Published: 4/3/2025
What SMEs Need to Know About HMRC’s Tightening Grip
For small and medium-sized enterprises (SMEs) across the UK, Research and Development (R&D) tax credits have long been a lifeline—offering financial relief to fuel innovation and growth. However, the landscape is shifting. HMRC’s scrutiny of R&D claims is at an all-time high, and Glasgow businesses are not immune. With stricter policies and a sharp rise in investigations, SMEs face a growing risk of having claims challenged—or even rejected—if they’re not watertight. At Countify, your Glasgow-based accountancy firm with years of R&D expertise, we’re here to help you understand these changes and protect your business from HMRC’s eagle eye.
HMRC’s Crackdown: Why Now?
HMRC has ramped up its oversight of R&D tax credits in response to widespread concerns over error and fraud. Recent estimates suggest that billions of pounds have been lost to ineligible or exaggerated claims in recent years, prompting a robust response. From hiring hundreds of new compliance officers to introducing mandatory random enquiry programmes, HMRC is leaving no stone unturned. For SMEs, this means a higher chance of your claim being flagged—whether it’s a genuine oversight or a misunderstanding of the rules.
New policies rolled out since 2023, such as requiring detailed pre-submission information and digital claim notifications, reflect HMRC’s push for transparency. The merger of the SME and RDEC schemes, effective for accounting periods starting on or after April 1, 2024, aims to simplify the process but has also tightened eligibility criteria. Add to this a reduction in relief rates for some SMEs and stricter rules on overseas R&D costs, and it’s clear: HMRC is serious about ensuring every claim holds up under scrutiny.
The Risk of Investigation: What’s at Stake?
For Glasgow SMEs, an HMRC investigation can be more than a headache—it can disrupt cash flow, tie up resources, and even lead to penalties. Random checks now cover a significant portion of claims, with reports indicating that up to one in five could face review. If your claim lacks detailed evidence—like project records, staff time logs, or a clear explanation of how your work advances science or technology—it’s at risk of being scaled back or rejected outright.
Worse still, HMRC’s Fraud Investigation Service is increasingly involved in cases of suspected abuse, wielding powers to dig back years and impose hefty fines. Even honest mistakes, like claiming costs that don’t fully qualify (e.g., routine upgrades mislabeled as R&D), can trigger scrutiny. For businesses relying on these funds to innovate or stay afloat, the stakes couldn’t be higher.
How Countify Can Help
At Countify, we’ve seen firsthand how HMRC’s tightening policies affect Glasgow SMEs. Our qualified accountants bring years of experience in the R&D industry, helping businesses not just survive investigations but thrive under the new regime. Here’s how we support you:
🔹 Pinpoint Eligibility: We identify qualifying activities—yes, even in “non-tech” sectors like manufacturing or hospitality—ensuring your claim stands up to HMRC’s rigorous standards.
🔹 Bulletproof Documentation: From technical narratives to cost breakdowns, we compile the evidence HMRC demands, reducing your risk of enquiry.
🔹 Expert Defence: If HMRC comes knocking, our team navigates the investigation process, defending your claim with precision and confidence.
Don’t Let Scrutiny Stall Your Innovation
The message for Glasgow SMEs is clear: HMRC’s heightened scrutiny isn’t going away. But with the right preparation, it doesn’t have to derail your business. At Countify, we’re committed to turning complexity into opportunity, ensuring you claim every penny you’re entitled to—safely and compliantly.
Suspect your past claims might not hold up? Worried about an upcoming submission? Contact Countify today. Based in Glasgow, we’re your local experts in R&D tax credits, ready to shield you from HMRC’s spotlight and keep your innovation on track.