Pressure mounting on rogue R&D advisors after HMRC doubles down
HMRC has significantly increased its focus on Research and Development (R&D) tax relief claims due to a rise in what it considers fraudulent activity. Since 2020, HMRC’s accounts have been qualified by the National Audit Office in relation to fraudulent R&D claims, prompting greater scrutiny.
This intensified approach has included dawn raids and the arrest of advisors involved in fraudulent claims. The heightened scrutiny serves as a clear reminder to businesses and advisors that compliance with legislation and HMRC guidance is essential. It also emphasies the importance of selecting credible, well-established R&D agents and avoiding advisors who lack a proven track record.
Background: R&D tax relief fraud
R&D tax relief fraud typically involves companies and/or advisors making inaccurate or exaggerated claims for tax relief on research and development activities. As a result, HMRC has intensified its investigations, particularly focusing on advisors who may be assisting companies in submitting inaccurate claims.
Typical red flags for unscrupulous advisors include wholly unrealistic tax saving claims, approaches that pressure business owners into making contact, tie in periods of up to five years and fees for claims even when a customer has confirmed no research and development activities have been undertaken.
Recent HMRC activity and trends
HMRC’s compliance activity around R&D claims has risen sharply. HMRC revised the estimate of error and fraud in 2022-23 to £759 million down from £1.1billion in the 2025 accounts, now estimated as 9.9% of expenditure. Estimates for the errors in 2024-25 are sat at £481 million, with claims totalling £7.6 billion in the year (5.9% of related expenditure). Due to the time lag in claims being made and the changes in the structure of the relief HMRC do say that the estimates should be viewed as illustrative.
In late 2024, HMRC introduced a voluntary disclosure service for companies that have overclaimed R&D tax relief, part of a broader effort to combat misuse of R&D tax credits. In 2025, HMRC has continued its tougher stance by progressing with corporate prosecutions under the “failure to prevent facilitation of tax evasion” offence, which underlines that advisors and companies can face serious consequences if found to be involved in fraudulent or negligent claims.
Following the introduction of the additional claim form (‘AIF’) HMRC are reporting that they are more reactive to claims being made and enquiries are being raised in a timely manner. There are enquiries dating back to 2020 and the alternative dispute resolution team (‘ADR’) are overloaded with these claims.
The latest HMRC statistics, released in September 2025, confirm that enquiry levels remain high, and the R&D relief regime continues to be under scrutiny. Enforcement activity, including dawn raids and arrests, is expected to remain a central feature of HMRC’s approach in the current year.
Risks for businesses
With HMRC actively investigating suspected fraud, businesses that do not thoroughly review their claims risk being caught up in an enquiry, whether they are aware of any wrongdoing or not. The potential financial and reputational damage from an HMRC investigation can be significant, with penalties, backdated tax liabilities, and possible legal consequences. If a claim is being made it is advisable to take out tax investigation insurance to cover the cost of any enquiry.
Importance of proactive action
With HMRC increasing its enforcement activity, doing nothing is not a safe option for businesses involved in R&D tax relief. Proactively reviewing claims or advisors can help mitigate future risks and provide peace of mind. If there are any concerns about the accuracy of a claim or the credibility of an advisor acting on your behalf, it is important to address these issues before HMRC begins an investigation.
We are here to help
At Azets, we understand the complexities of R&D tax relief and the importance of submitting accurate claims. Our team of R&D and tax investigation specialists works with businesses to assess claims and ensure compliance with HMRC requirements. We offer comprehensive support from reviewing current claims to guiding clients through voluntary disclosures if necessary.
We can assess the validity of your claims, help you navigate any potential risks, and handle all communication with HMRC on your behalf.
If you have concerns about your R&D tax relief claims or HMRC’s strengthened approach, please get in touch via the form below or contact your usual Azets advisor.