R&D tax credit PI cover — the post-2022 landscape

HMRC's volumetric enquiry programme starting in 2022 fundamentally reshaped the R&D tax credit adviser risk landscape. What had been a benign specialist niche became a scrutinised segment. Insurer appetite tightened, wordings adjusted, and firms with material R&D exposure now face a materially different renewal conversation than they did before.

What changed in 2022 — and why it matters for PI

HMRC opened enquiry rates on R&D SME scheme claims from roughly 3% pre-2022 to over 20% post-2022. The Autumn Statement 2022 and Spring Budget 2023 restructured the scheme rates. GAAR (General Anti-Abuse Rule) guidance was updated to reference R&D claim structures.

For advisers, this meant three things simultaneously: higher volumes of client HMRC enquiries; higher likelihood of disallowance of previously-filed claims; and higher likelihood of client damages claims against the adviser for filing claims that don't survive HMRC scrutiny.

Insurers responded with a mix of rate loading, wording restriction, and in some cases outright appetite exit.

How R&D-specific PI cover is now structured

Standard extension — still available at most insurers

For general accountancy firms with modest R&D activity (say up to 15% of fee income), most insurers will still include R&D within the standard tax-advisory wording — sometimes with a specific R&D extension endorsement.

Standalone R&D adviser wording — narrower market

For firms with material R&D activity (30%+ of fee income), or specialist R&D boutiques, standalone wording is now required. Fewer insurers in this space; specialist wholesale market for higher volumes.

R&D activity exclusion — some insurers now default

A minority of insurers now default to excluding R&D activity as standard, requiring an explicit extension to write it back in. Firms need to check.

Notification triggers for R&D advisers

The relevant trigger under most wordings is not the client claim — it's the HMRC enquiry opening. Wordings covering ‘circumstances that could give rise to a claim’ require notification when HMRC opens enquiry on a claim the adviser filed.

Under-notification here is a common mistake. Firms should have a documented process for logging HMRC enquiries against filed R&D claims and reviewing quarterly for notification obligations.

Wording tests at renewal

1. Confirm R&D activity is covered or specifically extended.
2. Confirm the definition of ‘R&D activity’ in the wording — some exclude specific sub-activities.
3. Test aggregation: if a common methodology is challenged by HMRC across 20 clients, does one limit apply or twenty?
4. Confirm HMRC-enquiry-notification treatment under the ‘circumstances’ clause.
5. Check retroactive date — historic filings should remain covered under the current policy.
6. Confirm defence-costs treatment — specialist R&D defence is expensive; wording matters.

The insurer appetite map

Broad appetite: general accountancy PI insurers writing R&D as part of the wider tax advisory scope, subject to activity-level limits.

Narrow appetite: specialist tax PI markets, some Lloyd's syndicates via wholesale.

Exclusion: certain retail-focused accountancy insurers now default to excluding R&D unless specifically extended.

Frequently asked

Related reading

• Tax advisers sector pillar
• Aggregation of claims in PI
• Accountants sector pillar
• Retroactive date discipline in PI