Updated 13th July 2025
As a creative business owner, you know better than anyone the level of innovation and experimentation your industry requires. This is the exact business model that R&D tax credits were designed to reward.
While R&D claims can be hugely rewarding, there’s also some risk involved you need to be wary of. From the high penalties of faulty claims to rogue advisory companies leading SMEs astray, here’s why we always recommend consulting with an accountant before you file your R&D claim.
What Are R&D Tax Credits (And What’s New in 2025?)
R&D tax credits are a valuable way for UK businesses to reclaim some of the costs linked to innovation, whether that’s developing new products, improving existing processes, or experimenting with technology.
Introduced in 2000, this scheme by HMRC incentivises businesses in the UK to spend money advancing science and technology by lowering their Corporate Tax liability or exchanging an enhanced loss for cash in hand. However, getting the right R&D tax credit advice can prove tricky.
And in 2025, the rules are tighter. HMRC is cracking down hard on errors and fraud, with over £4 billion lost in recent years due to questionable claims. There are also new moves to require advance assurance in certain sectors and potential registration requirements for R&D advisers.
You could over or under claim by not understanding eligible expenses
Often, we have clients tell us they’ve never filed for R&D tax credits before because it all seemed too difficult. We get this. R&D’s reputation for being complicated and easy to mess up is fairly accurate. And while you don’t want to miss out on money that’s rightfully yours by under-claiming, you also don’t want to risk the wrath of HMRC and receive hefty penalties for over-claiming.
The best way to avoid under or over-claiming is by getting R&D tax credit advice from an expert you trust. We’ve helped creative business owners see a huge deal of success with their R&D claims in the past, because we know what to look for, what documentation to produce and what expenses to track so you get what you deserve and not a penny less.
Some costs HMRC allows to be claimed for R&D include:
- Employee costs
- Subcontractor costs
- Software
- Consumable items
However, a cost only qualifies for R&D tax relief if it was incurred solely and exclusively in the pursuit of that new or improved product, process or service. Your new laptop can’t be written off as an R&D expense if you’re also using it to send emails.
Similarly, we recommend against trying to claim 100% of an employee’s salary as related to R&D. Everyone does some degree of admin work, spends hours in internal meetings or works on multiple projects throughout the day. Know exactly how much of employee costs can be attributed to R&D through detailed and segregated time sheets.
Finally, some costs you can NOT claim for R&D are:
- The production and distribution of goods and services
- Capital expenditure
- The cost of land
- The cost of patents and trademarks
- Or rent
HMRC is cracking down on R&D tax fraud
R&D tax credits have been in the news a lot recently, and sadly not for all good reasons. HMRC recently had to announce that the payment of some research and development claims would be paused while they conducted a large-scale fraud investigation.
They’ve also put new measures in place in a bid to crack down on R&D tax fraud, including capping how much a company can claim if more than 15% of its expenses are paid to subcontractors..
This is all off the back of the 2020 case in which three men were jailed for a total of 21 years after making a fraudulent £29.5 million R&D claim.
With an estimated £311 million in fraudulent or incorrect claims just last year, it’s no wonder HMRC is letting business owners know they’ll be examining each R&D claim very closely.
Of course, as long as you stay compliant, follow the rules and receive sound advice, you have nothing to worry about. But not every person who claims to be an expert can be trusted.
Rogue advisory companies could land you in hot water
The R&D tax credit market is entirely unregulated. Unlike to become a chartered accountant, there are no degree or qualification requirements, meaning just about anyone can set up an R&D tax credit company, claim to be an expert and try to turn a profit. Doing so without R&D tax credit advice is highly inadvisable.
What are the risks of using an unqualified R&D tax adviser?
In 2021, HMRC noted a rise in these rogue R&D advisors in their R&D Tax Relief report. With no background in tax or a membership to any professional bodies, these advisors will cold-call SMEs to suggest they make a claim, “tak[ing] advantage of customers who are unfamiliar with claiming for R&D, often charging on a commission basis, and submit[ting] numerous dubious claims.”
And you can be sure these ‘advisors’ won’t stick by your side if HMRC doubts your claim and decides to conduct an audit. With the ability to administer fines retrospectively, up to seven years after a claim’s been submitted, and no closed penalty scheme for R&D tax credits, the wrong advice could end up costing you tens if not hundreds of thousands of pounds.
How to Choose the Right R&D Tax Credit Adviser in 2025
- Look for memberships with recognised bodies like ICAEW or ACCA
- Avoid commission-based fees that eat into your claim
- Ask for proof of handling HMRC enquiries successfully
- Check their experience in your specific sector
- Beware of cold calls promising quick, guaranteed payouts
- Stick with a qualified accountant to make your claim
Why Use a Qualified Accountant or Adviser?
As we have already discussed, the R&D advisory market isn’t regulated. That means anyone can say they’re a specialist. But not everyone has the expertise (or integrity) you need.
Choosing the wrong adviser can put you at risk of:
- Rejected claims
- Paying back credits with interest and penalties
- Lengthy HMRC investigations that distract you from running your business
Frequently Asked Questions About R&D tax credits
Can I claim R&D tax credits myself in the UK?
Yes, you can file your own R&D tax credit claim. However, many businesses find it helpful to work with an accountant to avoid mistakes and maximise the claim.
Who can help with an R&D tax credit claim?
Qualified accountants are the best people to help. They understand the complex rules, prepare the necessary documentation, and can represent you if HMRC opens an enquiry.
Using an unqualified adviser can lead to incorrect claims, rejected refunds, penalties, and even lengthy HMRC investigations. It’s important to choose someone with recognised professional credentials and experience.
What happens if my claim is challenged?
You may need to repay the credit plus interest, and possibly penalties if HMRC finds serious errors.
What is advance assurance for R&D claims?
Advance Assurance is a voluntary HMRC process where you submit details of your R&D activities before making a claim. It helps HMRC confirm that your project qualifies, giving you greater confidence and potentially speeding up the claim process. In some high-risk sectors, HMRC is considering making this mandatory.
Is advance assurance mandatory now?
Not for all businesses, but it’s increasingly expected in certain industries.
Our Advice for Making a Claim
With R&D tax credits more complex than ever, working with a trusted accountant who knows the latest rules can save you time, stress, and money.
Get support from a team you can trust. At Raedan, we are expert accountants for the creatives and our mission is to clear away the financial stressors and obstacles that bog you down so you can focus on your grand creative vision.
If you’re still not sure you’re eligible for R&D tax relief, or would like to chat more about how we can support you with a claim, start by filling out this form and take the first step to better business finances.
