Is your R&D claim under threat?

When HM Revenue and Customs (HMRC) reach out to inform you that it is opening an enquiry into an R&D tax relief claim you made, the first thoughts that come to mind are likely:

• Is this legitimate?
• What did we do wrong?
• What are we supposed to do now?
• Do I need to bring in the experts to help defend the claim?

All very valid questions after spending weeks preparing your client’s submission, confident that it met every requirement, only to find it questioned in detail.

As HMRC continues to tighten scrutiny of claims to preserve the integrity of the R&D scheme, enquiries have become far more frequent.

What was once a rare occurrence is now something most claimants can expect at some point, hence why we want you to be prepared.

What triggers an enquiry

There are many reasons why a claim might attract HMRC’s attention.

Some are chosen at random through the Mandatory Random Enquiry Programme (MERP), while others are selected because something within the claim raises a red flag.

Common mistakes that lead to an investigation

Many enquiries begin with avoidable errors. Claims sometimes include routine work that does not meet HMRC’s definition of R&D or they lack clear evidence of who carried out the activity and their professional competence.

In other cases, the issue is not with the work itself but with how it has been presented.

If the project description fails to explain the scientific or technological uncertainty addressed or if costs are allocated without sufficient proof, HMRC is likely to ask questions.

Missing or incomplete supporting documentation, such as the Additional Information Form, can also lead to a claim being held for further review.

What can you expect from an HMRC R&D tax claim enquiry?

An enquiry is HMRC’s way of testing the accuracy and validity of a claim, but also serves as a means of educating claimants about best practices.

This educational slant will be more pronounced if you are assigned a named officer.

You may be asked to provide detailed technical explanations of the R&D work, cost breakdowns and records that support the claim.

HMRC can also request meetings with the people who carried out the R&D project to understand how and why their work meets the criteria for tax relief.

The process can take several months, depending on the complexity of the claim and how quickly the requested information is provided.

HMRC want to improve the overall quality of R&D tax relief claims and use enquiries as a means to teach better record-keeping practices and ways to write better technical narratives.

Noting the issues that are flagged by enquiries and resolving them for future claims will improve the quality of R&D tax relief claims and help with overall compliance.

The consequences of erroneous claims

If HMRC concludes that a claim was inaccurate, the relief may be reduced or withdrawn.

In more serious cases, penalties can be applied depending on whether the error was deemed careless or deliberate.

An enquiry outcome can also affect a company’s reputation and its future eligibility for R&D tax relief.

Preparation and clarity are the best ways to avoid this. Keeping detailed records of the project, including all costs involved, and seeking expert review before submission can reduce the risk of enquiry.

How to defend your claim against an enquiry

If your client’s claim comes under enquiry, it’s important to remain calm and methodical.

Start by reviewing the correspondence from HMRC carefully. Before you can prepare your response to defend your claim, you'll need to understand the concerns being raised.

Engaging a specialist compliance team can make an important difference at this stage.

Experienced R&D advisers know how HMRC approaches these cases and can help build a strong defence.

They can take over correspondence, prepare the necessary technical explanations and represent your client through to resolution.

At randd uk, we have a dedicated team that focuses solely on R&D enquiries.

We work with both our clients and other accountants to protect the full value of claims wherever possible.

Our approach is to handle the process with precision and minimal disruption, allowing businesses to continue their work while we manage all communication with HMRC.

If your client is facing HMRC scrutiny, don’t wait for matters to escalate.

Book a free enquiry review with randd uk’s compliance team today and protect the value of the claim your client deserves.