For many Life Sciences companies, R&D tax relief has long been viewed as a mechanism for recovering cost; an incentive aligned with innovation, growth, and scientific ambition.
That framing is no longer sufficient.
Over the past 18–24 months, we have seen a clear shift in how R&D claims in the Life Sciences sector are reviewed and challenged by HMRC. The focus has moved decisively away from the size of a claim and towards its technical credibility, evidential support, and internal consistency.
For finance leaders and R&D teams alike, this marks an important change in mindset: the future of R&D tax relief is not optimisation, it is defensibility.
Why Life Sciences Claims Attract Scrutiny
Life Sciences companies sit at the intersection of high technical complexity, regulatory oversight and significant public funding.
From HMRC’s perspective, this creates risk, not because innovation is discouraged, but because complex science is often poorly articulated as qualifying R&D.
Common enquiry triggers we see include:
- Over-reliance on regulatory milestones as evidence of R&D.
- Descriptions that demonstrate effort, but not scientific/technological uncertainty.
- Claims that blur the boundary between routine development and scientific advance.
None of these imply wrongdoing. They reflect a gap between how scientists experience R&D and how HMRC assess it for compliance with the R&D tax definition and guidelines.
The Central Issue: Scientific Uncertainty vs Scientific Complexity
One of the most frequent points of tension in enquiries is the difference between:
- Complex science — difficult, resource-intensive, specialised.
- Scientific or technological uncertainty — where the outcome or method is genuinely unknown at the outset due to:
- the lack of publicly available information on how to resolve the uncertainty; and,
- the inability of the competent professional in that field of science or technology to resolve the uncertainty using publicly available knowledge and his/her experience in that field.
HMRC’s assessment hinges on the latter.
In Life Sciences, particularly in diagnostics, MedTech, and platform technologies, it is common for projects to involve highly complex work that nevertheless follows established methodologies. Without careful articulation, this can appear routine from a tax perspective — even when the underlying work is intellectually demanding.
The Role of the Competent Professional
Recent enquiries increasingly test the substance of the competent professional requirement rather than its formalities. HMRC is less concerned with job titles or organisational seniority, and far more interested in whether the individual recognising and assessing the uncertainty had the appropriate depth of field‑specific/technological expertise to judge that the solution was not readily deducible.
A competent professional is thus deemed to be someone with a strong technical foundation in the relevant scientific or technological domain, practical experience working on similar challenges, and a clear awareness of the current state of knowledge in their field. Their involvement is critical because they are uniquely placed to distinguish true scientific or technological uncertainty, where the outcome genuinely could not be known in advance—from work that is complex, resource‑intensive or highly specialised, but ultimately follows established and understood methodologies.
For R&D leaders, this means ensuring that the competent professional is engaged contemporaneously, so that uncertainties are recognised and evidenced at the point they arise. For finance directors, it underlines that governance and documentation; Capturing the reasoning, judgments and technical assessments made by the competent professional are just as important as allocating qualifying cost accurately.
A Shared Responsibility Between Finance and R&D
One consistent pattern in smoother enquiries is alignment.
Where finance and R&D teams share:
- a clear understanding of qualifying activity.
- a common language around uncertainty and advancement.
- early involvement in shaping the project narrative.
Claims are not only stronger as a result, they are also easier to defend.
R&D tax relief should not be treated as a retrospective exercise applied after scientific decisions are made. The strongest claims are those where defensibility is considered during the life of the project, not after it concludes.
Looking Ahead
R&D tax relief remains a vital incentive for Life Sciences companies. But its future will favour those who approach it with the same discipline they apply to for instance, regulatory submissions, grant funding and investor due diligence.
The question is no longer “How much can we claim?”
It is increasingly “How robust is this claim under scrutiny?”
Companies that adapt to that reality will not only reduce enquiry risk, they will place themselves on firmer ground for sustainable, repeatable relief in the years ahead.
*Guest blog from Aarti Varia at iTax Advisors. If you would like to submit a guest blog please email [email protected]