R&D tax relief claim numbers fall by a fifth in 22-23

New figures released by HMRC today show that the provisional number of claims for R&D tax relief declined by 21% in 2022-23.

However, the estimated amount of total research and development (R&D) tax relief claimed for the tax year 2022 to 2023 was £7.5bn, an 1% rise from the previous year. This corresponds to £46.7 bn of R&D expenditure, 4% higher than in the previous year.

The figures show there was an above average drop in the number of smaller claims (up to £15,000), but an increase in the number of claims above £250,000 which has resulted in a 28% rise in average claims value.

Carrie Rutland, head of innovation incentives policy at BDO said: “Against the backdrop of widespread concerns around error and fraud in R&D claims, today’s figures which show a decline in R&D claims in 22-23 may well reflect the impact of greater scrutiny by HMRC.

“This is likely to have led to a reduction in speculative claims during the year – and we may expect these to reduce further in 23-24.

“Recent reports that 11 people have been arrested on suspicion of R&D tax relief fraud suggest that the tax authority is continuing with its tougher approach to stamping out incorrect or fraudulent claims.

“However, there are some concerns, particularly among innovative small businesses, that the system is being tightened too far, with businesses thinking twice about making legitimate claims amid worries that defending those claims at a later date may not be cost effective.

“Companies carrying out genuine in-scope R&D shouldn’t be put off from claiming but they do need to ensure that their claims are valid and compiled accurately.”