Does my company have to be a going concern to claim R&D tax relief?

Yes, if you want to be paid. The condition has three parts: your latest published accounts were prepared on a going concern basis, nothing in those accounts indicates that the going concern basis depends on receiving R&D relief, and you are not in administration or liquidation. It is tested at the moment the claim is made, not at the end of the accounting period the claim covers.

Going concern condition for R&D tax relief

What the condition actually tests

It is not an assessment of your financial health. It is a mechanical test with three limbs.

Your latest published accounts were prepared on a going concern basis. “Published” means filed or otherwise made public — not your latest management accounts and not the accounts for the period you are claiming for, if a later set has been published since. The test moves as you file.

Those accounts do not say the basis depends on R&D relief. If the going concern statement or the notes make the company’s status conditional on receiving an R&D credit, the condition is not met. This is the limb that catches companies whose auditors or accountants have been candid about the cash position. It is worth reading the going concern note before it is signed, because a sentence written for prudence can cost the claim it refers to.

You are not in administration or liquidation. Absolute, and not curable while the appointment lasts.

When it is tested

At the time the claim is made. That has a practical consequence people miss: a company that was plainly solvent throughout the accounting period, and became distressed afterwards, fails the condition if it makes the claim after the position deteriorated. The claim is tested against the company’s state on the day it is filed.

The corollary is that timing is a lever. If a claim is prepared and a company’s position is worsening, filing it before accounts showing a non-going-concern basis are published, and before any appointment, is the difference between a payment and nothing.

What happens if you fail it

The consequence differs between the two current reliefs, and this catches people out.

Under the merged scheme. Failing the condition does not stop you claiming the credit. It stops the payable amount at the final step. If the company becomes a going concern again before the deadline for amending the return, the payment becomes due after all. The credit can still be set against the company’s own corporation tax liabilities through the earlier steps.

Under ERIS. Failing the condition stops the claim itself — both the additional deduction and the payable credit. And if a valid claim is made but the company ceases to be a going concern before the credit is paid, the claim is treated as never having been made.

So an R&D-intensive loss-making SME in difficulty is materially better protected by claiming the merged scheme credit than ERIS, even though ERIS is worth more. That is a live decision on distressed claims and it should be taken deliberately.

The group transfer exception

There is one relief from the first limb. If the only reason your accounts were not prepared on a going concern basis is that you transferred your trade and its R&D to another company in the same group, you are still treated as a going concern — provided the transfer happened within the period those accounts cover.

This exists so that ordinary group reorganisations do not destroy claims. It does not help where the accounts are on a break-up basis for any other reason.

Worked example

Illustrative. A loss-making SME with a 31 March year end, R&D-intensive, expecting a payable credit on its year to 31 March 2026. Its accounts for that year are signed in October 2026 with a going concern note that reads “the directors have prepared the accounts on a going concern basis on the assumption that the R&D tax credit claim of approximately £180,000 is received.”

That sentence engages the second limb. The accounts indicate that the going concern basis depends on receiving R&D relief, so the condition is not met, and under ERIS there is no claim.

The company has two ways out and both had to be taken earlier. The note could have been drafted to rest on the shareholder facility that was in place rather than on the credit, which would have been equally true. Or the claim could have been filed before those accounts were published, when the latest published accounts were the clean prior-year set. Neither is available in October.

Where claims go wrong

Nobody reads the going concern note before the accounts are signed. The claim and the accounts are usually prepared by different people, often at different firms, and the note is written without anyone thinking about the second limb. This is the most common way a good claim is lost, and it is entirely avoidable.
Waiting to file. Claims sit unfiled for months while someone finishes a report. For a company whose position is deteriorating, that delay is the whole risk.
Assuming the test looks at the claim period. It looks at the latest published accounts at the date of claim, which may be for a later period entirely.
Filing after an administrator is appointed. It fails, and it also puts the adviser in a difficult position with the office-holder about who instructed the work.
Choosing ERIS on value alone for a distressed company. ERIS is worth more per pound but is far more fragile if the company deteriorates before payment. On a distressed claim, run the comparison on the risk as well as the amount.