R&D tax relief has been through more upheaval in the last two years than in the previous two decades. The merged scheme arrived for accounting periods beginning on or after 1 April 2024. New CT600L boxes went live on 6 April 2026. HMRC launched a Targeted Advance Assurance pilot on 18 May 2026. And in the background, some tax software providers failed to update their systems in time — creating a genuine compliance crisis for companies with live claims.
If you have an R&D claim in preparation, or an accounting period ending after April 2024 that hasn’t yet been filed, there are six things you need to act on now.
What the Merged Scheme Actually Changed
The merged R&D scheme replaced the old SME and RDEC regimes for accounting periods starting on or after 1 April 2024. Most companies now claim under a single framework offering a 20% gross R&D expenditure credit (RDEC) — an above-the-line credit that reduces corporation tax directly and shows up in your P&L before tax. For loss-making, R&D-intensive SMEs, the Enhanced R&D Intensive Support (ERIS) scheme provides an effective benefit of around 27% — but only where qualifying R&D expenditure exceeds 30% of total expenditure.
The subcontractor rules changed significantly. Under the old SME scheme, you could claim on payments to subcontractors even where they did the work. Under the merged scheme, the company bearing the cost of the R&D is the one that claims — which matters enormously in group structures, agency arrangements, and supply chains where work is contracted out.
Overseas expenditure is now restricted. Work done outside the UK qualifies only where there is a specific exemption — broadly, where the R&D requires conditions not available domestically (geographic, geological, environmental) or where regulatory approval demands overseas testing. This is a tighter test than many assumed when the rules were announced, and BDO’s commentary is worth reading carefully if you have any offshore R&D activity.
The New CT600L Boxes: What Changed on 6 April 2026
Six new boxes were added to the CT600L supplementary form for all merged scheme RDEC claims with effect from 6 April 2026:
- L71, L71A — PAYE and NIC liabilities relevant to the Step 3 cap calculation
- L72, L72A — additional PAYE/NIC cap data
- L73, L73A — confirmation of exemption from the cap, or further cap-related information
These boxes operationalise the PAYE and NIC cap under section 1112B CTA 2009. The cap limits the payable R&D credit to £20,000 plus 300% of the company’s relevant employment tax liabilities — covering all employees and directors, not just those working on R&D. For most companies with a reasonable UK headcount, the cap is not a binding constraint. But for R&D-heavy businesses with thin UK payrolls, offshore teams, or heavy use of externally provided workers, it bites hard. The difference from ERIS is critical: under ERIS, credit exceeding the cap is lost. Under the merged scheme, it carries forward.
The new boxes are mandatory for any new claim or amendment to an existing claim for accounting periods from 1 April 2024. There is no soft landing. If your software does not support them, you cannot file.
The Software Filing Crisis: What HMRC Has Said
This is where it gets uncomfortable. HMRC has formally acknowledged that some tax software providers had not updated their systems to include the new CT600L boxes when the requirement went live on 6 April 2026. The practical result: companies unable to file merged scheme RDEC claims despite wanting to comply.
HMRC’s position is that it may exercise discretion under paragraph 83E(5) of Schedule 18, Finance Act 1998 to allow late claims — but only with evidence. To rely on this discretion you need contemporaneous documentation: screenshots of validation errors, correspondence with your software provider confirming the missing functionality, and representations under SP 5/01. This is not a blanket amnesty. It is a case-by-case exercise of discretion that requires you to have documented the problem at the time.
If you have claims in the pipeline and have not yet checked whether your software supports L71-L73A on the CT600L, that conversation needs to happen today. ACCA’s May 2026 update sets out the position clearly for practitioners.
HMRC’s Targeted Advance Assurance Pilot: The Detail
HMRC launched a Targeted Advance Assurance (TAA) pilot on 18 May 2026, running for 12 months to May 2027. It is free, voluntary, and open to SMEs — including previous claimants, unlike the original advance assurance scheme which was restricted to first-time claimants. Each company can make up to two applications, each covering one project and one specific area of uncertainty.
The four areas on which assurance can be sought are:
- Whether the project meets the statutory definition of R&D
- Whether overseas expenditure qualifies for relief
- Who can claim where R&D work is contracted out
- Whether the company qualifies for exemption from the PAYE and NIC cap
HMRC’s target response time is 40 calendar days. Critically, there is no right of appeal against a refusal at the pre-claim stage — normal appeal rights only attach once a formal claim has been submitted and rejected. The pilot is not available to companies with open corporation tax enquiries, DOTAS arrangements, or Corporate Serious Defaulter status.
Kene Partners’ analysis of the pilot is worth reading alongside BDO’s broader commentary on advance clearances. The interaction between the pilot and the CT600L changes is direct: area four — the PAYE/NIC cap exemption — maps precisely to the new L73/L73A boxes. Get a positive TAA on that question and you file with certainty on one of the most contentious elements of the return.
The Additional Information Form Requirement
This has been mandatory since August 2023 and is still catching companies out. The Additional Information Form (AIF) must be submitted digitally via HMRC’s portal before the CT600 is filed. If the CT600 goes first, the R&D claim is rejected. There is no grace period, no override, and no tolerance for incorrect sequencing. Build the AIF submission into your filing checklist as a mandatory gate before CT600 submission.
First-time claimants — or companies that haven’t claimed for more than three years — must also submit a Claim Notification within six months of the end of the accounting period. Missing the notification deadline means losing the right to claim for that period entirely.
Six CFO Actions for R&D Compliance in 2026
- Confirm your software supports CT600L boxes L71–L73A. Contact your provider immediately. If it doesn’t, document the failure and start building your SP 5/01 evidence file. Do not assume this will resolve itself before your filing deadline.
- Check your PAYE/NIC cap position before claiming. Run the calculation: £20,000 plus 300% of total employer NIC and PAYE liabilities. If your overseas or agency workforce is large relative to your UK payroll, the cap may materially reduce the payable credit — or eliminate it under ERIS.
- Assess ERIS eligibility with care. The 30% R&D intensity threshold is assessed on total expenditure. A company that falls just below in the current period can still claim ERIS if it qualified in the prior 12-month period — but this grace period is not automatic and requires documented analysis.
- Use the Targeted Advance Assurance pilot for genuine uncertainties. If you have real doubt on whether overseas costs qualify, who claims on a contracted-out arrangement, or whether your PAYE cap exemption holds, apply now. Two applications per company. HMRC’s 40-day target means you can resolve the question before your filing deadline in most cases.
- Sequence your filing correctly. AIF first. CT600 second. Claim Notification (if required) within six months of period end. Any deviation from this sequence invalidates the claim.
- Review your documentation standard for HMRC scrutiny. HMRC has significantly increased the volume and depth of R&D enquiries since 2023. Contemporaneous technical records, project logs, and competent professional sign-off are not optional — they are your first line of defence if an enquiry opens. Forrest Brown’s analysis of PAYE cap compliance gives a clear sense of what HMRC now expects.
The Broader R&D Landscape in 2026
Data licences and cloud computing costs directly linked to R&D are now within the definition of qualifying expenditure. Pure mathematical research is eligible. These are genuinely expanded categories that many companies haven’t yet modelled into their claims. Against that, the tighter overseas restrictions and the subcontractor rule changes have narrowed the base for some businesses. The net effect depends heavily on your operating model.
The broader context is that HMRC lost significant revenue to abuse of the old SME scheme — estimates suggest billions in fraudulent or negligent claims between 2020 and 2024. The response has been a structural tightening of the regime and a permanent increase in compliance scrutiny. Legitimate claimants bear a disproportionate share of that scrutiny. The answer is not to reduce claims — it is to make them bulletproof. ACCA’s guidance and HMRC’s own merged scheme guidance should both be on your reading list before the next claim goes in.
If you want a review of your R&D claim framework under the merged scheme — or help navigating the CT600L software issue or the Advance Assurance pilot application — contact Mark at Tanous. Straightforward advice from a CFO who has been through the compliance machinery.