How the numbers surfaced
For years, HMRC’s published estimate of R&D non-compliance was low single digits, built from risk-targeted work. The Mandatory Random Enquiry Programme changed the method: check a random sample properly and measure what is actually there. The first MREP results, published from 2023, reset the picture. For 2021-22, £1.3 billion of the £7.6 billion claimed, 17.6%, was estimated lost to error and fraud. The SME scheme sat at 25.8% of its expenditure and RDEC at 4.6%.
Those two percentages, side by side, explain nearly everything that followed: the problem was structural to a high-rate, cash-payable, lightly-policed SME scheme, amplified by a tail of advisers paid by results.
What HMRC actually did
The response ran on four tracks at once:
- People. R&D compliance staffing grew from around 100 to more than 500, and coverage rose to roughly 17% of claims checked in 2023-24, about 9,700 checks.
- Paperwork. The claim notification requirement, the mandatory Additional Information Form naming the responsible officer and every agent involved, and return-box confirmations. Weak claims became visible before payment rather than after.
- Policy. The 2023 rate rebalancing, then the merged scheme and ERIS from 2024, retiring the structure where most of the loss lived. The story of those changes is on what changed in 2023 and 2024.
- Targeting. Education campaigns aimed at sectors where, in HMRC’s words, R&D is unlikely to be carried out, care homes, childcare providers, personal trainers, wholesalers and retailers, pubs and restaurants, after speculative-claim marketing reached exactly those businesses.
What it means if your claim is honest
Three practical consequences, none of them alarming:
- Expect friction as normal. Forms, questions and the real possibility of a check are the steady state now, not a sign something is wrong with your claim.
- The burden sits on evidence. The regime is built to distinguish claims that can show their working from claims that cannot. That distinction is controllable, and it is the whole subject of record-keeping and the red flags.
- The market cleaned up in your favour. Named agents and screening pushed the speculative end out. An honest claim no longer competes for credibility with a flood of bad ones to anything like the same degree, and HMRC’s own falling estimates suggest the machinery is working.
Frequently asked questions
Is HMRC against R&D claims now?
No. The relief exists to be claimed and HMRC paid out billions under it last year. What changed is the assumption of correctness: claims are screened, a meaningful share are checked, and the paperwork exists to make weak claims visible early. Sound claims still get paid.
Where was the money actually going wrong?
Overwhelmingly in the old SME scheme: HMRC's random-enquiry measurement put SME-scheme error and fraud at 25.8% of that scheme's expenditure for 2021-22, against 4.6% in RDEC. That asymmetry is why the reforms fell hardest on the SME side.
Is the problem fixed?
Improving, on HMRC's own numbers: 17.6% of relief in 2021-22, 9.9% for 2022-23, with illustrative estimates of 6.5% and 5.9% for the two years after. Still high enough that the compliance posture is not going away.
What does this mean for our claim?
Build it for the check, not just the payment: notification on time, an honest narrative, evidenced costs, records that arrive quickly. In a market where a sixth of claims get checked, that is not caution; it is the baseline.