Many enquiries arise even where businesses believed their claims were accurate. This FAQ page answers the most common questions we hear from worried directors and finance teams. Each answer is written in clear, plain English and reflects HMRC’s latest approach across England and Wales.
Most enquiries arise from errors or weak evidence rather than deliberate behaviour.
Businesses have clear rights to respond, challenge a decision and appeal if necessary.
Early advice helps reduce the risk of penalties and resolves enquiries more efficiently.
If you have received a letter from HMRC, help is available and the situation can usually be managed safely with the right guidance.
Frequently Asked Questions
Why has HMRC contacted me about my R&D claim?
HMRC usually contacts businesses because it needs more information or believes part of the claim may be inaccurate. Enquiries can be triggered by sector benchmarks, adviser behaviour, inconsistent figures, or generic technical reports. Many are routine checks rather than accusations of wrongdoing. FWJ Takeaway: An enquiry letter is common and can often be resolved with clear evidence and a structured response.
Does an HMRC enquiry mean my R&D claim is wrong?
No, an enquiry only means HMRC wants clarification. Most enquiries arise from unclear descriptions of technological uncertainty or questions about cost allocation. Providing clear explanations often resolves the issue. FWJ Takeaway: Being selected for enquiry does not mean HMRC believes anything dishonest has occurred.
What documents does HMRC expect during an R&D investigation?
HMRC usually asks for project descriptions, evidence of uncertainty, payroll records, subcontractor invoices, timesheets and supporting calculations. Recent cases show that HMRC prefers contemporaneous documents, records created during the project, not afterwards. FWJ Takeaway: Organised evidence makes the enquiry process smoother and reduces the risk of wider questions.
How long do HMRC R&D enquiries take?
Most enquiries last between two and six months, depending on complexity and how quickly information is provided. More technical or high-value claims can take longer, particularly if referred to HMRC’s specialist R&D units. FWJ Takeaway: Timely responses help shorten the process and avoid unnecessary delays.
What is the most common reason HMRC rejects R&D tax relief claims?
The most common reason is a weak explanation of the scientific or technological uncertainty. Other frequent issues include unsupported staffing costs, generic technical reports, and claims for routine commercial development rather than genuine R&D activity. FWJ Takeaway: A strong technical narrative is the foundation of a successful claim.
Can HMRC ask me to repay a tax credit I’ve already received?
Yes. HMRC can amend your return and seek repayment if it concludes the relief was overstated or claimed in error. If repayment would strain cashflow, a time-to-pay arrangement may be available. FWJ Takeaway: Repayment demands can be negotiated. Professional advice helps protect your business.
Can HMRC apply penalties if I made a mistake?
HMRC may charge penalties under Schedule 24 of the Finance Act 2007 if it believes the inaccuracy was careless or deliberate. Penalties can often be reduced or removed where the business acted reasonably or cooperated fully during the enquiry. FWJ Takeaway: Penalties are not automatic. Early engagement protects your position.
What if my R&D adviser prepared the claim incorrectly?
HMRC may still pursue the business, even if the adviser made the mistake. However, you may have separate rights against the adviser if their work fell below an acceptable standard. FWJ Takeaway: Using an adviser does not transfer your compliance responsibilities but poor advice can be challenged separately.
Does HMRC target claims prepared by certain advisers?
Yes. HMRC has increased scrutiny of high-volume and unregulated advisers whose claims have been repeatedly found to contain errors. Clients of these advisers may be automatically selected for review. FWJ Takeaway: If your adviser is considered high-risk, reviewing your claim before responding can be helpful.
What happens during HMRC’s technical review?
More complex claims may be reviewed by HMRC’s specialist R&D units. These teams include technical officers who assess whether the work meets the statutory definition of R&D. They may request additional explanations or evidence. FWJ Takeaway: A clear, factual description of your project helps HMRC understand its technical merit.
Can HMRC conduct interviews or meetings during an enquiry?
Yes. HMRC may ask to speak with directors, engineers, developers or project staff. This helps HMRC assess whether the claimed uncertainty and advancement match the statutory criteria. FWJ Takeaway: Meetings are common. Preparation ensures your team explains the project confidently.
Can I challenge HMRC’s findings?
Yes. You can request an internal review or appeal to the First-tier Tribunal (Tax Chamber). Appeals must generally be made within 30 days of HMRC’s decision. FWJ Takeaway: Disagreeing with HMRC does not put you at risk. The appeal process is clear and well-established.
What if I cannot meet HMRC’s deadline?
HMRC may grant an extension if you request one in advance and explain the reason. Failing to respond on time can lead to assumptions being made about the accuracy of your claim. FWJ Takeaway: Communication is important. Asking for more time is better than missing a deadline.
Does an enquiry affect future R&D claims?
Not necessarily. However, if HMRC identifies errors, it may look more closely at later claims until it is satisfied that the issues have been addressed. FWJ Takeaway: Addressing the root cause early helps protect future submissions.
Can an R&D enquiry turn into a wider HMRC investigation?
It is possible, but not common. Escalation usually happens only where HMRC believes there is careless or deliberate behaviour. In more serious cases HMRC may use COP8 or COP9 procedures. FWJ Takeaway: Most enquiries remain focused on the R&D claim. Serious escalation is rare with early intervention.
What should I do if HMRC has disallowed my claim entirely?
You can supply additional evidence, request an internal review or appeal. Complete disallowance often occurs where HMRC believes the activities do not meet the statutory definition of R&D or where evidence is insufficient. FWJ Takeaway: A full disallowance is not final. Many decisions change when supported with further detail.
How do I reduce the risk of penalties or repayment demands?
Clear evidence, accurate calculations and early engagement are the strongest ways to reduce risk. Ensuring your R&D adviser is reputable and experienced also reduces exposure. FWJ Takeaway: Preparation and clarity make the biggest difference to risk management.
Should I get help before responding to HMRC?
Yes, structured advice can prevent avoidable mistakes and help you respond safely. Our tax dispute team can review the enquiry letter, explain HMRC’s concerns and help prepare clear, factual responses. FWJ Takeaway: Early advice often saves time, stress and cost.
Our brilliant R&D tax credit defence team is here to help
Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HM Customs & Excise in their National Investigation Service. His experience is unrivalled in all types of HMRC claims including HMRC investigation defence, VAT claims, R&D tax credit defence, Account Freezing Orders, Tax Disclosure, Code of Practice 8 & 9 claims, winding up petition defence and much more.
Khaliq Martin. Khaliq is a Senior Paralegal in the tax disputes team assisting on a broad range of HMRC investigation and defence matters. Khaliq draws on his international litigation background and public sector experience to help prepare detailed evidence and submissions for use in appeals and settlement negotiations, ensuring cases are presented clearly, carefully and effectively.s
Stephen Downie is a partner with significant tax experience and is also a qualified accountant and previously spent time working at the Insolvency Service.
Anita Sharma. Anita is a Senior Associate specialising in tax litigation and financial disputes with HMRC. She advises high-net-worth individuals and major commercial clients on appeals against HMRC decisions, complex tax assessments, and enforcement proceedings. Anita has secured interim relief following HMRC revocations to keep clients trading during appeals and is known for achieving practical, results-focused outcomes in high-value disputes.
