HMRC are continuing their crackdown on the R&D Tax Credit scheme, with new rules taking effect in April 2023.  The stated goals of these changes are:

  • To Modernise the regime by extending the relief
  • To refocus the incentives on UK-based R&D
  • To improve compliance by deterring fraud and errors
  • Resolve design flaws of current rules


As of April 2023, the following are now claimable under R&D relief:

  • License payments for data
  • Cloud computing costs
  • Staff costs for employees engaging in data analysis and collection


  • Subcontracted work will now only qualify where the subcontractor carries out work within the UK.
  • Payment to externally provided workers (EPWs) will only qualify where workers are on a UK payroll.


HMRC have become concerned about the extent of fraud within the system due to a mismatch between the amount of R&D reported by the Office of National Statistics and the amount claimed with HMRC.

  • All claims must now be digital and will require more extensive detail (they have not yet clarified what this will be)
  • All claims must now be signed by a senior officer of the company
  • The company must notify HMRC in advance that they plan to make a claim (no word on the timelines here)
  • Any agents involved in the claim must identify themselves


The biggest practical changes are the requirement to notify HMRC in advance.  This will heavily disadvantage any companies which have missed R&D relief due to ignorance of the scheme.  It appears these missed claims can no longer be claimed for retrospectively.  The other large change is the refocus on UK expenditure only being allowed.  Outsourcing has always resulted in lower relief; it appears that this was seen as insufficient by HMRC.