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:

1. Technical narrative (was there genuine uncertainty?)
2. 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.