Most people read a compliance check letter the way they’d read a parking notice: quickly, defensively, looking only for the deadline and the worst-case scenario. That’s understandable, but it means missing the part of the letter that matters — because beneath the formal language, HMRC is telling you exactly what it wants to see and where it isn’t yet convinced. Learning to read that signal is worth more than any amount of general “stay calm” advice, because it tells you where to focus your effort before you’ve spent a single hour on the response.
This isn’t a guide to the process of responding — we’ve covered that separately. This is about decoding the document itself: what each part of a typical letter does and what the specific phrasing is really asking for.
Start with the shape of the letter, not just the words
Before you read a single question, look at the letter’s structure. A short letter with two or three broad questions usually signals an aspect enquiry — HMRC has one specific concern, often the technical narrative or a particular cost category, and hasn’t yet decided the rest of the claim needs scrutiny. A longer letter with a numbered list of eight or ten questions, covering costs, technical detail and process, points to a fuller review. Neither is good or bad news in itself, but it tells you how widely to cast your evidence net before you start.
The legal basis cited near the top — usually a reference to Schedule 18 of the Finance Act 1998 — confirms this is a formal enquiry into the Corporation Tax return, not an informal query. It’s boilerplate, but it’s worth noting because it sets the standard of evidence HMRC expects: contemporaneous records, not a fresh explanation written for the occasion.
Translate the standard phrases
HMRC’s questions are drawn from a consistent bank of wording, and each one tests something specific.
“Please explain the scientific or technological advance sought.”
This is not asking what the product does or why customers wanted it. It’s asking: what did the field’s existing state of knowledge or capability look like before you started, and what specifically did you add to it? A commercial description of the finished product answers a different question and, to a caseworker, can read like an evasion.
“Please set out the technological uncertainties encountered.”
HMRC wants the specific technical questions that a competent professional, working from existing knowledge, couldn’t answer — not general project risk, not commercial uncertainty about whether customers would buy it. If your answer could apply to any ambitious project, it hasn’t identified the uncertainty.
“Please confirm the boundaries of the project.”
This asks you to separate the R&D activity — the work resolving genuine technological uncertainty — from the surrounding commercial project. Claims run into trouble here more than anywhere else, because the qualifying activity is usually narrower than the project, and a vague answer invites HMRC to draw the line for you, usually more tightly than you would.
“Please identify the competent professionals and their qualifications or experience.”
HMRC is checking that the judgement on what counted as an advance was made by someone with genuine domain expertise, not merely asserted by an adviser or a finance team working from a template. A thin answer here undermines everything else in the response, as it suggests nobody with the relevant knowledge was involved in framing the claim.
“Please provide a breakdown of qualifying costs by category and their relationship to the qualifying activity.”
This request asks for your workings, not just your totals. HMRC wants to see the link between each cost and the specific R&D work — including time apportionment for staff, the qualifying proportion of subcontractor or externally provided worker costs, and why consumables were used up or transformed by the qualifying activity rather than the wider project.
Notice what isn’t being asked
It’s just as useful to notice what a letter doesn’t ask. If a letter asks only about costs and says nothing about the technical narrative, HMRC has likely already accepted the eligibility case and is testing the numbers — a different, generally lower-stakes exercise than a letter that opens by questioning the advance itself. Reading the letter for what it doesn’t raise tells you almost as much as reading it for what it does.
How we read letters at Vantage
When a compliance check letter lands on our desk — including for claims we didn’t originally prepare — the first thing we do is exactly this: read each question as a specific technical test, not a generic prompt, and map it to the evidence that would actually answer it. Because John and the team come from engineering and technical backgrounds rather than generalist tax, that translation tends to be quick and precise, and it shapes everything that follows in the response.
If you’ve got a letter in front of you and aren’t sure what it’s really asking, send it over — John will record a short Loom video to give you an honest, no-obligation read on what HMRC is testing and where your claim stands.
Talk it through
Book a no-obligation call with John or Jason: www.vantagernd.co.uk/book/
Or send us a brief overview of your projects for a free Loom video review: www.vantagernd.co.uk/review-your-project/