Receiving notice of an HMRC R&D tax credit enquiry can be daunting. Even genuine, well-prepared claims may face additional scrutiny under HMRC’s increasing compliance checks. How a business responds during this process can determine whether it retains its entitlement or faces reduced benefits, penalties, and reputational risk.
This guide explains how to manage an enquiry effectively and why professional R&D Enquiry Defence can protect your position.
Why HMRC Opens an R&D Tax Credit Enquiry
HMRC investigates R&D tax credit claims for several reasons, including:
- Insufficient technical detail in the project narrative.
- Overstated costs or inclusion of ineligible expenditure.
- Lack of supporting evidence such as timesheets or development records.
- Sector-specific scrutiny in industries with historically high claim error rates.
In recent years, HMRC has strengthened its compliance approach, meaning more companies are now subject to review regardless of claim size.
What to Expect During the Enquiry Process
A typical HMRC R&D enquiry will involve:
- Initial Notification – A formal letter requesting further information.
- Evidence Requests – Detailed questions about technical uncertainties, project aims, and cost calculations.
- Meetings or Calls – HMRC may arrange discussions with your technical and finance teams.
- Evaluation Period – HMRC reviews the evidence provided and determines the outcome.
- Decision – Acceptance of the claim in full, partial reduction, or rejection.
The process can take several months, during which your business must respond promptly and accurately to all requests.
Steps to Defend Your R&D Claim
To manage an HMRC investigation effectively, consider the following best practices:
- Review the enquiry letter immediately to understand the scope and deadlines.
- Assemble your evidence – technical reports, financial records, and development logs.
- Nominate a single point of contact to coordinate all communications with HMRC.
- Seek expert support – a specialist in R&D Enquiry Defence can identify potential weaknesses before HMRC does.
- Maintain professionalism and transparency throughout, avoiding defensive or incomplete responses.
Common Mistakes to Avoid
Many businesses risk losing their claim by:
- Providing vague or inconsistent answers.
- Submitting unverified data or estimates.
- Missing HMRC deadlines.
- Attempting to handle complex technical queries without specialist input.
Such errors can escalate an enquiry and increase the likelihood of penalties.
Why Professional R&D Enquiry Defence Matters
Working with a specialist can significantly improve the outcome of an enquiry. Experienced advisers know how to present technical and financial evidence in line with HMRC’s expectations, address potential red flags, and negotiate on your behalf.
FI Group offers a dedicated R&D Enquiry Defence service, helping businesses respond strategically, protect their claims, and minimise disruption during investigations.
Final Thoughts
An HMRC R&D tax credit enquiry does not automatically mean your claim will be denied. By acting quickly, preparing robust evidence, and seeking professional defence, you can safeguard your entitlement and maintain compliance.
Learn more about FI Group’s R&D Enquiry Defence services to ensure your business is fully prepared to respond to HMRC challenges.
