HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One
Written by:
Daniel Scott
Partner & Head of Accounting
HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One
For many founders and finance directors, the phrase “HMRC enquiry” still feels like a warning siren. But in the modern R&D landscape, enquiries are becoming normal—and they’re often not about whether you did R&D, but how you calculated the claim.
Why HMRC Enquiries Are Now Common
HMRC now uses a volume-based compliance model, driven by the Additional Information Form (AIF). That means most claims are reviewed by generalist teams using standardised checks—not deep technical scrutiny.
So, the question isn’t “Did you innovate?”
It’s “Do the numbers match the story?”
How Claims Get Selected for Review
Selection isn’t personal. It’s mechanical.
HMRC flags claims based on:
- inconsistent narratives vs. costs
- unusually high or identical staff apportionments
- large year-on-year increases
- heavy director time claims
- first-time claims without benchmark data
The AIF makes these patterns easy to spot.
What an HMRC R&D Enquiry Looks Like
Enquiries usually start with a standard letter and a request for:
- project explanations
- staff apportionment breakdowns
- supporting evidence
Most reviews split into two areas:
- Technical narrative (was there genuine uncertainty?)
- Financial construction (do the numbers add up?)
In practice, the financial side causes the most trouble.
The Most Common Challenges
HMRC usually focuses on:
- staff apportionments
- director involvement
- subcontractor classification
- project boundaries
- gaps in records
They rarely “re-fight the science” unless the story itself is weak.
The Key Consistency Check
Before submitting, ask:
Do the staff days claimed match the timeline in the narrative?
If you claim 8 months of Lead Architect time for a 3-month sprint, you’re basically inviting an enquiry.
Biggest Mistakes During an Enquiry
Most problems are self-inflicted:
Oversharing
Too much irrelevant detail creates new questions.
Rewriting history
Changing figures or narratives mid-enquiry destroys credibility.
Panic
Conceding too quickly or acting defensively makes outcomes worse.
What a Strong Response Looks Like
Good responses are:
- clear and specific
- aligned with the original submission
- supported by selective evidence
- honest about judgment calls
The goal is to show the methodology was reasonable—not to overwhelm HMRC.
Typical Outcomes
Most enquiries end with:
- full acceptance
- minor adjustments
- occasional project rejection
Penalties are rare unless there’s evidence of carelessness or deliberate misrepresentation.
The Best Strategy: Prevention
Claims built on consistent narratives, defensible apportionments, and strong records rarely escalate. When they do, they resolve faster and with fewer adjustments.
If you want your claim reviewed before filing or need support during an enquiry,
get in touch.
