HMRC launches new R&D eligibility tool, a useful starting point, but professional advice remains essential
HMRC has introduced a new online tool to assist businesses in assessing whether their projects may include activities that qualify as research and development (R&D) for tax purposes. The tool is based on the Department for Science, Innovation and Technology (DSIT) Guidelines and HMRC’s Guidelines for Compliance (GfC3), and is intended to support potential claimants in understanding how the definition of R&D applies to their work.
The tool presents a series of “yes” or “no” questions designed to help users identify whether their project might qualify. It also supports HMRC’s view that a “competent professional” should be involved throughout the process to accurately determine eligibility. In this respect, it acts as a helpful tool for businesses new to R&D tax relief and those looking for an initial indication of whether their activities are likely to fall within scope.
A useful gatekeeper, but not a substitute for expert input
Feedback from members of our team suggests that the tool functions well as a gatekeeper. It offers a clear and accessible means of exploring whether a project may qualify for R&D tax relief, but its purpose is limited. The tool does not assist in preparing the supporting technical documentation required by HMRC, ensuring that the explanations are clear and precise, or identifying all relevant aspects of a qualifying project.
Furthermore, the tool does not provide guidance on any financial matters, such as calculating eligibility. The output should therefore be viewed as an indicator rather than a conclusion. A positive result does not guarantee that a claim will be successful, nor does a negative result necessarily mean that qualifying R&D is absent.
As one member of our team made the helpful comparison of:
“It’s the equivalent of paying to go to a music festival without knowing which bands are playing – you’ll get in, you’ll hear music, but you won’t know whether you’ll be happy with the outcome.”
Suitable for claimants, less so for advisers
While the tool provides a useful starting point for claimants and is much simpler than reviewing and understanding the full HMRC guidance, it is overly simplified and of limited use for experienced advisers or established claimants. The yes or no structure of the questions may lead to false negatives, particularly for projects that involve complex scientific or technological uncertainties.
Our assessment
The introduction of this tool in our eyes is a warm and welcome step towards greater clarity and accessibility in the R&D tax relief regime. It suggests that HMRC is committed to making the R&D tax scheme more accessible to those without prior knowledge.
However, determining whether a project qualifies as R&D remains a complicated process that requires detailed technical and financial assessment. The tool should therefore be used as a starting point and further used in conjunction with a qualified R&D tax specialist.
Engaging with an adviser ensures that claims are comprehensive and compliant, providing both assurance and the best possible outcome for businesses. You can view the tool here.
How MSC R&D can help
At MSC R&D, we work with cybersecurity companies with our team of PhD-qualified technical analysts with hands-on CTO experience who accurately identify all qualifying R&D activities and ensure claims are fully defensible.
Before submission, every claim undergoes our internal QA process, including review by former HMRC inspectors, one of whom co-authored the R&D guidelines, ensuring compliance with HMRC’s evolving standards. Our ISO 27001:2022 and ISO 9001 certifications reflect our commitment to both data security and service excellence.
