A building services consultancy's R&D claim, and HMRC's questions

A UK building services engineering consultancy based in south-east England, trading for more than a decade, with about 25% year-on-year growth over five years built on repeat business and referrals. It claimed for the year ended 31 March 2024. It is an example of a sector where qualifying work is easy to overlook, because the projects look like ordinary client engineering work.

Sometimes. The five projects included refurbishing the control systems of a dynamic rotary UPS power plant, supplementary heating works, adjusting the automation control of a sewage treatment plant, a kitchen grease management system and an electrical infrastructure upgrade. Careful selection and documentation showed where genuine technological uncertainty lay. The careful part was telling genuine uncertainty from routine work.

HMRC wrote with questions about the claim. We answered them, and the enquiry was closed with the claim standing, with no reduction. The detailed technical report and additional information form prepared at the outset gave us the evidence to respond clearly. That outcome is a fact about this claim, not a promise about any other, but it reflects how we prepare every claim.

A 46-page report documenting each project with the competent professionals involved, the technological uncertainties and the advances sought, plus the 23-page additional information form. Both were submitted with the company tax return. Having this evidence in place before filing is what made the later HMRC questions answerable. We keep this evidence organised for every claim we prepare.

The total R&D deduction available was £369,523. It was used first against the year's taxable profit of £58,014, which it eliminated, leading to £11,624 of corporation tax being repaid. The remainder was carried forward, so the benefit was not limited to the year of the claim. The figures come from the client's own claim file.

After eliminating the year's profit, the balance was carried forward against the following year's profit of £258,920, eliminating it and saving £64,730 of corporation tax. The £52,589 left was carried into the year after, saving a further £9,992 to £13,147 depending on the rate. The range reflects whether the lower or the higher corporation tax rate applies to that last amount.

About £86,000 to £89,500 across three years, with the range reflecting the rate that applied to the final carry-forward. These are the client's actual figures from this claim. They are not a forecast for any other company, since every claim depends on its own projects, costs and profits. Savings on this scale depend on the profits available to absorb the deduction.

The period ended 31 March 2024 and began before 1 April 2024, so the claim was made under the SME scheme rules that applied to that period. Claims for periods beginning on or after 1 April 2024 now go through the merged scheme or ERIS. Which rules apply always depends on when the period began, so the first step on any claim is to check the dates.

No. This case shows that building services projects can contain real uncertainty, and that evidence and honest project selection matter. Each claim stands or falls on its own facts, and we tell you plainly if a project does not qualify. We would rather exclude a doubtful project at the start than defend it later, and we make that call with you before filing.

That a claim built to be defended can be defended. The questions HMRC raised were answered from a documented technical case, and the claim stood without reduction. It also shows why, if HMRC writes, the first reply should be considered and evidence-led rather than sent in a hurry. Our enquiry defence page explains the process.