Research and Development (R&D) tax relief has helped thousands of innovative UK businesses recover some of the costs of developing new products, improving processes and overcoming technical challenges. However, recent reports suggest that many genuine businesses are no longer making claims because they fear becoming caught up in HMRC’s crackdown on abuse of the scheme.

There is no doubt that HMRC was right to tackle fraudulent and exaggerated claims. The tax authority has introduced tougher compliance procedures and new requirements to ensure that relief is available only for genuine innovation. These measures have significantly reduced error and fraud within the system.

The difficulty is that some legitimate businesses have also become reluctant to claim. Recent research indicates that many companies have delayed innovation projects, reduced investment or simply decided not to submit claims because they are concerned about the complexity of the process or the possibility of an HMRC enquiry.

If your business is developing new technology, improving manufacturing processes, creating specialist software or solving difficult engineering or scientific problems, it may still qualify for valuable tax relief. Many business owners mistakenly believe that R&D only applies to laboratories or major scientific breakthroughs. In reality, a wide range of commercial activities can qualify where a project seeks to overcome genuine scientific or technological uncertainty.

The key is ensuring that any claim is well prepared and supported by appropriate evidence. HMRC expects businesses to demonstrate why the work involved technological or scientific uncertainty, how those challenges were addressed and what costs were incurred. Good project records, technical documentation and accurate financial information are now more important than ever.

To help businesses gain greater certainty, HMRC has also launched a targeted Advance Assurance pilot. This enables eligible SMEs to obtain an indication on certain aspects of a proposed claim before it is submitted, reducing uncertainty in more complex cases.

The message for innovative businesses is simple. Do not allow concerns about increased scrutiny to prevent you from claiming relief to which you are entitled. Equally, avoid firms that promise large tax repayments without first carrying out a detailed technical review of your activities.

If you think your business may have undertaken qualifying R&D, or if you have dismissed the possibility in the past, now is an excellent time to review your position. A properly prepared claim, supported by robust evidence and professional advice, can still provide valuable tax savings while meeting HMRC’s increasingly rigorous standards.

If you would like to discuss whether your business could qualify for R&D tax relief, please contact us. We will be pleased to review your projects and advise whether a claim is likely to succeed.

What it could mean for households and small businesses

The Government has announced that VAT on domestic electricity bills will be reduced from 5% to 0% from 1 October 2026 as part of its latest package of cost of living measures. The change is intended to reduce household energy costs ahead of the winter months and help ease pressure on family finances. The measure was one of the first announcements made by the new administration and will be introduced through legislation when Parliament returns after the summer recess.

For the average household, the Government estimates that the change could reduce annual electricity costs by around £45, although the actual saving will depend on electricity consumption. Energy suppliers are expected to pass the VAT reduction on to customers, including those on fixed tariffs.

Although the announcement is aimed primarily at households, there are wider implications worth noting.

Some small businesses that qualify for domestic energy VAT relief and are not VAT registered, together with eligible charities and residential care homes, are also expected to benefit from the reduced rate. Businesses that are fully VAT registered and recover their input VAT are unlikely to see any significant financial advantage because the VAT they pay is normally reclaimed through their VAT returns.

It is also important to keep the announcement in perspective. The reduction applies only to the VAT element of electricity bills. Wholesale energy prices, standing charges and future changes to the Ofgem price cap will continue to have a much greater influence on the total amount consumers pay. If energy prices rise significantly during the winter, some or all of the VAT saving could be offset by higher underlying costs.

As with many tax announcements, the detail matters. The legislation has yet to be published and further guidance is expected on the precise operation of the new zero rate, particularly for qualifying organisations and customers in Northern Ireland, where different VAT arrangements currently apply.

If you are unsure whether your household, charity or business will benefit from the change or would like advice on reducing your overall energy costs and improving tax efficiency, please contact us. We will be pleased to explain how the new rules apply to your circumstances and help you identify any other opportunities to reduce your tax burden.

Artificial intelligence is rapidly becoming part of everyday business. From drafting emails and analysing data to producing marketing content and improving customer service, AI offers exciting opportunities for businesses of every size.

However, as recent guidance from the accountancy profession makes clear, adopting AI successfully requires more than simply choosing the latest software. Businesses also need to think carefully about governance, security and responsible use.

One of the greatest benefits of AI is its ability to automate routine administrative tasks. This allows staff to spend more time on work that adds value, such as serving customers, developing new products or improving business performance. For many smaller businesses, AI can deliver significant productivity gains without requiring major investment.

Despite these advantages, AI should not be viewed as a replacement for human judgement. Information generated by AI can occasionally be inaccurate, incomplete or out of date. Important business decisions, financial reports and customer communications should always be reviewed by someone with the appropriate knowledge and experience.

Businesses should also consider how confidential information is handled. Before uploading documents or customer data into any AI platform, it is important to understand how that information will be stored, processed and protected. Staff should receive clear guidance on what information may and may not be entered into AI systems.

Developing a simple AI policy can help reduce risk. The policy should explain which AI tools have been approved for business use, identify situations where human approval is required and remind employees of their responsibilities regarding confidentiality and data protection.

Training is equally important. Employees should understand both the capabilities and the limitations of AI. Used appropriately, AI can become a valuable assistant. Used carelessly, it can create compliance, legal and reputational risks.

As AI technology continues to develop, businesses that embrace it sensibly are likely to gain a competitive advantage. The key is to combine the efficiency of technology with the experience and judgement that only people can provide.

If your business is considering introducing AI into its operations, now is an ideal time to review your existing processes, data security arrangements and internal controls. With the right planning, AI can become a powerful tool that supports growth while helping your business remain secure and compliant.

If you complete a Self-Assessment tax return, or expect to do so in the coming months, it is worth taking a few minutes to check that the information HMRC holds about your State Pension is correct.

HMRC has recently identified an issue affecting some taxpayers where the amount of State Pension included in tax calculations may not have been accurate. Although the problem does not affect everyone, it serves as a timely reminder that the figures pre-populated by HMRC should never be accepted without review.

The State Pension is taxable income, even though tax is not usually deducted before it is paid. This means it must be included correctly on your Self-Assessment tax return where one is required. An incorrect figure could result in too much or too little tax being calculated.

The issue is particularly relevant for people who started receiving their State Pension during the tax year, experienced a change in their entitlement, or rely on information automatically provided by HMRC when preparing their return.

It is always sensible to compare the amount shown on your tax return with your own records. This may include annual State Pension statements, bank statements showing pension payments, or correspondence received from the Department for Work and Pensions.

Checking the figures before submitting your return is much easier than correcting mistakes afterwards. If an error is discovered after filing, it may be necessary to amend the return and, depending on the circumstances, pay additional tax or claim a repayment.

The incident also highlights a wider point. While HMRC increasingly uses digital systems to populate tax returns with information it already holds, those systems are fallible. The legal responsibility for ensuring that a tax return is complete and accurate always rests with the taxpayer.

Preparing your tax return early provides time to identify missing information, resolve discrepancies and avoid the pressure of the January filing deadline. It can also provide earlier certainty over any tax payable, making it easier to budget for future payments.

If you are unsure whether your State Pension has been reported correctly or would like your 2025-26 tax return reviewed before submission, we will be pleased to help. A simple review today could prevent unnecessary correspondence with HMRC and ensure you pay no more tax than you should.

Companies House continues to introduce significant reforms that will change the way companies are administered in the UK. The changes are being implemented in stages following the Economic Crime and Corporate Transparency Act and are intended to improve the accuracy of the Companies House register, reduce opportunities for fraud and strengthen confidence in UK businesses.

For many years Companies House acted largely as a repository for information submitted by companies. The new legislation gives it much stronger powers to question, reject or remove information that appears to be inaccurate, misleading or inconsistent. The overall objective is to ensure that the public register becomes a more reliable source of information for businesses, lenders, investors and the wider public.

One of the most significant changes is the introduction of identity verification. Directors, people with significant control and others involved in filing company information will increasingly need to verify their identity before carrying out certain activities. This is intended to reduce the misuse of false identities and make it more difficult for criminals to establish or control companies for fraudulent purposes.

Companies House is also taking a more active role in monitoring information filed on the register. Details such as directors, registered office addresses, persons with significant control and confirmation statements are expected to receive greater scrutiny than in the past. Companies that fail to keep their records up to date or submit inaccurate information may find that filings are challenged or rejected.

For the vast majority of well-managed businesses, these changes should not create significant difficulties. Companies that already maintain accurate statutory records, file documents on time and ensure that changes are reported promptly are likely to adapt with relatively little disruption.

However, businesses that have neglected company administration may need to review their procedures. This includes checking that statutory registers are complete, ensuring confirmation statements are submitted on time and confirming that company officers understand their ongoing legal responsibilities.

These changes should not simply be viewed as additional compliance obligations. Accurate and reliable company information helps strengthen confidence in UK businesses, supports lenders and suppliers when making commercial decisions and contributes to a more transparent business environment.

Directors should regard this as an opportunity to undertake a general review of their company’s statutory records and filing procedures. Identifying and correcting issues now is likely to be much easier than dealing with queries after new powers have been exercised by Companies House.

The reforms represent one of the biggest changes to company administration for many years. Businesses that prepare early, maintain accurate records and seek professional advice where necessary will be well placed to meet the new requirements with confidence.

If you would like us to review your company’s statutory records or discuss how these reforms may affect your business, please contact us. We will be pleased to help.