An HMRC enquiry into an R&D claim follows a more predictable path than it feels like from the inside. It opens with a formal notice, runs on rounds of questions and evidence, and ends with a closure notice that either leaves your claim alone or changes it, which you can then challenge. Most of what goes wrong in enquiries goes wrong because a company doesn’t know which stage it is at, or what that stage is actually testing.
This guide covers the whole path. If a letter has just arrived and you need to know what to do this week, start with how to read an HMRC compliance check letter and come back here.
An enquiry and a compliance check are the same thing
HMRC’s letters call it a “compliance check”. The legislation calls it an enquiry, under Schedule 18 of the Finance Act 1998. They are the same procedure. An enquiry covers the company’s Corporation Tax return — in principle the whole return, not just the R&D claim — although in practice HMRC usually scopes an R&D enquiry to the claim in its opening letter.
What is genuinely different is the softer correspondence HMRC sometimes sends first. A “one-to-many” or nudge letter invites you to review your own claim because HMRC has seen a pattern of similar errors across many companies. It is not an enquiry and carries no formal powers, though it should not be ignored. And HMRC has a separate power to “correct” a return and remove an R&D claim without opening an enquiry at all — which you can reject, within time limits. Both are covered in how HMRC screens R&D claims at scale.
How likely is it?
Far more likely than it used to be. For claims in the 2023 to 2024 year, HMRC reports that about 9,700 of 61,000 R&D claims — around one in six — received a compliance check. A few years earlier, an R&D claim was unlikely to attract a second look.
The change is a deliberate response to how badly the scheme was being misused. HMRC’s own random audits found that around half of SME claims for 2021 to 2022 had something wrong with them, and about 30% were wholly non-compliant. Several things drove that, and they explain how HMRC now picks claims:
- Volume firms. A wave of advisers selling quick, templated claims on a percentage fee produced large numbers of thinly evidenced submissions. HMRC’s response was to stop accepting claims on trust.
- The additional information form. Since it became mandatory, HMRC sees the projects, the uncertainties and the cost breakdown before it processes a claim. A thin or generic additional information form is now one of the quickest routes to an enquiry.
- Better cross-checking. HMRC compares claims with what it would expect from a business of that sector and size, and with the company’s earlier claims.
None of this means a check is an accusation. HMRC does not need a reason to open an enquiry and does not have to tell you why it picked your claim. In our experience the common triggers are:
- a SIC code at Companies House that nobody would associate with R&D
- errors or inconsistencies in the CT600 or the additional information form
- cost calculations that are unclear or poorly explained
- a technical narrative that doesn’t clearly show an advance or a real uncertainty
- a large first-time claim, or a claim that has grown sharply year on year
And sometimes there is no particular reason at all.
When it can be opened
If you filed the return on time, HMRC can generally open an enquiry at any point up to twelve months after the day you filed it. Late filings and amended returns have slightly different windows, and group companies other than small groups run from the filing date instead. The detail is in what happens if HMRC opens an enquiry into my R&D claim.
Once that window has passed with no enquiry, the claim is settled — unless HMRC can later make a discovery assessment, which it can only do in narrower circumstances, mainly where the company was careless or what it disclosed at the time was not enough for an officer to spot the problem. That is why the quality of the original claim keeps protecting you years after it was filed. See can HMRC reopen my R&D claim after the enquiry window has closed.
What HMRC asks for
The opening letter usually asks for three things: the technical case for the advance and the uncertainty, the workings behind the costs, and a first round of supporting evidence. Requests tend to start broad and get narrower with each round, until HMRC is asking, project by project, when the uncertainty was first identified, when work to resolve it began, when it was resolved, and which documents from the time show each of those dates.
On the technical side, HMRC is testing whether the project sought an advance in science or technology, and whether there was genuine uncertainty that a competent professional in the field could not readily resolve. Work that was difficult, slow or commercially risky does not qualify on that basis alone. The evidence that answers this is whatever was created while the work was happening:
- emails and meeting notes where the technical problems were argued through
- project plans, design changes, drawings and CAD revisions
- test plans, test results and failure reports
- photographs or video of prototypes and test set-ups
- software repositories and development logs
HMRC will also want to know who was involved at each stage and which uncertainty they were working on. Being able to map people to activities to uncertainties matters most where staff time has been apportioned.
On the financial side, expect requests for payroll records, the workings behind time apportionment, invoices for subcontractors, externally provided workers, consumables and software, and sometimes bank statements showing they were paid. Allocating 100% of anyone’s time to R&D will almost always be questioned. For externally provided workers, HMRC may want evidence that the supplying company ran PAYE on them; where that can’t be produced, the cost usually comes out.
The requests can be very large. In one enquiry we handled, HMRC initially asked for over 1,000 invoices for a single claim. By negotiating over what was actually relevant to the questions it was asking, we got that down to 150.
Most of this runs on ordinary correspondence. HMRC can also issue a formal information notice, which carries penalties if ignored and can only partly be appealed — see what HMRC can require you to provide.
How long it takes
You will usually be given 30 days to answer each round, and HMRC should aim to respond within a similar period once it has your information. There is no statutory limit on how long an enquiry can run.
A check focused on a single point can be resolved in a few weeks. A full enquiry into a complex claim can run for six months or much longer. HMRC reports that the average R&D check in 2023 to 2024 took 246 days. The quickest we have handled closed in four weeks; the longest ran for over two years. Silence in between is not necessarily bad news.
If an enquiry stalls with no real progress, you can ask the tribunal to direct HMRC to close it. The tribunal has to give that direction unless HMRC shows reasonable grounds for keeping it open — a real step, but not one to take the moment correspondence goes quiet for a few weeks.
How enquiries end
HMRC ends an enquiry with a closure notice, which states its conclusions and either confirms no change is needed or amends the return. It can also issue a partial closure notice to settle one point — the technical case, say — while the rest carries on.
Broadly, there are four ways it goes:
- HMRC is satisfied and closes the check with no change.
- Some costs were wrongly included or allocated, and the claim is reduced.
- One project is judged not to be R&D and comes out, while the others stand.
- The claim is rejected in full.
HMRC reports that 77% of R&D checks in 2023 to 2024 ended with some adjustment to the claim. That figure covers every claim checked, including the large number of templated claims that prompted the crackdown in the first place; it says little about a claim that was prepared properly.
Penalties
A reduced claim does not automatically mean a penalty. Penalties depend on behaviour: whether the inaccuracy was careless or deliberate. If you took reasonable care and the claim was still wrong, no penalty is due. A 2024 tribunal decision confirmed that HMRC cannot treat a failed R&D claim as careless just because it failed.
Where a penalty is due, it is a percentage of the tax lost — up to 30% for careless, 70% for deliberate and 100% for deliberate and concealed — and it comes down, sometimes to nothing, for telling HMRC about the problem and helping put it right. How promptly and openly a company corrects a claim it accepts was wrong makes a large difference. See what penalty could apply if my R&D claim turns out to be wrong.
If you disagree
You can appeal a closure notice amendment in writing within 30 days. From there you can ask for an internal review by an HMRC officer who wasn’t involved, or take the appeal to the First-tier Tribunal. Alternative dispute resolution — a mediated conversation with an independent HMRC mediator — can run alongside either, and can also be used while an enquiry has stalled. Most disputes resolve before a hearing: HMRC reports that 89% of R&D checks in 2023 to 2024 ended by agreement.
A first refusal is not necessarily the end. We have had a claim accepted after HMRC suggested ADR in response to a tribunal appeal, and another accepted in full by HMRC’s own lawyers shortly before the tribunal was due to hear it. The routes, deadlines and costs are covered in appeals, ADR and the tribunal.
Who handles it
Your adviser’s standing doesn’t change who is responsible: the company is liable for its return. But the adviser matters a great deal to how an enquiry goes, because the argument is technical and it is fought on HMRC’s own guidance. When choosing someone, ask how many enquiries they have handled, how many they defended and how many they lost. There is no such thing as an HMRC-approved R&D adviser; what HMRC does require of advisers, including registration since May 2026, is set out in what standards HMRC expects from your R&D tax adviser.
The best defence is built before the claim is filed
Enquiries are rarely about one missing document. They are about whether the technical and financial story hangs together: clear uncertainties, people mapped to the work, costs that follow from both, and records from the time that show it happened. A claim built that way tends to close quickly. One assembled afterwards from memory tends not to.
Over the last five years HMRC has opened six enquiries into claims we prepared. All six were defended successfully; the only adjustment was £232, from an accounting error. The detail of each — and of the enquiries we have taken on into claims other people prepared — is on our HMRC enquiry support page.
If you have a letter, or a claim you would like checked before HMRC looks at it, send us an overview for a free video review, or book a call with John or Jason.
This article is general information, not advice on your claim. R&D tax rules and HMRC practice change, and every enquiry turns on its own facts.