Research: Tax Allowances
The question
To ask the Chancellor of the Exchequer, how many R&D tax relief claims have been rejected in each year since 2015; and how many of those have been successfully appealed.
Answered by James Murray
In October 2024, HMRC released operational data in the Approach to Research & Development Tax Reliefs 2023-2024 publication. This includes data from 2022-2023 and 2023-2024 on the number of R&D enquiries, the proportion of claims requiring adjustment and data on appeals. This publication represents the most comprehensive data on R&D compliance activity and is not available for previous years.
This publication also included customer service data on processing times and the average time to complete a compliance check. HMRC processed 92% of claims within 40 days in 2023-2024. Processing means paying the claim, making contact to request further information, or refusing the claim, and, for claims identified as high-risk, starting an appropriately targeted compliance check.
The table below provides final and illustrative estimates of the cost of error and fraud in the R&D tax reliefs since 2020-2021.
| Final estimates 2020-2021 (£m) | Final estimates 2021-2022 (£m) | Illustrative estimate 2022-2023 (£m) | Illustrative estimate 2023-2024 (£m) |
SME scheme | 1,038 | 1,203 | 1,003 | 475 |
RDEC scheme | 90 | 134 | 48 | 125 |
Overall | 1,127 | 1,337 | 1,050 | 601 |
The Mandatory Random Enquiry Programme approach introduced for small and medium sized enterprises represents good practice in the measurement of error and fraud, and involves a detailed inspection of a representative sample of claims filed. These estimates are published in HMRC Annual reports and Accounts and previous reports can be found at gov.uk at: HMRC’s Annual reports and Accounts.
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