMRC may request evidence like access logs or usage details to support apportionments. Under the merged scheme, even more detailed records are expected. For accounting periods beginning on or after 1 April 2024, new requirements for the Additional Information Form include:

• Northern Ireland-based companies: registration details, sector, and de minimis state aid received over the past 3 years.

• Externally Provided Workers (EPWs): number of workers and employer PAYE references may be required, even for unconnected entities.

• Subcontractors: name of company, registration country and number, and the portion of qualifying spend must be disclosed.

It’s important for companies to start gathering evidence early to avoid delays. We have helped several large businesses streamline their processes and implement real-time tracking to improve their claim preparation work.

Aligning R&D intensity with accounting

To support an R&D claim, costs must clearly link back to your financial accounts. This is especially important in group structures, where intellectual property (IP) and qualifying costs may sit in different entities. This is something to watch closely during any restructuring activity to ensure you are claiming in the right entity. But these complex group structures with recharged costs can cause issues when calculating whether your company can claim under the more beneficial enhanced R&D intensive support (ERIS) scheme.

For R&D-intensive, loss-making SMEs claiming enhanced relief, you’ll need to prove you meet the intensity threshold:

• 40% for expenditure from 1 April 2023

• 30% for periods starting on or after 1 April 2024

The Additional Information Form requires a breakdown of total and qualifying R&D costs, including capitalised spend and any connected company figures to calculate the intensity. HMRC will likely cross-check these against your accounts, so accuracy and traceability are key. For example, intercompany recharges must be handled carefully to avoid double-counting when providing figures for connected companies. Ensuring your accounting records reflect this clearly will help HMRC verify your eligibility with minimal friction. We can assist you with accounting presentation and checking your intensity calculations to ensure they are in line with HMRC’s requirements.

As companies transition between claiming under the merged and ERIS R&D schemes, staying on top of legislative changes is critical. The benefit available will drop significantly, so being able to predict and plan for the cash flow impact is critically important to your ongoing R&D budgeting. We work with a range businesses who have moved between the different schemes due to growth or expansion, and we can help you with your R&D incentives planning.

Your R&D claim planning timeline

To help with your claim planning process we have set out the key milestones:

How we can help

Our specialist R&D team are here to help you navigate the complexities of the R&D claim process and assess whether there are risks or issues with your claim preparation methodology. As your business grows, we can ensure your R&D strategy remains compliant and your claim process does not impact too heavily on wider business operations.

We can assess what information is required to support your claim, guide you through the preparation process, and help you build a smoother, more robust approach to notifications, AIF submission, and record-keeping.