What is an HMRC R&D compliance check?

HMRC's R&D compliance activity ranges from a short written query about one aspect of a claim to a full enquiry covering every project and cost line. Because of the scale of error and fraud found across the R&D scheme in recent years, HMRC now runs a dedicated volume compliance approach for smaller claims and a more detailed review for larger or higher-risk ones.

A typical check starts with a letter asking for the technical narrative supporting the claimed advance in science or technology, a breakdown of qualifying costs, and sometimes evidence such as payroll records, subcontractor agreements, or project documentation.

For claims that raise more significant doubt, HMRC may involve a specialist technical adviser and request a call or meeting with the people who actually did the work, not just the finance team or external adviser.

HMRC opens the check using its general enquiry powers under Schedule 18 Finance Act 1998, which apply to the whole company tax return, not only the R&D section, although in practice the enquiry is usually scoped to the R&D claim.

Alongside the enquiry, HMRC can issue a formal information notice under Schedule 36 Finance Act 2008 if it needs specific documents or records that have not been provided voluntarily.

The check must conclude with a closure notice, which either confirms the claim as submitted, amends it, or removes some or all of the relief, and starts the clock for any appeal.

Treat the first letter as the start of a formal process, not a routine administrative query. How the initial response is put together often shapes the whole outcome.

Make sure the person best placed to explain the technical work, not just the accountant who submitted the return, is involved in preparing the response.

Keep a clear paper trail of everything sent to HMRC and every deadline given, since these enquiries can run for many months.

There is no fixed statutory deadline for HMRC to complete an R&D compliance check once opened, and current caseloads mean straightforward queries can still take several months from first letter to closure notice.

More complex cases involving multiple projects, disputed technical positions, or suspected fraud can run well over a year, particularly if HMRC involves specialist technical support at various stages.

Responding fully and promptly to each request generally shortens the process; incomplete or delayed responses are one of the most common reasons a check drags on.

Beyond any tax, interest or penalty at stake, responding properly to an R&D compliance check requires meaningful technical and tax adviser time, particularly where the original claim's evidence base is thin.

Growth plan clients have free tax investigation insurance included, which covers our fees for handling a compliance check like this from the first letter through to closure — see /fees.

Cash flow can also be affected if any expected credit is withheld while the check is ongoing.

Do not respond with a generic or copied narrative a second time; HMRC caseworkers are familiar with template answers from certain adviser firms and treat them with suspicion.

Do not ignore requests for a call or meeting; refusing engagement without good reason can count against you.

Do not wait until a closure notice arrives to seek specialist help — the earlier a strong response is prepared, the better the outcome tends to be.