Accountants report rise in blocked R&D claims amid new HMRC rules

More than three quarters of accountants have seen clients blocked from claiming research and development (R&D) tax relief after failing to notify HM Revenue and Customs (HMRC), according to a new survey from ForrestBrown.

The survey found that 78% of accountants reported clients missing out on claims due to lack of awareness around new notification requirements.

The changes, introduced as part of a merger of R&D schemes, require some businesses to notify HMRC of their intention to claim within a set timeframe. Failure to do so can invalidate a claim, even if the business is conducting eligible R&D activity.

The survey found that 80% of accountants stated that preparing claims now takes longer than a year ago, with over a third reporting a “significant” increase in time. 

As a result, more than three quarters had invested in additional training to keep up with regulatory changes.

Complexity around the claims process was also highlighted. More than half of respondents cited HMRC enquiries as a major pain point for clients, while 55% said writing project descriptions for the mandatory Additional Information Form was a challenge. 

Furthermore, nearly two thirds said determining eligibility for contracted out R&D was among the “most difficult” aspects of the new guidance.

Kelly Oakley, associate director at ForrestBrown, said: “Unsurprisingly, changes made to the R&D tax relief incentive are creating challenges for accountants and their clients alike. More work is needed to put together a robust claim that meets HMRC requirements, and the new rules create complexity.

“This is prompting some accountants to review how they provide R&D tax advice which for some means choosing to partner with a specialist to supplement their own expertise.”