From Crackdown to Correction: Is the R&D Compliance Pendulum Swinging Back?

The October 2026 Budget announcement revealed welcome news that two compliance measures relating to R&D tax relief, the Claim Notification Form (CNF) and the Additional Information Form (AIF), were being removed and simplified respectively. The two measures, previously introduced to help combat perceived error and fraud within the R&D tax relief system, had been increasingly seen by taxpayers, agents and professional bodies as an overly complicated barrier to entry for businesses seeking to make R&D claims.

The announcement comes off the back of the latest draft HMRC statistics on R&D tax relief which were published in September 2026 and illustrated a weak take-up by first time claimants in the tax year 2024-25 – The decline is likely to reflect the cumulative effect of recent compliance reforms, including the CNF and AIF. HMRC specifically identified the continuing impact of the AIF as a key driver of the wider reduction in claim volumes.

Claim Notification Form (CNF) and Additional Information Form (AIF)

Since April 2023, companies have been required to comply with the Claim Notification Form (CNF) rules – which include filing a notification to HMRC no later than 6 months after the end of an accounting period if the company planned to make a claim. Broadly speaking, the CNF was mandatory for companies making R&D claims for the first time, or for companies who had not made claims within the last 3 years of their claim notification period. Failure to comply with CNF requirements would prevent a company from being eligible for R&D tax relief for that accounting period.

Since August 2023, companies have also been required to comply with the Additional Information Form (AIF) rules – which includes a mandatory filing to HMRC, for all R&D claims, that obliges claiming companies to list key administrative information as well as the underlying technical and financial details of the R&D projects being claimed. Since its inception the information required to be input on the AIF has gradually increased. A careful balance between requesting evidence that substantiates the eligibility of an R&D claim whilst not becoming overly burdensome or disincentivizing for innovative companies has always been at the core of the AIF’s objective.

Following feedback from agents and professional bodies alike, the government decision to remove the CNF requirements from 1 April 2027 has been warmly welcomed (note that the CNF rules remain in place until that point). From Autumn 2027, the government has outlined its intention to simplify the AIF requirements which, again, is welcome news. Consultations will take place to understand how a revised AIF approach could take shape.

HMRC Statistics

The HMRC statistics relating to R&D tax relief for the most recent tax year available (2024-25) were published in September 2026 and further illustrated key trends:

• The overall number of R&D claims made has reduced, whilst the value of tax relief awarded has increased,
• First-time claimant numbers remain far below levels from earlier tax years, and
• An increased shift towards R&D claims being made under the new RDEC incentive.

In 2024/25, the estimated total number of R&D tax relief claims fell by 17% to 40,325 – the lowest number in 10 years. Yet, despite fewer businesses claiming, the value of support increased to £8.2bn, while qualifying R&D expenditure rose to £51bn. On the surface, it could be viewed as positive. The UK is still investing heavily in innovation. But it also raises an important question: If the total number of claimants is falling while overall support continues to rise, are we seeing a growing concentration of relief amongst larger and more established businesses?

The statistics showed that the estimated number of first-time applicants remained stubbornly low at 5,850 companies, compared to more than 19,000 per year during the schemes “peak years.” Many of the much-needed recent reforms to the R&D tax relief system were introduced to improve compliance, tackle abuse, and deter spurious claims and advisors from accessing this generous incentive. Over the last 5 years, HMRC increased the number of compliance workers who subsequently increased the number of compliance checks into R&D claims. This approach was somewhat attritional and a number of taxpayers and agents had concerns about the rigid conduct applied by HMRC. Retrospectively, it is likely that these measures (the CNF in particular) swung the pendulum in favour of too much compliance, leading to a number of innovative businesses falling foul of the rules or being deterred altogether.

The 2024-25 statistics also show an R&D tax relief system in transition. Claims categorised under the SME scheme, including R&D intensive SME and ERIS claims, fell from 38,110 to 24,570, a reduction of approximately 36%. In contrast, the combined number of RDEC and merged RDEC claims increased from 10,500 to 15,760, an increase of approximately 50%. Part of this movement is mechanical rather than behavioural. Most SMEs are now expected to claim through the merged RDEC scheme, meaning that an SME claimant may be included within the merged RDEC figures rather than the traditional SME scheme statistics. Nevertheless, the longer-term reduction in claimant numbers began before the merged scheme was introduced and remains significant.

Looking to the future

There is a risk of unintended consequences if genuinely innovative start-ups and scale-ups become discouraged by complexity, uncertainty, compliance requirements or the perceived risk of making a claim. So, the decision to remove the CNF and simplify the AIF can be seen as the signal that the pendulum is starting to swing back. The crackdown can be seen to have worked, but the lessons learned need to be applied carefully to ensure tax relief is available and awarded to those who are genuinely at the forefront of their sectors.

The innovations of early-stage science & technology businesses can be challenging to bring to fruition and commercialise. R&D tax relief is often one of the few sources of meaningful non-dilutive funding available to help combat that challenge.

Fewer first-time claimants should concern anyone interested in the long-term health of the UK's innovation ecosystem. If fewer innovative businesses enter the regime, the danger is that an incentive designed to stimulate innovation becomes increasingly concentrated amongst businesses that already have the resources, advisers and infrastructure needed to navigate it. The challenge for policymakers is clear: maintain robust compliance standards and protect taxpayers’ money, but ensure genuine innovators and early-stage companies can still access it. The step to relinquish some of the administrative burden (CNF and AIF) will be welcomed by such companies.

At Corrigan, our specialist team is proud to support early-stage and growing businesses in accessing R&D tax relief as an important source of non-dilutive funding. We also help founders understand the wider legislative and compliance environment in which the relief operates, enabling them to make well-informed decisions and prepare robust, evidence-based claims.