There has always been some confusion surrounding the interactions between customers and subcontractors in the R&D schemes. In fact, clarifying this was a major aim of the new Merged and ERIS schemes, which were introduced for accounting periods starting on or after 1 April 2024.

However, many claims are still submitted using the old SME scheme, and HMRC’s window for compliance checks means that the SME scheme will be relevant for some time.

Since late 2021, for claims submitted through the SME scheme, HMRC insisted that companies could not claim SME relief on R&D conducted while working under contract to another SME.