What Food & Drink R&D Actually Is (And Isn’t)

The food and beverage sector has been burned by years of poor advice on R&D tax credits. Claim factories blurred the line between new product development (NPD) and genuine R&D, leading to rejected claims, HMRC enquiries, and a sector-wide reputation for overclaiming.

The consequence? Many food and drink businesses now assume they can’t claim — even when they’re doing real food science and process engineering that clearly meets the R&D guidelines. That assumption is wrong, and it’s leaving substantial money on the table.

What Does Not Qualify as R&D

Most failed food and drink claims fall into the same traps. HMRC will typically reject:

• New recipes or flavours

Creating a new chocolate bar, sauce variant, or seasonal product using known ingredients, standard kit, and established methods. If there is no technological uncertainty, this is routine product development, not R&D.

• Consumer testing and market research

Taste panels, focus groups, and preference testing are commercial activities, not scientific or technological work resolving technological uncertainty.

• Straightforward scale-up

Moving from small batches to larger ones using the same method, where the process behaves as expected, there’s no real uncertainty.

• Like-for-like ingredient swaps

Switching suppliers or substituting one well-understood emulsifier, stabiliser, or fat for another with equivalent, documented properties.

• Standard quality and safety procedures

HACCP, routine micro testing, hygiene protocols, and regulatory compliance work are not R&D although they may provide constraints that require R&D to overcome.

• Purely aesthetic packaging changes

New graphics, formats, or shapes for branding and shelf impact, where there’s no underlying technical challenge.

• Using established processing methods in standard ways

Retorting, spray drying, extrusion, pasteurisation, or fermentation under well-understood conditions with predictable outcomes.

In plain terms: if a competent food technologist or process engineer could reasonably work out how to do it using existing knowledge, literature, supplier data, and standard food science principles, it is not R&D.

The core test is whether there was genuine scientific or technological uncertainty that could not be readily resolved by a competent professional in the field.

What Does Qualify as R&D

R&D exists where your teams face problems that current knowledge doesn’t answer. The uncertainty must be scientific or technological, not commercial.

1. Formulation Challenges

Reformulation to meet nutritional or regulatory targets where maintaining functional properties is genuinely uncertain, for example:

• Sugar, salt, fat, or calorie reduction where texture, mouthfeel, stability, or shelf life are at risk
• Clean-label reformulation where synthetic functional ingredients are replaced with natural alternatives whose behaviour in your specific matrix is not well-characterised

If a competent food scientist could not predict the outcome with reasonable confidence and had to systematically test, iterate, and characterise ingredient interactions, you are likely in R&D territory.

2. Preservation and Shelf-Life Extension

Projects where standard preservation methods are inadequate or damaging, such as:

• Combining hurdle technologies in novel ways to achieve specific microbiological targets
• Developing new thermal or non-thermal processes where heat-sensitive components are degraded by conventional pasteurisation or retorting

Routine pasteurisation of a standard product is not R&D. Designing and validating a novel process to hit defined safety and shelf-life targets in a challenging system may be.

3. Process Scale-Up with Genuine Uncertainty

Scaling from kitchen or pilot to full production where the process does not behave as expected, for example:

• Changes in mixing, heat transfer, shear, residence time, or phase behaviour that cause defects at scale
• Systematic investigation to understand why production output differs from pilot and to engineer process modifications to fix it

Where scale-up is non-trivial and the behaviour at scale could not be reliably predicted, the work to resolve that uncertainty can qualify as R&D.

4. Improved Processing

Using emerging or non-standard processing technologies where the interaction with your specific product is uncertain, such as:

• High-pressure processing (HPP)
• Pulsed electric fields (PEF)
• Ohmic heating
• Supercritical CO₂ extraction

If published literature and supplier data do not adequately cover your specific application, and you must systematically investigate process–product interactions, this can be qualifying R&D.

5. Allergen Management with Technical Challenges

Work to remove, substitute, or control allergens where standard approaches fail, for example:

• Developing gluten-free baked goods where gluten provides critical structure
• Replacing egg in emulsions or dairy proteins in texture-critical systems
• Designing cross-contamination controls in complex, shared facilities where existing methods are ineffective

Where you must develop and validate new technical solutions rather than apply standard practice, there may be qualifying R&D.

6. Fermentation and Biotechnology

Novel fermentation or bio-based processes where microbiology or biochemistry is not well-characterised for your application, including:

• Developing and optimising starter cultures for new substrates
• Controlling fermentation kinetics in unconventional matrices
• Achieving consistent quality in inherently variable biological systems

Food & Drink R&D: Where HMRC Draws the Line

Developing a new flavour of crisp is not R&D. Neither is tweaking a recipe to use a cheaper ingredient, creating a seasonal variant, or coming up with a new sandwich filling. These are commercial product development activities — perfectly legitimate business decisions, but they don't involve resolving technological uncertainty in the way the legislation requires.

HMRC has seen thousands of food and drink claims built on exactly this kind of work, and the crackdown has been significant. Claims rejected. Credits clawed back. Penalties applied. The result is that many food manufacturers now assume R&D tax relief isn't for them — or that it's too risky to bother with.

That's a shame, because genuine food science and process engineering R&D absolutely qualifies, and there's a lot of it happening across the UK's 7,000+ food and drink manufacturers.

What Does NOT Qualify

This is where most food and drink claims fall apart. The following activities do not qualify as R&D, regardless of how much time or money you spend on them:

• New flavour combinations or variants — creating a new product line, seasonal flavour, or recipe variant is commercial novelty, not technological advance. Even if it takes extensive consumer testing and iteration, the uncertainty is commercial (will customers buy it?), not technological
• Routine recipe adjustments — swapping one supplier's ingredient for another, adjusting quantities, or adapting an existing recipe for a different format (e.g. moving from a jar to a pouch) using known techniques
• Standard process operation — running established production equipment within its designed parameters, even if your team is experienced and the process requires skill
• Cosmetic or branding changes — new packaging designs, label changes, or reformulations driven purely by marketing or cost considerations
• Quality control using established methods — routine microbiological testing, standard shelf-life trials, or QC checks using validated methods
• Scaling up using known methods — increasing batch sizes where the process behaves predictably and the scale-up follows established engineering principles

Translation: HMRC draws a clear distinction between commercial novelty (a new product that's new to you or new to the market) and technological advance (work that resolves a scientific or technological uncertainty that couldn't be readily resolved by a competent professional). Per CIRD81900, the advance must be in science or technology, not in the commercial product itself.

The question is never "is this product new?" It's "did you face a scientific or technological problem that a competent food scientist, food technologist, or process engineer couldn't solve using existing knowledge and standard methods?"

What Genuinely Qualifies

Real food and beverage R&D exists where your technical team faces problems that don't have known, reliable solutions in the relevant field of food science or process engineering. Here's what that looks like:

Formulation and Reformulation Challenges

This is where the strongest food R&D claims often sit. Genuine technological uncertainty arises when you need to:

• Significantly reduce sugar, salt, or fat while maintaining texture, mouthfeel, stability, and consumer acceptability — where existing reformulation approaches (bulking agents, flavour masking) don't achieve the required result and you must develop novel ingredient interactions or processing methods
• Remove or substitute allergens (gluten-free, dairy-free, egg-free) where the functional role of the allergen in the product (structure, emulsification, binding) creates genuine formulation uncertainty
• Develop clean-label products replacing synthetic preservatives, emulsifiers, or stabilisers with natural alternatives where the functional performance is uncertain and requires systematic investigation
• Achieve specific nutritional profiles for products targeting health claims where the bioavailability, stability through processing, and organoleptic impact of functional ingredients is uncertain

The key is that you must be resolving a food science problem — not simply experimenting with flavour preferences.

Preservation and Shelf-Life

Qualifying R&D commonly arises where:

• Existing preservation methods (MAP, HPP, pasteurisation, chemical preservatives) cannot achieve the required shelf-life for a specific product without unacceptable impact on quality, texture, or nutritional value
• You're developing novel combinations of preservation hurdles (water activity, pH, temperature, atmosphere, natural antimicrobials) where the interaction effects on both safety and quality are uncertain
• New packaging technologies (active packaging, intelligent packaging, novel barrier materials) need to be developed or adapted for specific product-packaging interactions that are not well-characterised

Process Engineering and Scale-Up

This is often overlooked but can generate substantial claims:

• Kitchen-to-factory scale-up where the process behaviour changes unpredictably at larger volumes — mixing dynamics, heat transfer, ingredient interactions, crystallisation, or emulsion stability behave differently and require systematic investigation to resolve
• Developing novel processing methods — new combinations of temperature, pressure, time, and mechanical action where the effects on product properties are not predictable from existing knowledge
• Adapting production lines for fundamentally different product types where the interaction between new ingredients and existing equipment creates genuine processing uncertainty

Fermentation, Enzymatic, and Biological Processes

An increasingly important area:

• Novel fermentation processes for products like kombucha, kefir, plant-based proteins, or precision fermentation products where the microbiology is not well-characterised for your specific substrate, organism, and conditions
• Enzymatic processing using novel enzyme combinations or applications where the reaction kinetics, specificity, or stability in your processing environment is uncertain
• Cultivated or alternative protein development where the biological processes, media optimisation, and downstream processing involve fundamental scientific uncertainties

Automation and Process Technology

Where the food itself creates the technical challenge:

• Developing vision systems, robotics, or automated handling for natural food products whose variability (size, shape, texture, ripeness) makes standard automation approaches unreliable
• In-line monitoring and control systems where the relationship between sensor readings and actual product quality is uncertain and requires development of novel correlations or algorithms

The Merged R&D Scheme (From 1 April 2024)

For accounting periods starting on or after 1 April 2024, food and beverage companies claim under the merged R&D Expenditure Credit (RDEC) scheme:

• Credit rate: 20% of qualifying R&D spend
• Net benefit (typical): ~15p per £1 after 25% Corporation Tax
• Example: £150,000 qualifying R&D costs → approximately £22,500 in tax relief

For loss-making companies where qualifying R&D is ≥30% of total expenditure, you may access Enhanced R&D Intensive Support (ERIS) with a payable credit of up to 27%. This can be particularly relevant for early-stage food tech companies, alternative protein businesses, or companies investing heavily in process R&D while building market share.

Costs You Can Claim

Qualifying cost categories for food and beverage R&D include:

• Staff costs — salaries, employer NIC, and pensions for food scientists, food technologists, process engineers, NPD technologists, and production staff directly involved in R&D activities (apportioned by time spent on qualifying work)
• Consumables and materials — ingredients, raw materials, and consumables used or transformed during R&D activities. This includes trial batches, test formulations, and materials used in experimental production runs. Materials that enter commercial sale generally do not qualify
• Subcontractors — UK-based subcontracted R&D at 65% of invoiced cost. This covers specialist testing labs, contract manufacturers carrying out trial production under your direction, and external food scientists or technologists
• Software licences — specialist software used directly in R&D: formulation databases, rheology modelling, thermal process simulation, statistical experimental design (DoE)
• Cloud computing and data — processing and data costs for R&D modelling, simulation, or analysis (eligible from 1 April 2023)
• Utilities — heat, light, and power used in R&D activities including pilot plant operations, test kitchen facilities, and trial production runs

Important: From 1 April 2024, there are restrictions on overseas R&D costs. Subcontracted activities and externally provided workers must generally be UK-based to qualify under the merged scheme.

What HMRC Expects to See

Food and drink claims attract scrutiny because of the sector's history of over-claiming. To withstand an enquiry, your claim needs:

Clear identification of technological uncertainty. Not "we wanted to create a healthier product" but "the removal of sucrose caused the emulsion to destabilise during pasteurisation, and existing approaches to reformulation using [specific alternatives] could not maintain the required texture stability at the target fat content."

Evidence of systematic investigation. HMRC expects to see that you followed a planned approach — not just trial and error. Design of experiments (DoE), structured trial programmes, hypothesis testing, and systematic parameter variation all demonstrate a scientific approach per the DSIT Guidelines.

Distinction between R&D and routine NPD. Not all new product development is R&D. Your claim must clearly separate the work that involved genuine technological uncertainty from the routine commercial development activities (flavour optimisation, consumer testing, packaging design) that don't qualify.

Contemporaneous records. Lab notebooks, trial reports, formulation records, production trial data, email discussions about technical challenges — evidence created at the time of the work carries far more weight than retrospective narratives.

Competent professional baseline. You must be able to show that the problem could not have been readily resolved by a competent food scientist or process engineer using publicly available knowledge. If the answer was in a textbook, a supplier's data sheet, or established industry practice, it's not R&D.

Why Food & Beverage Companies Work With Innovation Plus

The biggest challenge in food and drink R&D claims is knowing where commercial product development ends and genuine R&D begins. Get that wrong in either direction and you either leave money on the table or expose yourself to an HMRC enquiry.

We help by:

• Honestly assessing whether your NPD and process work involves genuine technological uncertainty — and telling you straight if it doesn't