What penalty could apply if my R&D claim turns out to be wrong?

No penalty applies simply because a claim turns out to be wrong. A penalty is only due where the inaccuracy was careless or deliberate, and HMRC has to explain why — not just infer it from the fact that the claim didn't stand up. Where a penalty is due, it's a percentage of the tax lost: up to 30% for careless behaviour, up to 70% for deliberate but not concealed behaviour, and up to 100% for deliberate and concealed behaviour, all of which can be reduced further, sometimes to nothing, for full and prompt disclosure.

R&D Claim Penalties: Careless vs Deliberate

The behaviour test comes first

Before any percentage matters, there’s a threshold question: was the inaccuracy careless or deliberate at all? If it wasn’t — if you took reasonable care and the claim was still wrong — no penalty is due, full stop, regardless of how much tax was at stake.

Careless means the inaccuracy is due to a failure to take reasonable care.
Deliberate but not concealed means the inaccuracy was deliberate, but no steps were taken to hide it.
Deliberate and concealed means the inaccuracy was deliberate, and steps were taken to conceal it — HMRC gives submitting false supporting evidence as an example.

The bar for “careless” is not “the claim was wrong.” A First-tier Tribunal decision in 2024 is direct authority on this point in an R&D context: HMRC argued that because a company couldn’t demonstrate its claim qualified, it had “by default” been careless. The tribunal rejected this reasoning as circular, holding that HMRC must explain, on the facts, why the taxpayer’s conduct fell short of what a prudent and reasonable taxpayer would have done—not simply point to the fact that the claim failed. The company in that case had chosen an adviser with relevant experience, checked that adviser’s reputation with others in its industry, and given the adviser complete and accurate information; the tribunal found that was exactly what a prudent, reasonable taxpayer does, and cancelled the penalty entirely.

Using an adviser doesn’t automatically protect you, and going without one doesn’t automatically expose you. What matters is whether the steps actually taken — checking the adviser’s competence for this kind of work, giving them accurate and complete information, and engaging properly with the process — were what a reasonable taxpayer would do in the circumstances.

The percentages

Where behaviour does clear the careless or deliberate threshold, the standard penalty is a percentage of the “potential lost revenue” — broadly, the extra tax that would have gone unpaid, or the excess relief that would have been paid out, but for the inaccuracy:

Behaviour	Standard penalty
Careless	30%
Deliberate, not concealed	70%
Deliberate and concealed	100%

(Higher rates apply to inaccuracies involving certain offshore matters — not relevant to an ordinary UK R&D claim, and not covered here.)

Disclosure brings the percentage down

These are starting points, not fixed amounts. HMRC has to reduce the penalty to reflect the quality of disclosure — telling HMRC about the inaccuracy, giving reasonable help to quantify it, and giving access to records so it can be corrected. How far it can be reduced depends on whether the disclosure was unprompted (made before you had any reason to think HMRC had found, or was about to find, the problem) or prompted (any other disclosure):

Behaviour	Standard	Minimum after prompted disclosure	Minimum after unprompted disclosure
Careless	30%	15%	0%
Deliberate, not concealed	70%	35%	20%
Deliberate and concealed	100%	50%	30%

An unprompted disclosure of a careless error can reduce the penalty to nothing at all. This is the single biggest lever available once an inaccuracy has actually been found — the earlier and more completely you come forward, before HMRC gets there first, the better the outcome, even where a penalty is technically due.

Suspension of careless penalties

Where a penalty for a careless inaccuracy is due, HMRC has the power — not the obligation — to suspend all or part of it for up to two years, subject to conditions designed to help you avoid the same kind of error happening again. If you meet the conditions for the whole suspension period, the suspended amount is cancelled. If you don’t, or you incur another careless-inaccuracy penalty during the suspension, it becomes payable. This power doesn’t apply to deliberate inaccuracies, and HMRC isn’t required to offer it even where it’s available in principle.

Worked example

Illustrative, on a claim where £100,000 of tax was understated.

Scenario	Behaviour	Standard penalty	After disclosure
Genuine, reasoned technical judgement that turned out wrong; adviser properly briefed and vetted	Not careless	£0	£0
A project boundary was drawn too generously through inattention, self-reported before any HMRC contact	Careless, unprompted disclosure	£30,000	As low as £0
Same error, only admitted once HMRC’s enquiry had already found it	Careless, prompted disclosure	£30,000	As low as £15,000
Costs knowingly inflated, not disclosed until challenged	Deliberate, not concealed, prompted	£70,000	As low as £35,000
Supporting evidence fabricated to back an inflated claim	Deliberate and concealed	£100,000	As low as £50,000 (prompted) or £30,000 (unprompted, unlikely on these facts)

Where claims go wrong

Assuming an incorrect claim automatically means a penalty. It doesn’t. The 2024 tribunal decision discussed above exists precisely because HMRC sometimes proceeds as if it did, and that reasoning has already been rejected once at tribunal.
Not documenting why reasonable care was taken at the time. “We used an adviser” is not, on its own, evidence of reasonable care — what mattered in the successful case above was being able to show how the adviser was chosen and checked, and that complete information was given to them. That evidence needs to exist from the outset, not be reconstructed after a penalty is proposed.
Staying quiet once an error is found, hoping HMRC won’t notice. The financial gap between an unprompted and a prompted disclosure is large, and it exists only for the period before HMRC finds the problem — waiting to see what happens gives up the single best lever available.
Confusing a genuinely arguable technical position with carelessness. A claim can be wrong without being careless. Where the position taken was reasoned, properly evidenced at the time, and reflects a real (if ultimately unsuccessful) reading of the law, that is the classic case for no penalty at all, not a reduced one.
Not asking about suspension on a careless penalty. It’s discretionary, not automatic, and it isn’t offered by default — it has to be requested and the right conditions proposed.