We’re celebrating a great result this week — an HMRC R&D tax relief enquiry that had been ongoing since September 2024 has finally been successfully closed in our client’s favour.
Our client, an innovative scaffolding company, had their R&D claim challenged after HMRC initially issued a closure notice, believing their activities did not qualify as R&D. After months of detailed correspondence, Tim Johnson from our innovation tax team (innovation@pulse-accountants.co.uk) successfully demonstrated that the company’s projects involved genuine scientific and technological uncertainty.
HMRC accepted the argument and reversed their decision, recognising that the company was indeed undertaking qualifying R&D activities. This outcome highlights two key points:
The R&D landscape has changed significantly — especially following increased scrutiny prompted by firms like Green Jellyfish and ZLX.
Strong technical evidence and experienced representation remain critical in defending legitimate claims.
R&D tax relief remains one of the most valuable incentives for UK innovation, but HMRC’s approach has become far more rigorous. Claims are now scrutinised more deeply than ever, and businesses must be prepared to justify both the technical and financial aspects of their claim.
Specialist advisers are currently discussing several major themes shaping the R&D tax environment in 2025:
Companies often amend or submit R&D claims for past years. HMRC treats each accounting period separately, so even if one period is delayed or under enquiry, other years can still be claimed. Tracking each accounting period’s claim window independently is essential to avoid missing deadlines.
► HMRC guidance: Time limits for R&D tax relief claims
The PAYE/NIC cap continues to be a complex area. For accounting periods starting from April 2021 (and under the merged scheme from April 2024), the payable credit is capped at £20,000 plus 300% of PAYE and NIC liabilities. Any excess can now be carried forward — a welcome flexibility for cash flow planning.
Knowing which rule applies to your specific accounting period is key, as it directly affects your potential benefit.
If your company is subcontracted by a public body (e.g. Network Rail), eligibility for R&D relief depends on who controls and understands the technical challenges. If your business undertakes the work and carries the risk, you are often the correct claimant.
This distinction is increasingly scrutinised in HMRC enquiries and requires careful technical reporting.
In group structures, each company can only claim relief on qualifying expenditure recorded in its own accounts. The parent company can usually claim for staff on its payroll, while subsidiaries may claim externally provided workers if structured correctly. Avoiding double counting is essential, and technical reports should be tailored to each entity.
HMRC’s response times have lengthened considerably, with some enquiries lasting nine months or longer. Where delays become unreasonable, formal complaints referencing the HMRC Charter have successfully prompted action.
In recent months, HMRC has also been using open-source research (such as published papers) to challenge claims — making robust, contemporaneous technical documentation more important than ever.
Unannounced site visits by HMRC have become more common, even for smaller claims. Businesses should be aware that:
HMRC cannot enter without permission unless they have tribunal approval.
If approached, it’s best to politely decline entry and contact your adviser immediately.
We’re encouraging all clients to understand their rights and to ensure their R&D documentation is in order throughout the year.
R&D doesn’t always mean creating something entirely new. Relief can still apply where existing technology is adapted for a new and technically challenging purpose. For example, a scaffolding firm developing a new modular safety system using known materials but requiring innovative engineering to solve stability challenges could qualify.
The key is demonstrating that genuine scientific or technological uncertainty existed and that the solution could not easily be deduced by a competent professional.
A few examples showing the scale and direction of R&D globally:
Chronic Pain Research Breakthrough (University of Oxford) – A 2025 study identified a new genetic link to chronic pain, paving the way for safer, non-opioid treatments. (Oxford University News, August 2025)
Net Zero Technology Outlook Report – The Government Office for Science published a major analysis on technology required to achieve the UK’s 2050 net-zero target. (GOV.UK, August 2025)
These examples remind us that innovation comes in many forms – from groundbreaking science to applied problem-solving in construction, manufacturing, and beyond.
The R&D tax relief regime remains valuable but complex. To make the most of it:
Keep detailed records of your R&D activity and technical challenges.
Submit claims promptly and track each accounting period separately.
Work with a specialist adviser who understands HMRC’s latest approach.
Be proactive in defending legitimate claims – as our scaffolding client’s success proves, persistence pays off.
If you’re facing an HMRC R&D enquiry, or you’re unsure if your projects qualify, our specialist team can help. Email Tim Johnson at innovation@pulse-accountants.co.uk or contact us here to discuss your situation confidentially.
We work with ambitious business owners who want to innovate and grow – partnering with you to understand your challenges, collaborate on your claim, and help your business thrive.