The Treasury and HMRC had a budget of only £600,000 to conduct reviews of the reliefs in the last tax year leading to questions about whether the tax reliefs offer value for money.

Over £1bn was lost through research and development (R&D) SME relief alone in 2020-21 through errors and fraud leading the National Audit Office (NAO) to call for the Treasury and HMRC to ‘build on the improvements they have made so far in administering tax reliefs and make a step-change in how they assess whether tax reliefs achieve their economic objectives’.

The £1.04bn lost through R&D tax reliefs alone was almost a quarter of the £4.76bn spent on the tax break in total.

An NAO investigation found that the budgets for some of the tax reliefs exceeded their projected costs with R&D relief for SMEs being £15bn more than budgeted between 2015-16 and 2020-21.