Over the past few years the R&D tax relief schemes have undergone significant change, both in terms of the rules themselves and how HMRC applies them in practice. While the pace of change has now slowed, an increased level of scrutiny remains.
One consequence of this period has been a renewed focus on process, documentation and compliance. What has sometimes been overlooked, however, is that the core eligibility criteria for R&D tax relief has not changed. These fundamentals still underpin every claim and continue to form the basis on which HMRC assesses eligibility.
As part of our ‘Back to basics’ series, we’re revisiting these foundations starting with the technical eligibility criteria.
Although the legislation and guidance run to many pages, the technical eligibility criteria can be distilled down into six key points. To qualify, the work must:
There are other requirements – such as the work relating to the trade of the claimant company – but these six criteria are central.
Importantly, they have not changed despite the wider reforms to the R&D schemes.
HMRC defines an R&D project as “a number of activities conducted to a method or plan in order to achieve an advance in science or technology”. They also state that a project “may be part of a larger commercial project”.
So what does this mean for your client and their tax claim? Essentially, they must have planned their work and have set out to achieve an advance, rather than just doing day to day work and stumbling across it. This excludes the general tinkering and optimisation done by all companies to some degree, and requires a claimant company to be able to evidence that the work was planned and structured as required.
Where R&D forms part of a broader commercial project, only the activities that meet the R&D definition – and the costs that relate to them – can be included in the claim.
Projects do not need to align perfectly with the accounting period. Work that began before, or continued after, the period can still be included, provided qualifying activity took place during the year being claimed.
So what is an advance in science or technology? An advance is an increase in overall knowledge or capability in a field of science or technology. HMRC’s guidance lists four areas of activity in which an advance might be sought, including:
The scale of the advance does not need to be significant. What matters is that achieving it requires overcoming some level of technological uncertainty.
Simply put, a project has technological uncertainty if your client was unsure at the outset whether it was scientifically possible, or technically feasible, to achieve the desired result. This usually involves some level of both commercial and financial risk, and competent professionals scratching their heads.
Your clients must also be comfortable that the advance sought is for the industry as a whole, that the resolutions to the technological uncertainties are non-trivial and that the information on how it might be achieved was not available in the public domain. This does mean that if another company has achieved the advance, but how they did it is a protected trade secret, your client can still claim for work involved in replicating their competitor’s advance.
Having mentioned overall advances and the need for resolutions to be non-trivial, it’s now time to think about the project baseline. Essentially, the company needs to show that the advances made are for the industry as a whole and not just the claimant company, and that they advance a science or technology.
The only way to do this is to understand and articulate the baseline, which is the state of knowledge, capabilities or capacity of the underlying science or technology at the outset of the project.
The key point here is that you need to think about the overall baseline, not just for one company, or even one sector. For example, for a software claim, it’s not enough that the functionality sought hasn’t been achieved in this particular application or sector, but it must have either never been achieved or been achieved, but the information on how to achieve it must not be in the public domain.
Once you’ve identified the baseline, advances and uncertainties, you then need to look at the actual work carried out to achieve the advances. This work must be technical and have been carried out according to standard scientific or technological methods.
This is generally self-evident, especially where the advance is well-defined, but some projects can fail at this hurdle. For example, a company might be seeking to make an advance but then choose to pay for IP which enables them to achieve the advance without any difficulty or experimentation.
Lastly, but by no means least important, the work must be led by competent professionals. The definition of a competent professional can vary across different sectors and industries, but HMRC expects all competent professionals to:
There’s no requirement for competent professionals to have a specific level of education, or experience, as long as they meet the above criteria.
Next week, we’ll be sharing part 2 in this series of blogs, and focusing on how to approach writing a strong technical narrative.
WhisperClaims provides a structured framework that ensures the right questions are asked for every claim, every time. Our dynamic compliance engine helps advisers gather the information needed to assess eligibility consistently, and in line with HMRC expectations.
If you’re reviewing how eligibility is judged under increased scrutiny, or preparing for your first claims under the new regime, our upcoming webinar explores these foundations in more detail.
Join us for our “R&D tax claims after the reset: Re-examining eligibility evidence costs & benefit” webinar to revisit the fundamentals.
Wednesday 14 January 2026 | 12 noon
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