Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to improve the effectiveness of the initial assessment process for research and development tax relief claims.

All Research and Development (R&D) claims go through a risk screening process to determine which need further checking, with the majority paid without a formal compliance check.

Where risks are identified, HMRC opens compliance checks to investigate the claims, within established legislative time limits and with wider taxpayer safeguards such as appeal rights. Where a check is opened into a claim that on further investigation is found to be fully eligible, HMRC aims to close its check and approve the claim as quickly as possible.

HMRC has required claimants to submit an Additional Information Form as part of their claim since August 2023. The information provided in these forms enhances HMRC’s risking process by helping to more accurately identify claims that may not be compliant and reduces the risk of valid claims being picked up for a compliance check.

To strengthen the administration of the reliefs and provide businesses with greater certainty the Government announced at the Autumn Budget that it will explore widening the use of advance clearances for R&D reliefs.