HMRC R&D Tax Enquiries: What They Are & How to Respond
Last updated: August 2025
R&D tax enquiries (also known as HMRC compliance checks) are formal investigations launched to determine whether the costs and projects in your claim are eligible for R&D Tax Relief.
Enquiries generally last 6 to 12 months, though they can take significantly longer. If not handled effectively, they can lead to reduced funding, fines and additional scrutiny on your future claims.
With 20% of claims now subject to investigation, it’s vital that CEOs, CFOs, and financial leaders understand how these compliance checks work and what’s required to reach a favourable outcome.
To help you, our experts have written this comprehensive guide covering:
If you need immediate help with an active compliance check, GrantTree’s Enquiry Support team are here to support you. Calling on 15 years of experience in filing and defending R&D Tax Relief claims, we will work to:
Safeguard the value of your claim
Resolve your enquiry as quickly as possible
Minimise disruption to your business
Contents
What is an R&D tax enquiry?
R&D tax enquiries (officially called compliance checks) are investigations into a claim’s eligibility for R&D Tax Relief.
They examine whether the costs and projects you have submitted to HMRC satisfy the scheme’s strict and at times complex eligibility criteria, set by the government.
Enquiries are usually triggered when an inspector suspects any aspect of a claim is non-qualifying, typically a suspicious-looking cost or a project that doesn’t appear to fit the definition of qualifying R&D.
Some claims are also selected for an enquiry at random, as part of HMRC’s mandatory random enquiry programme (MREP).
What’s involved?
2–4 rounds of written questions from HMRC
An HMRC inspector interviewing your internal team and advisors
Potential escalation to Alternative Dispute Resolution (ADR)
In rare cases, referral to a tax tribunal
How long do enquiries last?
Enquiries generally last six to 12 months, but some take multiple years. They are liable to take longer if:
You can’t effectively answer HMRC’s questions
You don’t respond to HMRC quickly
You disagree with HMRC’s conclusions and escalate your enquiry to ADR or a tribunal
HMRC is currently investigating 20% of R&D Tax Relief claims. That works out to around 13,000 enquiries per year, according to government statistics.
The large number of enquiries is part of its wider effort to reduce non-compliance, which cost the government approximately £500 million last year, according to HMRC’s latest annual report and accounts.
Why R&D enquiries are important
Although disruptive, frustrating and time-consuming, compliance checks are vital for:
Protecting the R&D Tax Relief scheme from errors and abuse
Ensuring the scheme can effectively incentivise R&D
Delivering value for money for the government and taxpayers
What happens during an HMRC R&D tax enquiry?
Fundamentally, R&D enquiries or compliance checks are back-and-forths with HMRC where you answer questions and provide evidence to prove your costs and projects satisfy the scheme’s eligibility criteria.
Enquiries typically involve multiple rounds of written correspondence. Depending on the complexity of your claim and the severity of the investigation, this can be followed by interviews, dispute resolution meetings and, in rare cases, legal confrontation.
Here’s what to expect.
The Initial Letter
All enquiries start with a letter from HMRC, sent to your company’s registered business address. It contains a list of questions about your claim, covering both technical and financial aspects of your R&D.
Like the information in your original submission, your answers should be clear, factual and digestible. Where possible, you should supply supporting evidence, such as timesheets, invoices, and internal technical reports.
You have 30 days from the date the letter was generated to respond. Which means around 25 days by the time you actually receive the letter.
Follow-Up Letters
Unfortunately, very few R&D compliance checks end after you’ve replied to the first letter. HMRC will usually write to you a few more times with further questions.
These questions will either challenge the evidence you’ve provided or delve into other aspects of your claim. During these exchanges, HMRC is likely to ask about your team’s roles and how they contributed to overcoming scientific or technological uncertainty.
Each follow-up letter will come with a strict deadline for your reply. Responding quickly but comprehensively will help you achieve a resolution faster.
Interviews With an HMRC Inspector
You may be invited to a formal interview with your tax inspector. These calls…
- Usually last around 2 hours
- Are designed to systematically look for weaknesses in your claim
- May include other representatives from HMRC, including members of the Chief Digital and Information Office (CDIO), the authority’s internal development team
Your inspector may also follow up after the interview to ask for additional documentation to corroborate the information you discuss on the call.
Although not confrontational in tone, these calls can be pretty gruelling. It’s easy to mispeak, leading to misunderstandings or creating doubt in the mind of your inspector.
That said, they are also a great chance to address your inspector’s concerns in real time, helping you bring your enquiry to completion.
As part of our R&D Enquiry Support service, GrantTree offers comprehensive training for leadership sitting interviews with HMRC inspectors, and we will join the calls ourselves to offer live advice.
Inspector’s Conclusions and Next Steps
Once your tax inspector feels they have gathered information, they will write to you with their conclusion. The possible outcomes are:
Your claim is approved in full
Some of your costs or projects are disqualified, reducing your claim size
Your entire claim is rejected, depriving you of relief
If you disagree with HMRC’s conclusion, you have two options:
Accept the decision, and receive any remaining relief faster
Challenge the decision
You can challenge the decision in the following ways:
Request a call with your inspector to make your case
Apply for alternative dispute resolution (ADR)
Eventually, if you continue to disagree with HMRC’s decision, you can take your case to a tribunal, where a judge will decide the outcome.
Alternative Dispute Resolution (ADR)
Alternative dispute resolution is where a neutral mediator, usually a representative from elsewhere in HMRC, seeks to help both parties reach an agreeable resolution by:
- Opening lines of communication
- Unpacking both parties’ arguments
- Brokering compromises
ADR often results in companies agreeing to forgo relief for one or more projects in order to conclude the enquiry.
Tribunals
If the ADR process fails to conclude your R&D tax enquiry, your final option is to escalate your case to a First-tier tax tribunal.
This is a formal legal process where you and HMRC present your arguments to an independent judge. Tribunal rulings are legally binding and are believed to influence HMRC’s approach to compliance.
Tribunals are extremely rare. Your compliance check will need to last many months before going to a tribunal becomes a possibility.
Tips for defending your claim during a compliance check
Focus on technical uncertainties, not commercial challenges
A project’s relationship to and consequences for commercial challenges are irrelevant to its eligibility for R&D Tax Relief.
Instead, you need to focus on how your project was designed to achieve a pre-determined scientific or technological advance by overcoming uncertainties.
This can be hard for business leaders who spend much of their time focusing on commercial growth and the obstacles to it. But it’s essential to resolving your R&D tax enquiry.
Don’t be combative
Enquiries can feel confrontational or aggressive, especially in the early rounds. But you want to build a relationship with your HMRC inspector. Remember, enquiries are important to protecting the scheme from abuse.
As we say at GrantTree, enquiries are a call to nuance, not a call to arms.
Keep your messaging simple
In your written correspondence:
Keep the language simple and easy to understand
Stay on message: here’s why our work and costs qualify for relief
Remember your audience. HMRC inspectors are rarely technical experts
Push for an interview
It can be much easier to prove that your work and costs are eligible for relief on a call, rather than in writing. You can steer your investigation towards a call by:
Mentioning willingness to join a correspondence call
Voicing your preference for a call
Sharing your availability in the coming weeks
Explaining that you believe a call would be beneficial for all parties
Quote the DSIT guidelines
Show you know the scheme’s eligibility criteria by quoting relevant passages of the Corporate Intangibles Research and Development Manual (CIRD), the guidelines governing the scheme.
Most of the guidance you will want to quote can be found in CIRD81000 – R&D tax relief: conditions to be satisfied.
Keep pace with HMRC's approach
HMRC’s approach to enquiries is constantly changing. Keep up to date by signing up for GrantTree’s monthly newsletter.
What are the likely outcomes of an HMRC R&D enquiry?
The consequences of R&D tax enquiries vary wildly, from months-long funding delays to claim reductions, funding repayments and, in rare cases, large fines.
- The eligibility of the work you claimed for
- The quality and clarity of your original submission
- How well and quickly you answered HMRC’s questions
- Whether you had support from an R&D enquiry expert like GrantTree
Here are the most common outcomes, ordered by how likely they are:
Delays
Certain
A project’s relationship to and consequences for commercial challenges are irrelevant to its eligibility for R&D Tax Relief.
Instead, you need to focus on how your project was designed to achieve a pre-determined scientific or technological advance by overcoming uncertainties.
This can be hard for business leaders who spend much of their time focusing on commercial growth and the obstacles to it. But it’s essential to resolving your enquiry.
Disruption
Certain
An HMRC enquiry typically requires around 60 hours of work across your team.
Much of this work will fall to senior finance and technical people. These are expensive resources, and the opportunity cost of their time is significant.
GrantTree’s Enquiry Support team can take most of this work off your plate, allowing your key people to stay focused on their core roles.
Reduced claim size
Common
HMRC may remove costs or entire projects from your claim if:
They are ineligible for relief
You failed to prove their eligibility during the enquiry
The removal of costs or projects can significantly reduce your funding.
Damaged reputation with HMRC
Common
If HMRC finds significant issues with your claim, it can weaken the tax authority’s trust in your future submissions, as well as other corporate tax filings.
This can lead to:
A greater chance of future claims being enquired
Previous claims being investigated
Closer scrutiny of other financial submissions
Repayment of relief
Rare
HMRC can open R&D enquiries into claims that were paid out up to seven years ago.
If it finds ineligible costs in one of your old claims, you may have to repay relief you spent long ago.
Fines and penalties
Rare
If HMRC concludes you knowingly submitted false information, you could face:
Fines, up to the value of your claim
Harsher sanctions, including jail time
Read more about penalties and fines for R&D Tax claims.
Why does HMRC launch R&D enquiries?
HMRC opens compliance checks for four main reasons:
Insufficient evidence of eligible R&D
Financial discrepancies
A sudden jump in claim size
Random sampling (MREP)
Understanding these risks can help you build better claims and determine what HMRC is looking for if it opens an investigation.
1. Insufficient evidence of eligible R&D
To avoid an enquiry, you need to prove your projects satisfy the government’s definition of ‘eligible R&D’. Specifically, you must show that they were undertaken to overcome scientific or technological uncertainty to achieve a pre-determined advance. You did this in the technical section of your additional information form (AIF).
When proving their eligibility, companies often make two mistakes, which often trigger an enquiry.
Conflating standard R&D and qualifying R&D
Only R&D that looks to advance a field of science or technology qualifies for relief. Other types of R&D, while they may be important for your business, are ineligible.
Confusing commercial and technical challenges
Work to overcome commercial challenges, such as how to market a new product, is not eligible for relief. The challenges you’re facing must be scientific or technological in nature.
GrantTree’s Technical Consultants specialise in structuring claims around qualifying projects and completing AIFs to concretely demonstrate your eligibility, reducing your chance of enquiry.
2. Financial discrepancies
Nothing raises a red flag at HMRC faster than numbers that don’t add up.
If the figures in your additional information form don’t match those in your corporate accounts, there’s a good chance your tax agent will launch an enquiry to clear up the discrepancy.
For example:
Listing £200,000 worth of subcontractor costs in your AIF but only £100,000 in your P&L.
Claiming relief on 100% of subcontractor costs without sufficient justification
Even accidental mismatches can trigger an investigation. That’s why, before filing, it’s essential to triple-check your claim figures.
3. A sudden jump in claim size
A large jump in claim size from one year to the next can trigger an enquiry, especially if you haven’t justified it in your AIF.
This might sound strange given that the purpose of R&D Tax Relief is to encourage investment. However, HMRC can interpret sudden increases as evidence of:
Inaccurate bookkeeping
Claiming for ineligible projects
A more cavalier approach to claiming
The best way to avoid this issue is to explain the origins of this increase in your additional information form. This includes mentioning new sources of funding and noting any expansion to your development team.
4. Random sampling (MREP)
The final reason HMRC launches R&D enquiries is as part of its mandatory random enquiry programme (MREP).
Under this programme, HMRC investigates a certain number of claims at random to monitor levels of non-compliance across the scheme.
You can’t avoid an MREP enquiry. However, if your claim is eligible and well structured, and you manage your compliance check effectively, it should be straightforward to resolve.
When will I know if my R&D claim is under HMRC enquiry?
You won’t know for sure whether your R&D Tax Relief claim is under enquiry until you receive a compliance check letter from HMRC.
This will be sent to your company’s registered address and will contain a list of questions regarding your submission.
However, there are two signs that may indicate a letter may be on its way:
You submitted your claim more than 8 weeks ago, and it hasn’t been processed
You receive a nudge letter, asking if your company’s records are up to date
Neither of these indicators is a guarantee that your claim will be enquired. Here’s why:
Nudge letters are sent for various reasons. As part of a wider compliance drive, for example
Processing delays are common, especially at the end of the tax year
- If your claim hasn’t been paid out, it may be that HMRC is using your relief to offset other tax liabilities, such as owed PAYE
Additionally, having your claim paid out doesn’t mean it won’t be enquired later. HMRC can revisit claims processed up to 7 years ago. Up to 20 years if it suspects intentional fraud.
If you’re worried about an enquiry, it’s best to be prepared. Start by reviewing your submission for possible weaknesses before HMRC knocks on your door.
GrantTree’s Enquiry Support team can help you identify risks in your submission and advise on how to respond to HMRC’s questions.
How to minimise your chances of an R&D compliance check
While the number of enquiries has increased dramatically in recent years – 1900%, according to government figures – there are steps you can take to reduce your chances of a compliance check.
The best way to avoid an enquiry is to make sure your original claim is fully compliant and effectively demonstrates your eligibility for R&D Tax Relief.
Here are some tips for doing this.
Get your financials right
Make sure your numbers are consistent across your claim, P&L and CT600
Check your apportionments are accurate, fair and justifiable
Ensure you aren’t claiming for any non-qualifying costs
Align your costs with your AIF. If one project accounts for 50% of your expenditure, spend more time on it
Make your inspector’s job easy
Your HMRC inspector is unlikely to be an expert in your field, and they only have around 30 minutes to review your claim.
Make their life easier by signposting:
What advance you were seeking
What uncertainties you encountered
What baseline you started from
Avoid jargon and poorly evidenced data. Stick to clear, easy-to-follow language.
Focus on scientific and technological challenges
Many claims get enquired because they frame their R&D as a solution to commercial challenges like reaching new customers or adapting to changing market conditions.
Instead, you need to explain your projects in terms of the scientific or technical uncertainties you looked to remedy.
This will be greatly helped by working with an R&D Tax specialist or involving a competent professional who can articulate your development work to HMRC.
Work with an R&D Tax Credits specialist
The simplest way to reduce your chances of an R&D tax enquiry is to work with a trusted and experienced R&D Tax Credits specialist.
At GrantTree, combine:
Technical expertise to explain your cutting-edge work to HMRC
Financial precision to identify all eligible costs and avoid errors
- Deep knowledge of HMRC’s processes and expectations
We’ve helped thousands of UK innovators submit robust, fully-compliant claims, connecting them with over £450 million in tax relief and cash credits.
If you’d like help building a compliant and defensible claim, just get in touch.
FAQs About HMRC R&D Enquiries
HMRC is likely to launch an enquiry into claims you file while one of your previous claims is under investigation.
As a result, we generally recommend you wait until your enquiry has been resolved before filing additional claims.
The exception is if you are approaching the two-year hard deadline for claiming relief. In that case, you will have to weigh the benefit of additional funding against the pressures and disruption of potentially managing a second enquiry.
Yes. HMRC can open an enquiry into your R&D Tax Relief claim regardless of your company’s financial position.
Yes. HMRC has clamped down on non-compliance in R&D Tax Relief claims.
Its efforts have included increasing the number of enquiries, requiring all claims to be submitted digitally, and introducing new reporting requirements, such as the additional information and claim notification forms.
These efforts have proven broadly successful. Between the 2021-2022 and 2024-2025 tax years, the cost of non-compliance has fallen an estimated 64%, from £1.34 billion to £481 million.
Yes, HMRC can launch enquiries into claims that were processed up to 7 years ago. This window extends to 20 years if HMRC suspects a claim is fraudulent.
No. Advance assurance tells you whether your projects, as you’ve described them, are eligible for R&D Tax Relief.
However, that does not mean HMRC will not find an issue with your projects once you describe them in more detail in your additional information form. Nor does it mean that the tax authority will concur that all the costs you have assigned to that project are eligible for relief.
Yes, your claim can be enquired even if you work with a reputable provider.
However, having an experienced provider that prioritises compliance can significantly reduce your chances of an investigation.
GrantTree’s R&D Enquiry rate is currently less than 3%, almost seven times less than the national average of 20%. We have achieved this by:
- Taking a compliance-first approach, only claiming for eligible costs and projects
- Preparing robust, accurate submissions that prove our client’s eligibility for R&D Tax relief
- Prioritising technical expertise, with claims prepared by PhD-level academics and industry veterans who can explain complex R&D projects
If you miss the 30-day deadline for responding to HMRC’s correspondence, they will make a decision based on the information they already have.
This will usually mean HMRC rejecting the project or costs they believe are ineligible for relief, reducing your claim size.
Missing the deadline can also result in:
- Fines, if HMRC believe you have acted carelessly or in bad faith
- Interest accrued on any relief you have to repay
- Referral to HMRC’s Fraud Investigation Service (FIS) if they suspect deliberate non-compliance
Yes, HMRC will grant extensions to the response deadline if you give a valid reason. Grounds for an extension include:
- Needing more time to gather evidence
- Key personnel being unavailable – because they are unwell, for example
- Delays in collecting relevant data from subcontractors
- Bringing on a new R&D Tax consultant to defend your claim, giving them time to familiarise themselves with your case
Companies are typically only granted one extension per enquiry.
How to request an extension for your R&D enquiry response
- Contact the HMRC inspector or directorate named in your enquiry letter
- Email them and, if possible, call them
- State your reasons
You must apply for an extension before the deadline for your response elapses.
HMRC will be looking for evidence to corroborate both the financial and technical aspects of your claim. This can include:
Technical evidence
- Records of experiments conducted
- Pictures and videos of experiments and prototypes
- Bios of your competent professionals
- Research reports
Financial evidence
- Timesheets
- Invoices
- Bank statements
- Payroll records