A staggering 38% of companies have had their R&D tax relief claims rejected by HMRC despite been given initial approval, while 34% of claims were rejected from the start.

This clampdown follows the introduction of new pre-vetting arrangements for R&D tax claims monitored by HMRC to reduce abuse of the generous tax system.

With the government’s growth agenda, £20.4bn in funding for R&D tax relief was announced by Chancellor Rachel Reeves at the Budget at the end of October.

However, this may not encourage more companies to apply for the relief due to the unpredictability of HMRC approving applications.