By the time the second series of Steven Moffat and Mark Gatiss’ Sherlock was broadcast, audiences had not only got used to the duo’s revisionist take on Holmes and Watson but for the most part had enthusiastically embraced it, making in one of the BBC’s biggest hits for many years. It was inevitable that Moffat and Gatiss would eventually tackle The Hound of the Baskervilles and when they did (it was actually written by Gatiss on his own), it was equally inevitable that it would be as clever, inventive and funny as we’d come to expect.

Like many of the episodes, it ransacks various bits and pieces from Conan Doyle. It begins with a blood-soaked Holmes (Benedict Cumberbatch) returning home to 221B Baker Street with a harpoon (he’s travelled like this on the underground because no taxi would take him…) in a nod to the story The Adventure of Black Peter. After some amusing business with Holmes suffering withdrawal symptoms (we supposed to believe that he’s given up the drugs but in fact he’s been off the cigarettes for a few days), he and Watson (Martin Freeman) are visited by Henry Knight (Russell Tovey), a disturbed young man who spins them a tale of a terrifying childhood encounter with a “gigantic hound” on Dartmoor that killed his father 20 years earlier. Holmes is initially dismissive but his interest is eventually piqued and he and Watson head off for Dartmoor. Along the way they investigate the workings of a shady Ministry of Defence research base, Baskerville, and its experiments using genetically modified animals and a hallucinogenic gas (another tip of the hat to Conan Doyle, this time The Adventure of the Devil’s Foot), are unexpectedly reunited with Lestrade (Rupert Graves) and are warned not about the Grimpen Mire but the Grimpen Minefield that surrounds the base.

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The Hound of the Baskervilles is one of the most adapted adventures in the Holmes canon and bringing something fresh and original to it is no mean feat. Moffat and Gatiss decided to ring the changes by making their version part of a trilogy of stories that charted the gradual mental unravelling of Holmes as he was forced to deal with emotions and experiences that he was unused to – love in A Scandal in Belgravia, death in The Reichenbach Fall and fear in Baskerville. It begins with Holmes already in an agitated state thanks to his nicotine withdrawal and puts him through the emotional mill, forcing him to admit to Watson at one point that for the first time he could no longer trust his own senses, no longer believe in anything he was seeing and hearing. His behaviour in Baskerville would be enough to antagonise those still immune to the series’ charms – he’s revealed at one point to have deliberately exposed Watson to the hallucinogenic gas and mentally tormented him just to prove a point to himself – and the script’s suggestion that Holmes may have Asperger’s is initially rather jolting but actually makes a degree of sense.

But overall, the episode retains the feel of Conan Doyle even as it takes many, many liberties with the text. Thanks to Paul McGuigan’s stylish direction and Fabian Wagner’s gorgeous photography, it’s wonderfully creepy throughout, nevermore so than when out on the desolate moors. The climax, though marred by some sub-par CGI representing the hound, is a moody set-piece in a the fog-shrouded Dewer’s Hollow as Holmes, Watson, Knight and Lestrade – who, they learn, was sent to Dartmoor by Mycroft Holmes (Gatiss) to keep an eye on his increasingly wayward brother – suffer their own individual hallucinations as the hound, eyes glowing red and as monstrous as you’d expect, circles around them. Gatiss’ love for horror films is no secret and his schooling particularly in the British Gothics of Hammer and their imitators stands him in good stead here – The Hounds of Baskerville is as much a love letter to 70s British horror as it is to Conan Doyle.

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It’s also very funny, as you might expect. There’s a drawn out but well realised gag involving Watson’s solo investigation of a mysterious Morse code message apparently being delivered by mystery lights after dark (in the novel, Barrymore the butler uses a candle to signal to the escaped prisoner Selden) – initially baffled by the message (“U.M.Q.R.A .”) he ventures out onto the alone only to realise that the message is complete nonsense, the random flashing of car lights from a group of, appropriately enough, doggers.

Not everyone was convinced by The Hounds of Baskerville. Some felt that it was a too obvious treatise on the evils of vivisection and experimentation on animals, while others felt that it took at least one liberty too many with the source material. Which is fair enough but after the first series, surely by this time we’d all become used to what Moffat and Gatiss were doing with Holmes and Watson and the plentiful tinkering with the novel should have come as no great surprise. It’s a brave, funny and inventive attempt to do something new with a story that has been told and retold many, many times and as with all the episodes of Sherlock was clearly written with much love and affection for its source. The performances are top notch, the photography stunning, the pacing relentless – what more do you need from a resolutely modern take on a much-loved classic? As Holmes tells Henry in the aftermath of their traumatic adventure, “This case… Thank you, it’s been brilliant”.