A letter arrives from HMRC. It says they have opened a compliance check into your R&D tax relief claim, and your stomach drops. Take a breath. A compliance check is HMRC asking you to justify figures on your tax return. It is not an accusation of wrongdoing, enquiries are now opened into plenty of claims that are entirely sound, and much of the panic they cause is avoidable.
Most people read the letter the way they would read a parking notice: quickly, defensively, looking only for the deadline and the worst case. That is understandable, but it means missing the part that matters. Beneath the formal language, HMRC is telling you exactly what it wants to see and where it is not yet convinced. Reading that properly tells you where to put your effort before you have spent an hour on the response.
This page is about the letter itself and the first few weeks. For the whole process — why claims are picked, how long enquiries run, how they end and what happens if you disagree — see what actually happens when HMRC opens an R&D enquiry.
What the letter is
A compliance check letter is a formal notice that HMRC is enquiring into your company’s Corporation Tax return. “Compliance check” is HMRC’s public name for it; procedurally it is an enquiry under Schedule 18 of the Finance Act 1998, and you will usually see that reference near the top. It is boilerplate, but it matters, because it sets the standard of evidence HMRC expects: records made at the time, not a fresh explanation written for the occasion.
The letter will normally set out three things: the accounting period under review, a list of questions or information requests, and a deadline for your reply — typically 30 days from the date of the letter.
Start with the shape of the letter
Before you read a single question, look at the structure.
A short letter with two or three broad questions usually means HMRC has one specific concern — often the technical narrative, or a particular cost category — and has not yet decided the rest of the claim needs scrutiny. A longer letter with eight or ten numbered 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 wide to cast the net for evidence.
Then look at which kind of questions dominate. Questions about specific costs usually mean HMRC is checking your numbers. Lots of questions about technological uncertainty and the advance you were seeking mean something different: HMRC is testing whether the project qualifies at all.
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 is asking what the field’s existing knowledge or capability looked like before you started, and what specifically you were trying to add to it. A commercial description of the finished product answers a different question and, to a caseworker, can read like an evasion. See what counts as an advance in science or technology.
“Please set out the technological uncertainties encountered.”
HMRC wants the specific technical questions that a competent professional, working from existing knowledge, could not answer — not general project risk, and not commercial uncertainty about whether anyone would buy it. If your answer could apply to any ambitious project, it has not identified the uncertainty. See technological uncertainty.
“Please confirm the boundaries of the project.”
This asks you to separate the R&D — the work that resolved genuine technological uncertainty — from the commercial project around it. 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 expertise in the field, not asserted by an adviser or a finance team working from a template. A thin answer here undermines everything else in the response. See who counts as a competent professional.
“Please provide a breakdown of qualifying costs by category and their relationship to the qualifying activity.”
This asks for your workings, not your totals: the link between each cost and the specific R&D work, including how staff time was apportioned, the qualifying share of subcontractor or externally provided worker costs, and why consumables were used up by the R&D rather than the wider project.
Notice what isn’t being asked
What a letter leaves out tells you almost as much as what it asks. If it asks only about costs and says nothing about the technical narrative, HMRC has probably 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.
The first few days
Note the deadline. You have roughly 30 days, and the letter comes by post, so in practice it is nearer three weeks. That window is a starting point, not a fixed one. If the people who did the work have moved on or your technical lead is unavailable, ask HMRC for more time — early, politely and with a clear reason. Requests like that are usually granted. Requests made on day 29 are not. Never let the deadline pass without a reply; going quiet is one of the few things that reliably makes an enquiry worse.
Check the date the enquiry was opened. HMRC generally has twelve months from when you filed the return to open an enquiry into it, and it does occasionally write too late. The exact rules are in what happens if HMRC opens an enquiry.
Check which part of HMRC has written to you. Different teams handle smaller and mid-sized businesses, and they work slightly differently. A letter from the mid-sized business side often comes with a named contact.
Make your first call to whoever prepared the claim, if they are still in business, or to your accountant. If you prepared the claim yourself and your accountant cannot help, find someone who defends R&D claims for a living.
Don’t reply the same afternoon
The most damaging responses we see are the quick ones. A director, wanting to be helpful, writes a long email that day describing the projects from memory. Six weeks later a properly evidenced response contradicts something in that email, and the enquiry is now about the inconsistency rather than the claim. Everything you send becomes part of the record.
Acknowledge the letter, confirm that you are preparing a response, and then take the time to prepare it properly.
Gather what existed at the time
Contemporaneous evidence carries far more weight than a narrative written after the event. Expect HMRC to want evidence on both halves of the claim. Before you draft anything, pull together:
- Design records, drawings, test logs, rig data and failed iterations
- Emails where engineers argued through the problem, technical meeting notes and change requests
- Photographs of prototypes and test set-ups — including the ones that failed
- Timesheets, or a defensible basis for how staff time was apportioned
- Invoices and contracts for subcontractors, externally provided workers and consumables
- CVs or role summaries for the competent professionals involved
Failed experiments are not a weakness. They are often the strongest evidence that genuine uncertainty existed, because nobody works through five failed approaches to a problem that was already solved.
This is where people scramble. Many claims are assembled after the year end from memory, and when evidence is requested there is none, because it was all conversations. That is very hard to defend — which is why record keeping matters long before a letter arrives.
Get the technical person in the room
HMRC is testing technical judgement, and that belongs to the engineer, developer or scientist who did the work — not the finance director, and not an adviser writing from a template. If the original claim was prepared without real input from that person, the enquiry is where the gap shows. A response should read as though it was written by someone who understands the technology, because in a well-run process it largely was.
What not to do
- Don’t get angry. An indignant reply gains nothing and reads as defensive.
- Don’t dodge the questions. Answer what you were asked, concisely — including what the advance was.
- Don’t send everything you have. Volume is not evidence. A 200-page bundle invites more questions, not fewer, and a twenty-five-page narrative will not be read.
- Don’t withdraw or amend the claim on reflex. A sound claim is defensible, and withdrawing one under pressure costs real money.
- Don’t treat it as a tax exercise. An R&D enquiry is a technical argument that happens to have tax consequences.
If your adviser has gone quiet
Some high-volume firms are hard to reach once an enquiry is open, and some have gone out of business. You can tell HMRC that your adviser has ceased trading, but asking for more time on that basis alone is difficult — ask instead for time to gather the information requested. And be clear that your adviser disappearing does not change who is responsible. The company is liable for its return and everything in it. You can bring in a specialist at any point, including partway through.
Handle it yourself, or get help?
If you prepared the claim in-house and have people who understand what an advance means for tax purposes — not just what R&D means in your industry — answering the technical questions yourself can be reasonable. The signals to get help are HMRC repeating a question you believe you have already answered, or questions arriving from both the technical and the financial side.
When choosing someone, ask how many enquiries they have handled, how many they defended successfully and how many they lost. Be wary of anyone describing themselves as an “approved” or “accredited” HMRC agent. HMRC does not approve R&D advisers. Since May 2026 advisers have had to register with HMRC, but registration is a legal minimum, not an endorsement.
A first “no” is not the end
A software provider to the insurance industry still had an insurance broker’s SIC code. The claim was worth over £100,000 and the enquiry opened almost immediately. Whatever we sent came back as “doesn’t qualify, it’s been done before”. After two years we filed an appeal with the First-tier Tribunal; HMRC suggested alternative dispute resolution, and the claim was then accepted. We had pointed to recent tribunal decisions on almost identical technology. Outcomes vary, but a first refusal is not necessarily final. The full story is here.
How we read letters at Vantage
When a compliance check letter lands on our desk — including for claims we didn’t 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 we come from engineering and technical backgrounds rather than generalist tax, that translation tends to be quick, and it shapes everything that follows.
We have defended every enquiry HMRC has opened into a claim we prepared. The record, case by case, is on our HMRC enquiry support page.
If you have a letter in front of you and aren’t sure what it’s really asking, send us an overview and John will record a short video giving you an honest, no-obligation read on what HMRC is testing and where your claim stands. Or book a call with John or Jason.
This article is general information, not advice on your claim. Every enquiry turns on its own facts.