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Learn how to navigate HMRC R&D tax compliance checks. Understand triggers, response strategies, and how to protect your claim from rejection.
Most R&D tax credit claims pass through HMRC's system without issue. Your submission is processed, the relief is calculated, and you receive your benefit through either a reduced corporation tax bill or a cash payment. But not every claim sails such smooth waters; some submissions trigger a compliance check.
When this happens, HMRC opens an enquiry to verify that your claim meets the qualifying criteria. The process can feel daunting, particularly if you're facing it for the first time. Understanding how HMRC reviews claims, what might prompt an enquiry, and how to respond effectively can make the difference between a protected claim and a costly rejection.
Compliance checks have become more common in recent years, as HMRC looks to fend off would-be fraudsters or erroneous claimants. Recent statistics show that HMRC’s efforts to reduce error and fraud have been working, with estimates of the overall level for the 2023 to 2024 period of 6.5% (£497 million). Enquiries are one of HMRC’s core methods to review the level of non-compliance and deter companies from making false claims.
HMRC doesn't manually check every R&D claim that lands on their desk – the volume of claims makes that impossible. Instead, they use a risk assessment system that combines algorithmic screening with human judgment.
After you file your Company Tax return and your Additional Information Form (AIF), the claim passes through an automated review. The system flags submissions that show certain risk indicators. These include:
Claims that trigger one or more of these indicators get passed to an R&D compliance officer for manual review. At this point, a human decision-maker assesses whether the claim warrants further investigation or can be accepted as filed. HMRC keeps the specifics of this process deliberately opaque, but the pattern is clear: anything that looks unusual, incomplete, or inconsistent increases your chances of an enquiry.
However, HMRC also regularly runs a Mandatory Random Enquiry Programme (MREP), which picks claims at random, to monitor the levels of compliance. Therefore, you may find that you have no risk indicators and still get a HMRC letter through the door.
This initial screening typically happens within two to eight weeks of submission. Most claimants won't hear anything during this period. If HMRC decides to investigate, the first you'll know is when the compliance check letter arrives.
A compliance check letter from HMRC marks the formal start of an enquiry. The letter outlines what HMRC wants to examine and asks you to respond within 30 days. This deadline matters. Missing it can create complications; however, if you need more time, just ask.
The letter itself is usually straightforward. HMRC will explain which aspects of your claim they're questioning and what information they need to resolve their concerns.
This early stage is your best opportunity to resolve the enquiry quickly. A comprehensive, well-evidenced response can often satisfy HMRC's concerns without further back-and-forth. Working with a qualified R&D tax specialist at this point helps ensure your reply addresses the specific questions raised and demonstrates the legitimacy of your claim with appropriate technical depth.
We’ve seen that most compliance check letters follow a standard format, asking for the information that you should have submitted in the Additional Information Form. You should aim to rephrase and elaborate on these answers.
However, sometimes HMRC will find a specific topic they have queries about. This will likely be an extra question at the beginning of the letter, before regular questions about your advance and uncertainties.
If this is the case, you still need to respond to all the regular questions in-depth, even if HMRC is more interested in your subcontracting agreements.
Once HMRC receives your initial response, the enquiry may be resolved (fingers crossed!) or it may enter a discussion phase. This is where HMRC tests their understanding of your claim, challenges points they're uncertain about, and requests additional evidence to support your position.
Expect requests for project documentation, payroll records, contracts, timesheets, and technical specifications. HMRC may question specific aspects of your technical narrative or ask for more detail about how you identified qualifying activities. They might disagree with your interpretation of the rules or present their own reading of the legislation.
This stage can involve multiple rounds of correspondence. Each exchange is a chance to strengthen your case. Clear, structured responses backed by solid evidence help establish credibility with the reviewing officer. Being cooperative and thorough usually prevents the enquiry from escalating further.
When you send your letter to HMRC, it usually goes to a general email address. In our experience, the reviewer for each round of correspondence can change, so never expect a reviewer to have in-depth knowledge of your projects and the current state of the enquiry.
It's also important to demonstrate that your claim was prepared with appropriate expertise. HMRC wants to see that a competent professional assessed the technical eligibility of your work. Providing evidence of your advisor's qualifications and involvement in preparing the claim reinforces that you've taken reasonable care.
Based on our experience handling enquiries, the vast majority of HMRC's concerns revolve around one question: did you seek to achieve a genuine technological or scientific advancement?
This focus makes sense when you consider who's reviewing your claim. HMRC compliance officers are tax specialists, not engineers or scientists. They're unlikely to be competent professionals in your specific field. In our experience, HMRC doesn't bring external domain experts to meetings or tribunal hearings. Instead, they rely on you to explain the technical aspects of your work in terms they can understand.
This creates both a challenge and an opportunity. The challenge is making complex technical work accessible to a non-specialist audience. The opportunity is that you control the narrative. If your competent professional can articulate the advancement and uncertainty clearly, without relying on jargon or assuming domain knowledge, you're well positioned to satisfy HMRC's concerns.
If HMRC remains unconvinced after a few rounds of discussion, they may formally reject your claim. The rejection letter will request repayment of any tax benefit you've already received, whether that's a reduced corporation tax liability or a cash credit.
The letter will also include questions designed to help HMRC assess whether penalties should apply. Claims made carelessly or in bad faith face a higher risk of penalties. Using a qualified R&D tax advisor generally demonstrates that you took reasonable care in preparing your claim, which can reduce or eliminate penalty exposure.
You should answer these penalty questions honestly and promptly. Responding isn't an admission of wrongdoing. If HMRC later overturns their rejection decision, any penalties they've charged will be removed.
More importantly, a rejection isn't the end of the road. You have the right to appeal. When you do, provide a clear summary of why you believe the claim is legitimate. This is your opportunity to request a second review and present any additional evidence or arguments that support your position.
If you appeal a rejection and HMRC still disagrees with your position, the enquiry can escalate to HMRC's Solicitors Office and Legal Services team. SOLS provides an independent review of the dispute and attempts to resolve disagreements over R&D activities or expenditure.
If SOLS also rejects your claim, your final option is the First-Tier Tax Tribunal. This is a formal legal proceeding where an independent judge reviews the evidence and makes a binding decision. The tribunal route is lengthy, often taking many months or over a year due to delays in the justice system.
However, tribunal decisions have been largely in favour of the taxpayer in recent years, including a significant case won by Myriad that confirmed that the evidentiary burden moves from the claimant to HMRC at a certain point in the compliance check process.
Recently, we've noticed HMRC showing more willingness to resolve disputes through direct conversation rather than letting them reach tribunal. Teleconferences at these later stages give you the chance to demonstrate your team's knowledge directly, answer recurring concerns, and explain complex technical background more effectively than through written correspondence alone.
These conversations also give you the opportunity to probe HMRC's understanding of your project. Don't hesitate to question their interpretation or ask them to clarify their concerns. The discussion should be two-way. Done well, a teleconference can break through misunderstandings that have persisted through months of letters.
Our enquiry support team combines qualified tax specialists with R&D project analysts who understand both the technical and legislative requirements of R&D tax relief. We take full control of correspondence, evidence management, and negotiation, ensuring your case progresses efficiently and your claim value is protected.
We've successfully defended R&D claims at every stage of the HMRC compliance process, from initial enquiry letters through SOLS reviews, alternative dispute resolution, and First Tier Tribunal representation.
Our CEO, Barrie Dowsett, played a pivotal role in the landmark Get Onbord Ltd v HMRC tribunal case, where an HMRC rejection was overturned. This case has since been widely referenced across the industry and reinforced the importance of evidence-based, technically sound R&D submissions. The outcome demonstrated that with proper preparation and expert support, even claims that reach tribunal can be successfully defended.
At Myriad, we believe in complete transparency. When HMRC opens a compliance check into your R&D claim, the last thing you need is uncertainty over professional costs.
Our pricing is designed to give you clarity, control, and confidence from the outset. We start with a fixed-fee initial review and, if further work is required, support continues on a time and materials basis using clear, role-based hourly rates.
Learn how to navigate HMRC R&D tax compliance checks. Understand triggers, response strategies, and how to protect your claim from rejection.
HMRC has launched a new R&D eligibility tool (Sept 2025). See how the checker works, its limits, and how to prepare your R&D tax relief claim.
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Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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