HMRC Enquiries into R&D Claims: What Triggers Them and How to Respond

An HMRC enquiry into an R&D tax credit claim is a formal request to check that the claimed activities and costs genuinely meet the qualifying rules, and it is triggered most often by vague technical narratives, inflated cost figures, or claims that sit outside the sector norms HMRC expects. R&D tax credits for SMEs in the UK in 2026 are now claimed through a single merged scheme, and HMRC has sharply increased its compliance activity, so a well-evidenced claim matters more than ever. This article, from Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, explains what draws HMRC's attention to a research and development tax relief claim and how to respond and defend your relief.

Key Takeaways

• An HMRC enquiry into an R&D claim is a formal compliance check that must usually be opened within 12 months of the claim being filed.
• R&D tax relief for SMEs in the UK in 2026 runs through a single merged scheme with a 20% above-the-line credit, giving profitable companies a net benefit of around 15% of qualifying spend.
• Loss-making, R&D-intensive SMEs that spend at least 30% of total expenditure on R&D can claim up to a 27% cash credit under Enhanced R&D Intensive Support (ERIS).
• Every R&D claim submitted since 8 August 2023 must include an Additional Information Form, and first-time claimants must file a Claim Notification Form within six months of the accounting period end.
• Common enquiry triggers include weak technical narratives, round-sum cost estimates, subcontractor costs that are not properly apportioned, and claims prepared by unregulated "no win, no fee" agents.
• Advance assurance gives eligible first-time SME claimants HMRC agreement on the principle of their claim for the first three accounting periods.

What is an HMRC enquiry into an R&D tax credit claim?

An HMRC enquiry into an R&D tax credit claim is a formal investigation in which HMRC asks a company to justify the qualifying activities and costs behind its claim before deciding whether to allow, reduce, or reject the relief. HMRC can open an enquiry into a company tax return, including the R&D claim within it, within 12 months of the date the return is filed. HMRC has expanded a dedicated R&D compliance team and now checks a far higher proportion of claims than it did five years ago, in response to well-publicised error and fraud in the sector. An enquiry is not an accusation of dishonesty; it is a request for evidence, and a claim built on clear records and a robust technical case can usually be defended.

What triggers an HMRC enquiry into an R&D claim?

Most R&D enquiries are triggered by claims that look inconsistent, unsupported, or outside the pattern HMRC expects for a company of that size and sector. The most frequent triggers include technical narratives that describe routine commercial work rather than a genuine advance in science or technology, and cost figures that are rounded, estimated, or disproportionate to the company's payroll and turnover. Large subcontractor or externally provided worker costs included without proper apportionment attract attention, as do claims prepared by unregulated advisers who submit high volumes of weakly evidenced claims. First-time claims in sectors HMRC does not associate with research and development, and sudden year-on-year jumps in claimed expenditure, also raise the risk. Under the merged RDEC scheme, HMRC applies the same scrutiny to every claimant, so being an SME offers no shelter from a compliance check.

How does the merged R&D scheme affect claims in 2026/27?

The merged R&D scheme means that for accounting periods beginning on or after 1 April 2024, most companies claim a single 20% above-the-line expenditure credit rather than the old separate SME and RDEC routes. For a profitable company paying corporation tax, the 20% gross credit is itself taxable, producing a net benefit of roughly 15% of qualifying expenditure. Loss-making SMEs that are R&D-intensive, meaning at least 30% of total expenditure is qualifying R&D, can instead claim under Enhanced R&D Intensive Support (ERIS), which delivers up to a 27% cash credit. For the full picture, see our guide to R&D tax credits for small businesses.

Worked example: defending a challenged R&D claim

Consider a Surrey software company that spends £200,000 on qualifying R&D in the year to 31 March 2026 and claims the 20% merged-scheme credit, a gross figure of £40,000. HMRC opens an enquiry questioning whether the work is a genuine technological advance and asking for a breakdown of £60,000 of subcontractor cost. Because the company kept contemporaneous project notes, timesheets showing staff hours on qualifying work, and a technical narrative written by its lead developer, it can show the spend relates to resolving genuine technological uncertainty and correctly apportions the subcontractor cost at the required 65% for unconnected parties, giving £39,000 of qualifying subcontractor spend. The claim is upheld at close to its original value. Had the company relied on round-sum estimates and a generic narrative, HMRC could have cut the qualifying spend substantially and charged interest, and potentially a penalty, on the overclaimed relief.

How should you respond to an HMRC R&D enquiry?

The right response to an HMRC R&D enquiry is to reply within the deadline, in writing, with a clear technical and financial case supported by contemporaneous evidence rather than after-the-fact assertions. Read the opening letter carefully to understand exactly what HMRC is challenging, whether the qualifying nature of the activity, the cost figures, or both. Gather your project documentation, payroll records, subcontractor agreements, and the original Additional Information Form, and present the technical advance and the uncertainty your competent professionals faced in plain, specific terms rather than simply repeating the original claim wording. Where figures need correcting, correct them promptly, as cooperation reduces penalty exposure. Given the complexity, most companies benefit from having a qualified adviser lead the correspondence and, where necessary, request a review or refer a disputed decision to the First-tier Tribunal.

Frequently Asked Questions

How long does HMRC have to open an enquiry into my R&D claim?

HMRC normally has 12 months from the date you file your company tax return to open an enquiry into the R&D claim it contains. If the return is filed late or amended, the window can shift, and HMRC has longer where it can show careless or deliberate error. Keeping full records for at least six years after the period end protects you if a later question arises.

Does the merged R&D scheme make an enquiry more or less likely?

The merged R&D scheme does not reduce the likelihood of an enquiry. HMRC applies the same 20% credit rules and the same level of scrutiny to every claimant, whether a small company or a large one. If anything, HMRC's overall R&D compliance activity has increased in recent years, so a clearly evidenced claim under the merged scheme remains essential regardless of company size.

What is a Claim Notification Form and do I need one?

A Claim Notification Form is a digital form that new and infrequent R&D claimants must submit to HMRC to signal an intention to claim. You must file it within six months of the end of the accounting period the claim relates to. Missing this deadline can invalidate the entire claim, so first-time claimants should diarise it as soon as an R&D project begins.

Can advance assurance protect me from an R&D enquiry?

Advance assurance can give eligible first-time SME claimants HMRC's agreement in principle on their R&D claims for the first three accounting periods. It reduces uncertainty and the risk of a full enquiry on those early claims, provided the company claims in line with what it disclosed. It does not remove the need to keep proper records, but it is a valuable safeguard for genuine first-time claimants.

Will I face a penalty if HMRC reduces my R&D claim?

You may face a penalty if HMRC reduces your R&D claim and concludes the error was careless or deliberate rather than an innocent mistake taken with reasonable care. Penalties are based on the additional tax due and can range from nil for a fully disclosed innocent error up to a significant percentage for deliberate overclaims. Prompt cooperation and voluntary correction of figures reduce the penalty HMRC will seek.

How Blue Tick Can Help

Blue Tick Accountants prepares robust, well-evidenced R&D tax credit claims and defends companies facing HMRC enquiries into research and development tax relief. From advance assurance and Claim Notification Forms to technical narratives and enquiry correspondence, the practice helps limited company owners secure the relief they are entitled to while minimising compliance risk. Head to our website and book a meeting now.

Conclusion

An HMRC enquiry into an R&D claim is best prevented with strong contemporaneous evidence and a technical narrative that shows a genuine advance, not routine work. If an enquiry does arrive, respond promptly, correct any figures honestly, and present a clear case supported by records. The most important action for any limited company owner claiming R&D relief in 2026/27 is to document the science, the uncertainty, and the costs as the project happens, not months later when HMRC asks.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps limited company owners, landlords and the self-employed across the UK claim reliefs correctly and respond to HMRC with confidence. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.