What is a volume compliance check on my R&D claim?

HMRC’s tiers of compliance activity

HMRC does not treat every claim the same way. Broadly, four things can happen to a claim after it’s filed:

1. No further contact. The large majority of claims are accepted as filed, following an automated and manual risk assessment against the additional information form and the return.
2. A “one-to-many” or nudge letter. Informal correspondence, sent where HMRC has noticed a pattern of similar errors across many claimants, inviting the company to review its own position and amend if needed. This is not a formal step under any enquiry power — see What happens if HMRC opens an enquiry into my R&D claim? for how it differs from an actual enquiry.
3. A volume compliance check. A formal enquiry, opened under the standard notice-of-enquiry procedure, but run at pace and largely by correspondence — the subject of this entry.
4. An in-depth enquiry or a fraud referral. Reserved for complex or high-value claims, or where HMRC’s R&D Anti-Abuse Unit or Fraud Investigation Service suspects deliberate over-claiming. These take substantially longer and are handled by specialist teams rather than general compliance caseworkers.

The label “volume compliance check” is not itself a term of art in the legislation — procedurally it is an ordinary enquiry under Schedule 18 to the Finance Act 1998, opened and closed exactly as described in the entry linked above. What makes it distinct in practice is scale: HMRC runs large numbers of these checks against a fairly standard set of questions, generally without the extended back-and-forth or specialist technical involvement of a full enquiry.

The scale of it

For the 2023 to 2024 tax year, HMRC reports:

• 61,000 R&D claims received, of which 9,700 — around 17% — were subject to a compliance check, up from lower coverage in earlier years.
• 77% of checks resulted in an adjustment to the claim, up from 71% the year before.
• £441 million recovered through compliance activity across the year.
• The average check took 246 days to resolve.
• 89% of checks were resolved by agreement between HMRC and the claimant, without a tribunal hearing.

Two rounds of the Mandatory Random Enquiry Programme — a genuinely random sample of claims given a full audit, used to estimate error and fraud rates across the whole population rather than just the claims HMRC chose to look at — found substantial non-compliance in the SME scheme specifically. The second round, covering 2021 to 2022 claims, found around half of SME claims showed some degree of non-compliance, with about 30% wholly non-compliant; compliance was markedly higher on larger claims than smaller ones. HMRC’s own estimate of the error and fraud rate for 2021 to 2022 was 17.6% overall (25.8% for the SME scheme, 4.6% for RDEC), falling to a provisional estimate of 7.8% for 2023 to 2024 as reforms took effect — HMRC describes the more recent figure as illustrative rather than a finalised measurement.

The correction power — a different route from an enquiry

Separately from opening an enquiry, HMRC has a general power to correct a company tax return where an officer has “reason to believe” something in it “is incorrect in the light of information available to the officer” — not limited to arithmetic or clerical slips, despite the provision’s heading. HMRC has used this power against R&D claims where it considers, from the return and the additional information form alone, that the claim is clearly wrong — removing the claim by notice, without opening an enquiry, asking any questions first, or giving the company a chance to add supporting information before the correction is made.

This has been controversial. Professional bodies have raised concerns that the power is being used more broadly than its traditional scope of correcting obvious errors, and that, on closer examination, a proportion of the claims removed this way have been valid. You have a direct and time-limited right of reply, and it matters:

• The correction must be made within nine months of the day you delivered the return (or, if it corrects a later amendment, within nine months of that amendment).
• You can reject it by amending your return to reinstate the claim, within your normal window to amend the return.
• If that window has closed, you can still reject it by giving HMRC written notice within three months of the date of the correction notice.
• A validly rejected correction has no effect — the claim stands as you filed it, as if the correction had never been made.

Rejecting a correction does not end the matter. HMRC will most likely respond by opening a formal enquiry into the claim, which gives HMRC’s ordinary information-gathering powers and gives you the opportunity to put the full technical and cost evidence in front of a caseworker — something the correction process, by its nature, never asked for. For a claim you believe is right, that is usually the outcome you want: a decision based on the evidence, not a removal based on the return alone.