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In recent years, Research and Development (R&D) tax relief has become a valuable incentive for innovative UK businesses—particularly those in the software and technology sectors. However, HMRC has significantly changed its approach to reviewing claims, and software companies are now facing tougher scrutiny than ever before.
If your business is writing code, developing systems, or building software platforms, it’s more important than ever to understand how these changes affect your eligibility—and your risk.
The R&D Relief Landscape Is Changing
R&D tax relief was designed to reward companies solving genuine technical or scientific problems. In principle, that includes qualifying software development—especially when creating new systems, overcoming technological limitations, or advancing existing capabilities.
But HMRC has grown increasingly concerned that too many software R&D claims are of poor quality, lacking evidence, or simply incorrect.
As a result, they have significantly tightened enforcement:
- More in-depth investigations and audits
- Longer delays in processing claims
- Reassessment and clawback of previously approved claims
These developments mean the burden of proof is now much higher—and your business needs to be prepared.
What HMRC Expects Now
Submitting a successful claim is no longer just about describing innovation. HMRC is placing a strong emphasis on:
- Documented technical uncertainty: You must show the work tackled challenges that were not readily solvable by competent professionals.
- Detailed technical reports: These must clearly explain the problem, your approach, and the breakthroughs involved.
- Clear cost attribution: There should be transparent links between your R&D activities and the qualifying expenditure.
If your project doesn’t meet these standards—or if the supporting evidence is weak—your claim may be delayed, denied, or even investigated.
New Rules in 2024: Even Stricter for Software
The 2024 updates to the R&D scheme introduce even stricter compliance requirements—particularly for software firms. Key changes include:
- Mandatory digital submissions with more granular detail
- Greater emphasis on contemporaneous record-keeping
- Tighter definitions of qualifying R&D activities, especially around routine development or commercially-driven projects
In short, claims that may have previously been accepted are now at far greater risk of rejection or challenge.
The Risks of Getting It Wrong
The cost of an unsuccessful claim isn’t just a missed refund. Businesses may also face:
- Unexpected tax bills, if claims are clawed back
- Interest and penalties on disallowed claims
- Full-scale HMRC investigations, which can be time-consuming and disruptive
For many tech firms, especially SMEs, this could pose a serious threat to cash flow and business continuity.
How Black & White Accounting Supports Software Businesses
At Black & White Accounting, we specialise in helping technology and software companies secure R&D relief safely, strategically, and compliantly. Our R&D tax support includes:
- Initial eligibility assessment, so you only claim what you’re genuinely entitled to
- Expert preparation of technical reports, written to meet HMRC’s expectations
- End-to-end claim management, including defending your claim in the event of an enquiry
We ensure your claims are not only compelling, but also fully backed by the right evidence, giving you confidence and peace of mind.
Claiming R&D relief? Make sure you’re doing it the right way.
Before you hit submit, speak to Black & White Accounting. We’ll help you maximise your claim while protecting your business from unnecessary tax risk.
