R&D tax relief has long been a key feature of the UK’s innovation policy, offering companies financial support through reduced corporation tax liabilities or, in some cases, a payable credit.
For businesses investing in qualifying R&D, it is intended to ease the cost of innovation and encourage further development.
In Scotland, the relief is particularly relevant across sectors such as life sciences, energy, advanced manufacturing and technology. For many businesses operating in these fields, it remains an important source of support for investment in new products, processes and services within an increasingly competitive global market.
A changing claims landscape
HMRC’s R&D statistics, released in September 2025 and covering claims up to the 2023 to 2024 period, show a clear shift in the profile of claims across the UK. Claim volumes have fallen sharply, while the average claim value has risen by 33% year on year. At the same time, the total value of relief claimed has declined only modestly.
Taken together, these figures suggest that fewer businesses are claiming, but those that do are making larger claims. That points to continued underlying R&D activity, even as participation in the regime narrows.
Scotland and the wider UK
Scotland broadly reflects the wider UK picture. Claim volumes have fallen, average claim values have increased, and the overall value of relief accessed has remained relatively stable.
This suggests the drivers are systemic rather than regional. Changes in HMRC policy, increased compliance activity and additional administrative requirements appear to be shaping claimant behaviour across the UK, including in Scotland.
Why claim volumes are falling
The decline in claims is not surprising. In recent years, HMRC has taken a firmer approach to tackling error and fraud in the R&D regime, with more compliance checks, additional administrative requirements such as claim notification rules and more detailed submission obligations, and increased scrutiny of areas seen as higher risk.
These steps are widely seen as necessary to protect the integrity of the regime. At the same time, they have increased the perceived difficulty of making a claim.
For many businesses, particularly SMEs without in-house tax expertise, this has created greater uncertainty. Some prospective claimants may decide not to proceed at all if they are unsure whether their activities qualify. Others, including businesses that have claimed before, may become more cautious because of the risk, cost and time involved in defending a claim under enquiry.
The result is that, while HMRC may be reducing non-compliant claims, some genuine claimants may also be stepping back from relief to which they are eligible.
Advance Assurance as a response to uncertainty
Against this backdrop, HMRC has increasingly focused on measures intended to provide businesses with greater certainty. One such mechanism is Advance Assurance.
Advance Assurance is a voluntary service that allows eligible SMEs to obtain HMRC’s agreement in advance that their planned R&D activities meet the requirements for tax relief. In principle, it offers reassurance before a claim is submitted and should help reduce uncertainty for businesses considering whether to engage with the regime.
In practice, uptake has been extremely limited. In 2023 to 2024, fewer than 1% of eligible companies applied, suggesting that awareness is low and that some businesses may still view the process as difficult to access or unlikely to succeed.
The 2026 Targeted Advance Assurance pilot
Following consultation, HMRC launched a 12-month Targeted Advance Assurance pilot in May 2026. The initiative is intended to increase engagement with the regime and provide earlier certainty in areas where businesses often face difficulty. It focuses on four issues that HMRC considers particularly complex or higher risk: whether a project qualifies as R&D for tax purposes, whether overseas expenditure is eligible for relief, whether contracted out R&D costs can be claimed, and whether a company qualifies for exemption from the PAYE/NIC cap.
The pilot also represents a meaningful widening of access. Unlike the existing Advance Assurance scheme, which is limited to first-time claimants within specific size thresholds, the targeted pilot is open to a broader range of SMEs, including those that have claimed before. As with the existing scheme, participation is free and voluntary, and HMRC has indicated a target response time of around 40 days. For businesses seeking clarity on difficult aspects of the regime, that may make it a practical and efficient option.
Implications for Scottish businesses
For Scottish SMEs, the pilot may offer a useful route to greater certainty at a time when confidence in the regime has been weakened.
In particular, it may encourage eligible but hesitant businesses to engage with the regime, support existing claimants in continuing to claim with greater confidence, and improve overall compliance by clarifying HMRC’s position at an earlier stage.
R&D tax relief: conclusion
The R&D tax relief regime is clearly changing. The recent statistics point to a system of fewer claims, but larger ones, set against stronger compliance activity and greater caution among businesses. In that context, the Targeted Advance Assurance pilot looks both timely and constructive.
By offering earlier clarity on complex issues, it has the potential to improve confidence in the regime and help ensure that innovative Scottish businesses continue to access the support available to them.
Among its UK locations, accountancy and advisory firm MHA has offices in Aberdeen and Edinburgh. For more information, visit www.mha.co.uk