The operational gap in R&D Tax: Where good claims break down

Date:
Fri, 14 Aug 2026 14:45:36 +0000

Description:
The global stage of innovation is once again shifting, and where Silicon Valley once dominated over all, other equally powerful regions are rising up to challenge it.

FULL STORY ======================================================================Copy link Facebook X Whatsapp Reddit Pinterest Flipboard Threads Email Share this article 0 Join the conversation Follow us Add us as a preferred source on Google Newsletter Subscribe to our newsletter The global stage of innovation is once again shifting, and where Silicon Valley once dominated over all, other equally powerful regions are rising up to challenge it.

Sadiq Khan recently spoke out on the dynamic politics in the US and claimed
it was a key reason why tech talent and VC is being driven to the UK in competition against Silicon Valley. As more investment and talent are drawn
to the UK, the volume of R&D activity carried out here will only grow, and with it, the number of businesses turning to R&D tax relief to fund that innovation. Latest Videos From TechRadar Watch full video here:

But under the watchful eyes of HMRC, whose growing scrutiny is felt by all across the industry, the need for robust claims is more important than ever. Vishnu Pillai Social Links Navigation

Head of Tax and Claim Operations at EmpowerRD. R&D activity must be properly captured and evidenced, yet while the underlying innovation is real and substantive, the claims can run into trouble. You may like Quarterly tax reporting is here is HMRC ready? Britains AI problem isnt innovation, its execution The scale-up playbook is broken. Here's what replaces it

If the documentation was incomplete, the evidence was gathered
retrospectively in a rush, and the finance and technical teams had never properly aligned on what needed to be captured or when, the claim is left operationally weak.

This is where strong, solid R&D activity is undermined by the operations and processes behind the claim. Are you a pro? Subscribe to our newsletter Sign
up to the TechRadar Pro newsletter to get all the top news, opinion, features and guidance your business needs to succeed! Contact me with news and offers from other Future brands Receive email from us on behalf of our trusted partners or sponsors By submitting your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over. The R&D disconnect In my experience, the most common point of failure is rarely businesses
technical knowledge. Theres often a disconnect between those individuals conducting R&D and the people preparing the claim. If we think about it, technical and engineering teams do not naturally think in the language of tax legislation and why should they?

Its not in their wheelhouse, and frankly, it isnt a requirement of their day-to-day role. Equally, finance and tax functions often do not have the depth of technical understanding needed to translate innovation activity accurately into a compliant claim. This gap can leave the whole process vulnerable.

The challenge that businesses face is compounded by poor documentation and reactive evidence gathering, which remain some of the biggest operational weaknesses across the market. HMRC has been increasingly clear that it
expects evidence captured at the time the R&D activity occurs, not reconstructed after the financial year has closed, as this leaves it open to incorrect recall and inaccuracies. What to read next How governance gaps are creating a shadow AI risk for finance leaders The AI trust gap: No scaling without quality management Europe's trillion-dollar tech giant hides a much bigger obstacle

My advice to any business approaching its R&D claim in 2026 would be listen
to HMRC, take it seriously and be proactive. Think about your R&D activities and how you are recording them throughout the year, not just at year end. The pressure created by increased HMRC scrutiny The R&D tax ecosystem has undergone substantial change in recent years, with the introduction of the merged scheme, changes to rates, new compliance requirements, and all under the shadow of HMRCs growing scrutiny.

Its approach is far more rigorous, more targeted and its more likely to release enquiries into claims today than it was five years ago. The merged scheme is designed to bring greater consistency and clarity for businesses making claims, but in the short term, navigating HMRCs expectations requires more robust operational processes.

The critical word is quality. For todays claimants, this means ensuring
claims are compliant with legislation and carry minimal risk of enquiry. It also means the quality of service, so making it as easy as possible for teams to provide the information needed for the claim, ensuring nothing is missed and maximizing the claim from a compliance perspective.

Those two things should work in tandem to successfully create a robust claim that doesnt demand unnecessary workload from those involved and ultimately produces a better outcome. Establishing the conditions to claim with confidence As a means of making the claims process easier, businesses have turned to AI . There are well-documented, tangible benefits to deploying this technology across the claims process, but only when its tightly cornered off with guardrails. Yes, AI tools can make the compilation of claims faster and smoother, but when its used to write the narratives and technical descriptions, theres a greater risk of inaccuracies, and its something that HMRC is cracking down on. The technology is only as good as the underlying data and the human judgement applied to it.

But were clearly heading in the right direction. HMRCs new levels of scrutiny are ultimately there to set a better standard for R&D claims and filter out those with false claims. We exist in a volume-driven era, where the focus has previously been to build and submit claims quickly and at scale, rather than prioritizing quality. The UK has so much to offer when it comes to
innovation, and the shifts taking place reflect a broader maturing of the market as we cement our place on the global stage.

Any business destined to become the foundation of the countrys global success is investing their own R&D processes, giving their innovation the backing it deserves to enable cyclical investment from R&D tax relief. We know the operational gap is where good claims break down, so closing it is where the real competitive differentiation now lies. We list the best UK tax software . This article was produced as part of TechRadar Pro Perspectives , our channel to feature the best and brightest minds in the technology industry today.

The views expressed here are those of the author and are not necessarily those of TechRadarPro or Future plc. If you are interested in contributing find out more here: https://www.techradar.com/pro/perspectives-how-to-submit



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