HMRC have specifically defined the nature of projects that qualify for R&D Tax Credits and have legislated when costs can be claimed.
We frequently get asked whether projects that fail or are otherwise cancelled should be treated. Following the official government guidelines, this page defines how such projects should be treated within your R&D Tax Credits claim.
"Not all projects succeed in their aims. What counts is whether there is an intention to achieve an advance in science or technology, not whether ultimately the associated scientific or technological uncertainty is completely resolved or resolved to the degree intended. Scientific or technological planning activities associated with projects which are not taken forward (e.g. because of insurmountable technical or commercial challenges) are still R&D."
As can be seen above, this is generally good news for most companies, as projects that fail or for any other reason don't progress, can still be included in an R&D Tax Credits claim so long as they adhere to the BEIS eligibility criteria on the definition of R&D for Tax Purposes.
Projects that fail prior to work commencing to resolve scientific or technological uncertainty must not be included within a claim, even if you are confident that the project would have been scientifically or technologically uncertain, as this would mean that that the project had not yet become an R&D project.