Introduction:
The landscape for UK research and development tax relief has shifted significantly. With the establishment of HMRC’s upcoming expert advisory panel, innovation-driven companies face both fresh opportunities and heightened scrutiny. Understanding what’s changing, how it affects your operations and how to prepare is now vital for high-growth clients, especially in the tech space.
What is the HMRC R&D expert panel, and why was it established in 2025?
The Government confirmed in the Spring 2024 Budget that it will establish an R&D Expert Advisory Panel, expected to be operational from Autumn 2025. The panel aims to refine how claims are assessed, ensure consistent interpretation of qualifying activities and provide sector-specific expertise.
What triggered HMRC to form this expert panel?
HMRC’s 2023–24 report shows error and fraud estimated at 9.9% (£759 million) for 2022–23. For 2023–24, further figures estimate SME non-compliance at ~14.6% with overall non-compliance ~7.8%, though HMRC has not yet confirmed final figures as per GOV.UK.
Given rising scrutiny and a fall in claim numbers, the Government’s goal is to bolster genuine innovation and improve claim quality through independent oversight.
Who sits on the panel and what sectors do they represent?
While HMRC has not publicly listed all members in full detail, the panel comprises independent specialists drawn from industry, tax advisory and academia, covering sectors such as technology, life sciences, manufacturing and digital innovation. (International Tax Review) This variety ensures a balanced understanding of innovation across industries.
What does the panel actually do?
The Expert Advisory Panel is expected to meet regularly (for example, quarterly) to provide sectoral insight and support HMRC’s R&D policy and guidance, but it will not decide individual claims.
Its remit includes:
- advising on definitions of eligible R&D activities
- reviewing emerging technologies and how they fit within the relief framework
- informing HMRC’s guidance, compliance and policy communication
How have R&D tax relief rules evolved in recent years?
The UK R&D tax relief regime has undergone extensive reform since 2023. These changes include merging schemes, new rates, higher documentation standards and tighter compliance checks, all aimed at simplifying the system, improving transparency and reducing abuse.
What are the key reforms businesses need to know (2023–2025)?
- From accounting periods beginning on or after 1 April 2024 the SME and RDEC (Research and Development Expenditure Credit) schemes are merged into a single R&D scheme.
- Under the Enhanced R&D Intensive Support (ERIS) scheme for accounting periods beginning on or after 1 April 2024, loss-making SMEs whose R&D spend is at least 30% of total expenditure may claim a cash credit worth up to ~27% of qualifying spend.
- The Additional Information Form (AIF) and agent declaration requirements increase transparency.
- HMRC compliance focus: non-compliance remains a priority after 2023 fraud/error estimates of ~9.9%.
How does the new system affect SMEs and scale-ups differently?
SMEs now face a more demanding claims environment: while relief remains available, qualifying criteria are stricter and documentation expectations higher. Larger companies under the merged scheme may benefit from more uniform treatment but still face detailed scrutiny. For high-growth tech clients, proactive preparation is critical.
What documentation is now essential for compliance?
Projects must clearly demonstrate:
- technical or scientific uncertainty and experimentation (not routine improvements)
- robust cost allocation, including payroll, subcontractors and consumables
- a narrative linking project activities to technological advance
- retention of evidence such as timesheets, project logs and technical briefs
Failing to maintain complete records risks claim adjustments or rejection.
Why is R&D tax relief still critical for high-growth and tech clients?
Despite the tightening compliance regime, R&D tax relief continues to be one of the most powerful financial levers for innovative firms to boost cash flow, reinvest and scale sustainably.
What kind of ROI can tech scale-ups expect from R&D claims?
The net benefit of R&D tax relief for SMEs before April 2023 was around 24.7%, but under the merged scheme this has fallen to roughly 15–16.2% on average. According to HMRC’s latest statistics (September 2024), qualifying R&D expenditure was close to £47 billion in recent years, though exact figures for 2022–23 may differ slightly.
How does tax relief strengthen innovation strategy?
- Improves liquidity: relief can convert losses into cash or offset payable tax.
- Builds investor confidence: shows governance discipline around innovation spending.
- Enables risk-taking: companies can trial, develop and scale innovation without overextending capital.
What common misconceptions stop founders from claiming?
- “Only lab-based R&D qualifies” – The real criterion is technical uncertainty, not lab work.
- “Software doesn’t count” – it can, if it advances technology in functionality or efficiency.
- “We’ll document later” – delaying documentation raises audit risks and weakens evidence.
How will the new expert panel change R&D claim reviews and decisions?
The panel’s formation represents a step toward consistent and expert-led interpretation. Expect fewer arbitrary reviews and more technically informed discussions around what qualifies as innovation.
Will it make the process stricter or simpler?
Likely both. Clearer guidance may streamline claims, but the evidence bar will rise. Firms that maintain strong documentation can expect smoother reviews; speculative claims will face greater challenge.
How might audit and inquiry rates change under the panel’s oversight?
HMRC’s non-compliance for 2023–24 is provisionally estimated at ~7.8% overall, with SMEs around 14.6%. With expert insight improving risk profiling, audits may become fewer but more detailed, focusing on substance over form.
What early trends are emerging since the panel’s creation?
Early feedback from advisers indicates improved communication between industry and HMRC, as well as a shift toward supporting genuine innovation over volume-based claims. This is a promising direction for quality-driven firms.
What can businesses do now to prepare stronger R&D claims under new scrutiny?
As compliance standards rise, companies, particularly high-growth and tech-led, must embed claim readiness into their project management processes.
What should be documented from day one of an R&D project?
- Problem statements outlining technical uncertainty.
- Experimentation logs showing iterations, results and learnings.
- Technical milestones tied to measurable outcomes.
- Cost tracking that aligns financial and project data.
How can finance teams and engineers collaborate more effectively?
- Set up project accounting codes for each R&D initiative.
- Use cloud integrations (e.g., Xero, QuickBooks) to automate data capture.
- Conduct quarterly cross-functional reviews to align costs with progress.
- Keep a living R&D narrative document updated in real time.
What are the most common HMRC red flags to avoid?
- Generic project descriptions lacking evidence of uncertainty.
- Non-qualifying costs (e.g., marketing, aesthetic design).
- Subcontractor claims unsupported by innovation work.
- Poorly documented payroll or project time allocation.
By addressing these proactively, high-growth firms reduce risk and improve claim credibility.
How does OD Accountants help clients navigate the new R&D environment?
At OD Accountants, we help high-growth and innovation-led companies not just claim R&D relief but integrate it strategically within their financial operations.
What makes OD Accountants’ R&D approach different?
- Specialist insight bridging finance and technology.
- Evidence-first process that ensures claims are audit-ready throughout development.
- Up-to-date knowledge of HMRC guidance and expert panel expectations.
How does cloud accounting enhance claim accuracy and traceability?
- Tracks eligible spending in real time.
- Integrates project data and financials for full visibility.
- Produces automated reports aligned with HMRC requirements.
What measurable outcomes have clients achieved?
- Claim preparation time cut by ~30%.
- Reduced requests for additional evidence from HMRC.
- Stronger cash-flow forecasting and strategic funding alignment.
What’s next for R&D tax relief in the UK?
The establishment of the R&D Expert Panel signals a shift toward a more transparent, collaborative regime balancing compliance with innovation incentives.
Will new guidance or legislation emerge in 2026?
Yes, the panel’s first insights are expected to inform HMRC and Treasury policy from 2026, potentially introducing updated eligibility criteria and sector-specific guidance.
How can companies stay ahead of ongoing changes?
- Subscribe to HMRC’s official R&D updates.
- Partner with advisers tracking panel outputs and legislative trends.
- Run internal R&D readiness audits annually.
- Integrate innovation strategy with tax planning from project inception.
Conclusion: Why proactive R&D claim strategy matters now
The formation of HMRC’s Expert Advisory Panel represents both a safeguard and an opportunity. For innovative businesses, evidence-based R&D claims will become the new standard. Those embedding compliance into their innovation cycles will unlock sustainable relief, while others risk delay or rejection.
Take action now: Book your complimentary R&D Relief Readiness Call with OD Accountants to assess your documentation, eligibility, and strategy ahead of your next claim.
Frequently Asked Questions
Q1: How long does an HMRC R&D claim usually take in 2025?
Typical turnaround is 6–8 weeks for standard claims, though complex cases may take longer.
Q2: What are the penalties for inaccurate R&D claims?
If HMRC finds a claim incorrect due to error or negligence, you may face repayments plus interest and penalties of up to 100% of the tax benefit.
Q3: Are AI-driven innovations eligible for R&D relief?
Yes, provided the work involves a technological advance and addresses uncertainty beyond routine software development.
Q4: Can startups with no profits still benefit from R&D tax relief?
Yes. Loss-making SMEs can claim a cash credit under the merged scheme or ERIS if eligible.
Q5: How often should companies review their R&D documentation?
Quarterly reviews are best practice to align financial and technical records and stay audit-ready.