Not every research and development (R&D) project goes to plan.
Failure or abandonment is very common. In fact, in the pharmaceutical industry the global success rate for R&D projects is as low as 7%, according to IQVIA’s R&D Global Trends in R&D 2025 report.
Some projects don’t meet their intended goals, others are aborted; perhaps because they’ve become scientifically or technically unfeasible, or because costs have spiralled to the point where carrying on is no longer commercially worthwhile.
Fortunately, the UK’s R&D tax relief scheme recognises that failure can be an integral part of the innovation process. Regardless of whether or not your R&D project was successful, you may still be able to claim R&D Tax Credits, as long as you’re able to meet HMRC’s definition of R&D. To do this, your project must have at least aimed to achieve an advance in science or technology with an element of uncertainty. In other words, it’s the attempt that matters and not whether you were successful.
Below, we explain everything you need to know about claiming for failed or abortive R&D projects.
Below, we drill into HMRC’s Research and Development Tax Credits Statistics: September 2025 report, which helps to reveal the health of innovation investment in the UK.
Can you claim R&D Tax Credits for failed projects?
The short answer is yes (as long as there was qualifying activity before the project ended).
HMRC’s guidelines on the Meaning of research and development for tax purposes are very clear: ‘Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place.’ As well as this, the official Research and Development Manual has a section on abortive projects, clarifying that ‘Scientific or technological planning activities associated with projects which are not taken forward… are still R&D.’
What counts as a failed R&D project?
Any project that you’ve worked on where the outcome didn’t fully meet your original goals might be called ‘failed’ R&D.
For example:
- A prototype didn’t work as intended under test conditions
- An experiment to improve a process’s efficiency made the performance worse
- Attempts to link software systems revealed previously unknown technical incompatibilities
- A project is abandoned after it became clear that the technology would be too expensive to develop
- A project is halted as the business priorities of the company have changed
But remember, the reason behind why your R&D project failed isn’t important. When it comes to claiming tax relief, the better question is: What is an R&D project?
R&D projects follow a systematic process to try and advance the existing science or technology baseline whilst attempting to resolve a scientific or technological uncertainty (regardless of their success). This might involve trying to improve an existing product or process, attempting to invent something new, or seeking to contribute to our overall knowledge in a field of science or technology.
What costs can be claimed for failed R&D projects?
The rules for claiming are exactly the same for failed or abortive R&D projects as for successful ones. If your project qualifies, you can claim for your eligible expenditure, such as:
- Staff costs
- Consumables
- UK-based subcontractors and externally provided workers (EPWs)
- Software
- Cloud computing and data licences
- Certain indirect expenses that supported the R&D work (e.g., admin, or maintenance of R&D equipment)
What evidence do I need to claim for an unsuccessful R&D project?
To prepare for any R&D Tax Credits claim, regardless of whether your project was successful, you should keep detailed records of all your R&D activities. These records need to tell the story of your project, showing a clear narrative of what the advance was, what the scientific or technological uncertainty was, how you systematically attempted to overcome this uncertainty, and what was learned (despite the project ultimately failing).
Below is a non-exhaustive list of what may be included:
- Project plans
- Emails
- Timesheets
- Competitor analysis
- Test logs
- Test reports
- Datasets
- Design briefs
- Completed designs
- Meeting notes
- Invoices & receipts
How Leyton can help
Whether your innovation failed or was abandoned, you may still be able to claim for a significant portion of your costs.
If you’re not sure whether your failed research and development qualifies for tax relief, we recommend contacting a member of our specialist team. They’ll be happy to guide you on the likelihood of a successful claim.
Should your project qualify, they can help to identify eligible activities and put together a robust claim that will satisfy HMRC’s strict criteria.
Speak to an expert today.
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