---
title: "R&D Tax Claim Rejected? Can You Sue Your Adviser?"
url: https://professionalnegligenceclaimsolicitors.co.uk/rd-tax-claim-rejected-can-you-sue-your-adviser/
date: 2026-10-27
modified: 2026-10-27
lang: en
author: "pncs"
description: "Yes, a company can sue its R&D tax credit adviser if the adviser was negligent and the company lost money because of it. The harder question is what that loss is. Money HMRC claws back because the company was never entitled to it is often unrecoverable. Lost valid relief, penalties, interest, wasted fees and the cost of fighting HMRC usually can be claimed."
categories:
  - "Financial Negligence"
  - "Letter Before Claim"
  - "Limitation periods"
  - "Litigation advice"
  - "Negligence Claim"
  - "Pre Action Protocols"
  - "professional negligence"
  - "tort law"
tags:
  - "HMRC R&D enquiry"
  - "HMRC winding up petition"
  - "Limitation period"
  - "Negligence Claims advice"
  - "negligent tax adviser claim"
  - "paragraph 18 Schedule 24 FA 2007"
  - "paragraph 83EB Schedule 18 FA 1998"
  - "Pre-Action Protocol for Professional Negligence"
  - "Professional negligence"
  - "Professional Negligence Claim"
  - "professional negligence compensation"
  - "R&D claim notification"
  - "R&D tax credit adviser negligence"
  - "R&D tax relief clawback"
  - "section 1142A CTA 2009"
  - "Section 14A Limitation Act 1980"
  - "section 14B Limitation Act 1980"
  - "SI 2023/813"
  - "sue R&D tax adviser"
  - "Third Parties (Rights against Insurers) Act 2010"
image: https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Innovative-Office-Desk-with-PCB-and-Envelope-1024x576.png
word_count: 2355
---

# R&D Tax Claim Rejected? Can You Sue Your Adviser?

Yes, a company can sue its R&D tax credit adviser if the adviser was negligent and the company lost money because of it. The harder question is what that loss is. Money HMRC claws back because the company was never entitled to it is often unrecoverable. Lost valid relief, penalties, interest, wasted fees and the cost of fighting HMRC usually can be claimed.

Most of the companies asking this question did nothing wrong except trust a specialist. They signed up with an R&D tax credit firm, often on a percentage fee, received a payment from HMRC, and then months or years later opened a letter saying the claim was wrong. Many directors are surprised to learn that the adviser walks away with its fee while the company faces the repayment, the penalty and sometimes a [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/).

#### Had an HMRC Letter About Your R&D Claim? What to Do First

Do not ignore it, and do not leave the reply to the adviser who prepared the claim, because its interests may now differ from yours. Note the deadline on the letter, keep the engagement letter, the technical report, the fee invoice and every email, and read our guide to [HMRC clawback demands for R&D tax credits](https://taxdisputes.co.uk/2024/04/rd-tax-credits-hmrcs-clawback-demands/). At the same time, find out whether the adviser is still trading and insured, as our guide on [claiming against an insolvent professional's insurer](https://professionalnegligenceclaimsolicitors.co.uk/insolvent-professional-claim-against-their-insurer/) explains.

**What Counts as Negligent R&D Tax Advice?**

An R&D adviser is negligent if it did its job worse than a reasonably competent adviser in that field would have, and the company suffers loss as a result. That is the same three part test of duty, breach and loss that applies in every claim we bring against [negligent tax advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) and [negligent accountants](https://professionalnegligenceclaimsolicitors.co.uk/compensation-negligent-accountants-financial-tax-advisors/). Our [step by step guide to proving professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/how-to-prove-professional-negligence-a-step-by-step-legal-guide/) explains each part in plain terms.

In [R&D ](https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief)cases the common failings we see are claiming for ordinary software or routine engineering work that was never real research, counting costs that do not qualify, writing a technical report that does not describe any genuine scientific or technological uncertainty, and failing to warn the company that HMRC was likely to challenge the claim. HMRC has stepped up its checks on these claims, as our article on [R&D tax relief enquiries and penalty mitigation](https://taxdisputes.co.uk/2025/12/rd-tax-relief-enquiries-penalty-mitigation/) explains. A claim that HMRC rejects is not automatically a negligent one, though, and some rejected claims should be defended, as set out in our guide to [challenging HMRC when it rejects an R&D claim](https://taxdisputes.co.uk/2025/10/hmrc-rejected-your-rd-tax-relief-claim-legal-defence-guide/).

### Want legal advice on the merits of your case?
Your legal enquiry goes immediately to our PN litigation team in Middle Temple, London. We can't take on low value cases or give free legal advice - our minimum fee is £1750 +VAT for a conference with a solicitor and barrister. Call us on +442071830529.

[Check My Case Now ✔](https://professionalnegligenceclaimsolicitors.co.uk/litigation-case-assessment-form/)

**Missed R&D Claim Notification Deadline: The Clearest Type of Claim**

Some R&D negligence claims are simple. Under [section 1142A of the Corporation Tax Act 2009](https://www.legislation.gov.uk/ukpga/2009/4/section/1142A), a company that must give HMRC advance notice of an R&D claim has a notification period that ends with the last day of "the period of six months beginning with the first day after that period of account". If the adviser was engaged in time and let that window close, the company may lose relief it was genuinely entitled to. Under paragraph [83EB(7) of Schedule 18 to the Finance Act 1998](https://www.legislation.gov.uk/ukpga/2023/30/schedule/1/paragraph/14), a new claim cannot then be made.

The same applies to the additional information HMRC now requires with every claim. The explanatory note to [the Relief for Research and Development Regulations 2023, SI 2023/813](https://www.legislation.gov.uk/uksi/2023/813/introduction/made) records that under paragraph 83EA of Schedule 18 to the Finance Act 1998 "a claim is invalid unless" that information has been provided. Lost valid relief is a real loss, and it is the kind of loss our [guide to claiming compensation for negligent advice](https://professionalnegligenceclaimsolicitors.co.uk/can-you-claim-compensation-for-negligent-advice/) deals with.

**Who Pays the HMRC Penalty When the Adviser Made the Mistake?**

The company does, at least at first. Paragraph 18 of Schedule 24 to the Finance Act 2007 makes the taxpayer liable for a careless inaccuracy in a document given to HMRC on its behalf. HMRC's own [Compliance Handbook guidance on agents and inaccuracy penalties](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch84520) says it does not matter whether the error was put there by the taxpayer or a third party. Our page on [HMRC penalties](https://taxdisputes.co.uk/hmrc-penalties/) explains how these penalties are worked out and reduced.

There is an escape route. Under paragraph 18(3), the company is not liable for its agent's mistake where it shows HMRC that it "took reasonable care to avoid inaccuracy". In [Hanson v HMRC [2012] UKFTT 314 (TC)](https://taxdisputes.co.uk/wp-content/uploads/2026/01/Hanson-v-HMRC.pdf) the tribunal accepted that taxpayers are entitled to rely on competent professional advice if they give the adviser accurate and complete information. So the first step is often to fight the penalty, and if HMRC will not cancel it, our article on [HMRC penalty suspension](https://taxdisputes.co.uk/2026/09/hmrc-penalty-suspension-how-to-avoid-paying/) covers another option.

**What Compensation Can You Recover From an R&D Tax Adviser?**

Compensation puts the company back where it would have been if the adviser had done its job properly. That rule comes from Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, which our [compensation guide](https://professionalnegligenceclaimsolicitors.co.uk/how-is-compensation-calculated-in-a-professional-negligence-claim/) discusses. If the work never qualified, a careful adviser would have told the company not to claim. The company would never have received the money, so simply paying it back to HMRC is usually not a loss the adviser must cover.

What the company can usually claim is different. It may include the adviser's fee, any penalty that could not be avoided, late payment interest, accountancy and legal costs spent dealing with the HMRC enquiry, and valid relief lost through missed deadlines. Where the company spent the money in reliance on the advice and now cannot repay it, there may be further losses, as our page on [financial negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/financial-negligence-claim-solicitor/) describes. Any award can be cut under [section 1(1) of the Law Reform (Contributory Negligence) Act 1945](https://www.legislation.gov.uk/ukpga/Geo6/8-9/28/section/1) "to such extent as the court thinks just and equitable" if the company's own carelessness, such as giving the adviser wrong figures, played a part.

**Should the Company or the Director Bring the Claim?**

In almost every R&D case, the company is the client and the company owns the claim. Our article on [whether directors can sue professional advisers for business losses](https://professionalnegligenceclaimsolicitors.co.uk/can-directors-sue-professional-advisers-for-business-losses/) explains that a director only has a personal claim if the adviser owed that director a separate duty. That matters if the company later goes into liquidation, because the claim then sits with the liquidator.

Proving who the adviser was is usually easy. Schedule 2 to [SI 2023/813](https://www.legislation.gov.uk/uksi/2023/813/introduction/made) requires the additional information form to name "any agent or tax adviser engaged by the company, or which has provided services to the company". Keep the engagement letter, the technical report, the fee invoice and every email, because they are the core of the evidence our [professional negligence solicitors in London](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) will ask for first.

**R&D Tax Credit Firm Closed Down or Gone Bust?**

Many R&D claim firms have shut down since HMRC tightened its checks. If the firm had professional indemnity insurance and is now insolvent, [section 1(2) of the Third Parties (Rights against Insurers) Act 2010](https://www.legislation.gov.uk/ukpga/2010/10/section/1) provides that its rights against its insurer "are transferred to and vest in" the person it owes money to. Our guide on [claiming against an insolvent professional's insurer](https://professionalnegligenceclaimsolicitors.co.uk/insolvent-professional-claim-against-their-insurer/) explains how that works in practice.

Not every R&D firm carries insurance, and some are not members of any regulated profession. That is why we check early whether there is anyone worth suing before a client spends money on a full claim, in the same way we approach [claims over negligent tax scheme advice](https://professionalnegligenceclaimsolicitors.co.uk/negligent-tax-scheme-advice-claims-explained/).

**Fight HMRC or Sue the Adviser? Why Many Directors Get the Order Wrong**

People searching for help after an R&D clawback letter often assume they must choose between appealing against HMRC and suing the adviser. In most cases both run side by side. The tax dispute decides how much the company actually owes, and that figure shapes the negligence claim. Our article on [HMRC clawback demands for R&D tax credits](https://taxdisputes.co.uk/2024/04/rd-tax-credits-hmrcs-clawback-demands/) explains the choices on the tax side, and appeals go to the tribunal under the process in our [First-tier Tax Tribunal appeals guide](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/).

HMRC can also look back further than many directors expect. Its [Enquiry Manual guidance on discovery assessments for companies](https://www.gov.uk/hmrc-internal-manuals/enquiry-manual/em3213) notes that paragraph 43 of Schedule 18 to the Finance Act 1998 applies where the loss of tax was brought about carelessly by the company or by a person acting on its behalf, which includes an adviser. Our [guide to challenging HMRC discovery assessments](https://lexlaw.co.uk/solicitors-london/ultimate-guide-to-hmrc-discovery-assessments-how-to-challenge-appeal-2026/) covers this, and HMRC information requests are dealt with in our article on [challenging a Schedule 36 penalty](https://taxdisputes.co.uk/2026/10/how-to-challenge-an-hmrc-schedule-36-penalty/).

**When an R&D Repayment Demand Leads to a Winding Up Petition**

R&D credits are often claimed by young companies that spend the money quickly. When HMRC demands it back with interest, the company may not be able to pay. Under [sections 122(1)(f) and 123(1)(a) of the Insolvency Act 1986](https://legislation.gov.uk/ukpga/1986/45/part/IV/chapter/VI/crossheading/grounds-and-effect-of-windingup-petition), a company that fails for "3 weeks" to pay an undisputed debt above the statutory minimum after a statutory demand is treated as unable to pay its debts. Our guide to [whether HMRC can wind up your company](https://windinguppetitionsolicitors.co.uk/can-hmrc-wind-up-my-company-directors-guide-to-winding-up-petitions/) sets out what happens next.

A live negligence claim against an adviser does not stop HMRC petitioning. Directors should act on both fronts at once, and our articles on [when HMRC enforcement turns into insolvency action](https://windinguppetitionsolicitors.co.uk/when-hmrc-enforcement-becomes-insolvency-action/) and [responding to an HMRC winding up petition](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) explain the steps. Tech start-ups face particular pressure here, as our page on [tech start-up insolvency](https://windinguppetitionsolicitors.co.uk/tech-start-up-insolvency-when-investor-funding-fails/) explains.

**Time Limits for Suing an R&D Tax Adviser**

The basic time limit is six years. [Section 5 of the Limitation Act 1980](https://legislation.gov.uk/ukpga/1980/58/part/I/crossheading/actions-founded-on-simple-contract) gives six years for a claim in contract, running from the breach, and [section 2](https://www.legislation.gov.uk/ukpga/1980/58/part/I/crossheading/actions-founded-on-tort) gives six years in negligence, running from when the company first suffered damage. In R&D cases we take the view that damage may be suffered as early as the date the flawed claim was filed, not the date HMRC wrote. Treat the filing date as the date the clock may have started.

Where the company only found out later, [section 14A(4)(b)](https://www.legislation.gov.uk/ukpga/1980/58/section/14A) can give three years from the date it first had "the knowledge required for bringing an action for damages". [Section 14B](https://www.legislation.gov.uk/ukpga/1980/58/section/14B) then sets a 15 year longstop from the negligent act. Our [guide to the limitation period for professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/what-is-the-limitation-period-for-a-professional-negligence-claim/) and our wider page on [limitation periods](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) explain how these rules interact. If time is short, a standstill agreement can pause the clock, as our article on [limitation in litigation](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/) explains.

**How to Start a Claim Against an R&D Tax Adviser**

Before going to court, the company must follow the [Pre-Action Protocol for Professional Negligence](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). Under paragraph 7.1 the adviser should acknowledge the letter of claim within 21 days, and under paragraph 8.2 it then has three months to investigate and respond. Paragraph 4.1 warns that the protocol "does not alter the statutory time limits". Our page on [how to start a professional negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) walks through each letter.

The letter of claim should set out what the adviser was hired to do, where it fell short and what the company has lost. Our [step by step guide to starting a professional negligence claim](https://lexlaw.co.uk/guide-to-starting-professional-negligence-claim-pre-action-protocol-no-win-no-fee-advice/) covers the pre-action letters and settlement options in more detail.

**How We Can Help**

We act for companies, and for liquidators and directors where they own the claim, against R&D tax credit firms, accountants and tax advisers whose advice has led to HMRC clawbacks, penalties and lost relief. We can run the HMRC dispute and the negligence claim together so that one does not undermine the other. We do not offer free legal advice or legal aid, and we generally take on substantial matters where the losses justify High Court litigation, as our [negligent tax advice claims guidance](https://professionalnegligenceclaimsolicitors.co.uk/negligent-tax-scheme-advice-claims-explained/) sets out.

We are dual qualified solicitors and barristers with chambers in Middle Temple, next to the Royal Courts of Justice. We offer a fixed fee advice conference with both a solicitor and a barrister, where we review your R&D claim papers, the HMRC correspondence and the adviser's terms, and tell you plainly whether a claim is worth bringing. To begin, complete our [professional negligence case assessment form](https://professionalnegligenceclaimsolicitors.co.uk/litigation-case-assessment-form/).

[Submit your Negligence Claim for Legal Review](https://professionalnegligenceclaimsolicitors.co.uk/litigation-case-assessment-form/)

### Frequently Asked Questions

How long do I have to sue an R&D tax adviser?
Generally six years, under section 5 of the Limitation Act 1980 for contract and section 2 for negligence. If the company did not know about the problem, section 14A may allow three years from the date of knowledge, subject to the 15 year longstop in section 14B. The clock may start when the flawed claim was filed, so early advice is safer.

Can I still claim if the R&D firm has gone into liquidation?

Possibly. Section 1 of the Third Parties (Rights against Insurers) Act 2010 transfers an insolvent firm's rights under its liability insurance to the person it owes. That only helps if the firm held a relevant policy, so the insurance position should be checked first.

Do I have to finish my HMRC appeal before suing the adviser?

No. The tax dispute and the negligence claim usually run side by side, and the result of the tax dispute often decides the size of the negligence claim. Limitation keeps running while the HMRC dispute continues, so a standstill agreement or protective claim may be needed under paragraph 4.1 of the Pre-Action Protocol for Professional Negligence.

What happens if my adviser missed the R&D claim notification deadline?

Under section 1142A of the Corporation Tax Act 2009 the notification period ends six months after the end of the relevant period of account. Where a required notification was not made, paragraph 83EB(7) of Schedule 18 to the Finance Act 1998 prevents a new claim. If the adviser was responsible for notifying, the lost relief can be claimed as damages.

*This article is general information about the law of England and Wales* and *is not legal advice.*