HMRC R&D enquiry: what to do when the letter arrives

Do not panic, and do not ignore it

An enquiry is HMRC asking questions, not a finding that the claim is wrong. Compliance activity on R&D claims has increased significantly, so many legitimate claims are now checked. What matters is how clearly and accurately you answer.

The letter will set out what HMRC wants and a date to respond by. Diarise it immediately. If you need more time, ask for it early and explain why.

Understand what is being questioned

Enquiries usually focus on one of two things. The first is whether the activities qualify: was there a genuine advance in science or technology, and genuine uncertainty that a competent professional could not readily resolve. The second is whether the costs are correct and properly apportioned.

Read the questions closely and answer those questions. Volunteering large volumes of unrelated material rarely helps and can open new lines of enquiry.

Evidence that carries weight

The strongest evidence is contemporaneous: technical documentation, test results, design iterations, failed approaches and the reasons they failed. Statements from the competent professional who led the work, written in their own technical language, carry far more weight than marketing descriptions.

On costs, show the method. Timesheets, project records and a reasoned apportionment are more persuasive than round percentages.

Mistakes that make enquiries worse

Letting the original adviser disappear, sending generic answers, overstating the technology, or conceding points without understanding them are the common errors. If part of the claim was genuinely wrong, correcting it voluntarily is usually better than defending it.

Where to go next

If you have received an enquiry letter, book a free call and we will review the claim and HMRC's questions with you. Our specialists write claims on the assumption they will be read closely, which is also the right basis for defending one.