Behind every headline fraud case are thousands of honest businesses just trying to prove their work is real. Good documentation is how they achieve it.

R&D tax relief exists to reward innovation, but a handful of high-profile fraud cases have put the scheme under heavy scrutiny from HMRC, the media and Parliament. Ahead of October’s Autumn Budget, the examples below show why more action is still needed to prevent costly R&D tax fraud.

Josh Perry, UK & IRE Head of Sales at innoscripta says: “The following cases grab headlines, but it’s important claimants don’t lose sight of what they show. In each one, the fraud was built on claims with no real R&D credentials, and no evidence trail to back it up.

“They’re a far cry from the majority of UK businesses doing innovative work. With the help of technology, we hope to see a fewer fraudulent claims, so the reward goes to businesses legitimately doing the R&D.”

• The Convergica claim (£29.5m): In one of the largest attempted frauds seen in the scheme, Convergica Ltd claimed £29.5m in R&D tax relief against a £137m IT healthcare project that never existed. HMRC uncovered the fraud after requesting supporting bank statements. Three associates were jailed for a combined 21 years.
• Green Jellyfish: In September 2024, HMRC obtained warrants against Norwich-based R&D tax consultancy Green Jellyfish and a related firm, arresting 11 people. Media investigations questioned why clients in sectors such as horse breeding and butchery had been advised they qualified for R&D relief. It has since ceased trading.
• HMRC’s own numbers: Perhaps the most revealing figure is the one HMRC admitted itself. Its accounts show that more than £4.1bn has been lost to error and fraud in the R&D schemes between 2020-2024, urging the recruitment of hundreds of additional compliance staff and a wave of new claim-notification rules.

Lessons still to be learned

Perry continues: “If your claim reflects real R&D activity and is backed by complaint, audit-ready documentation, you have nothing to fear from HMRC’s scrutiny. If anything, that scrutiny protects honest claimants by removing the bad actors who’ve made the scheme harder for everyone else.

“What strikes me most about these fraudulent cases is how avoidable they were. These weren’t complex areas or disagreements about what qualifies as R&D, they were claims with nothing real behind them, brought by people who never intended to face any scrutiny at all. The complete opposite to the businesses we work with every day, who are doing development work and simply want the confidence that their documentation will hold up if HMRC comes calling.”

Improvement was needed at HMRC

Despite overseeing the R&D process, HMRC has made its own mistakes, costing businesses R&D finding over the years.

Perry comments: “£4.1bn sounds alarming until you break down what’s actually driving it. The majority of that figure is genuine error – claims prepared without the right evidence, or advisers who didn’t fully understand the rules – rather than deliberate fraud. That’s a solvable problem, and it’s exactly why we built our platform. When your R&D activity is documented as it happens, rather than retrospectively reconstructed months later under deadline pressure, most of that error doesn’t occur in the first place.”

Protecting UK R&D 

Perry concludes: “Every one of these cases added pressure on HMRC to tighten the rules further. But policymakers need to be careful not to punish honest, innovative businesses for the actions of a small minority. The right response isn’t to make the scheme harder to access – it’s to make good documentation the norm, so HMRC can move faster and more confidently for the claimants who deserve it.

“Give UK businesses the documentation, traceability and audit-readiness to claim what they’re entitled, free from fear of HMRC’s compliance checks, and the UK’s R&D sector stays health.”