R&D Enquiries: What to Expect and How to Respond

HMRC has published its approach to handling R&D Tax Relief claims and enquiries at CIRD80525. The tone is collaborative on paper: HMRC states that it aims to be sympathetic and supportive, that it will keep record requests to the minimum compatible with reasonable assurance, and that it expects claimants to be open, clear, helpful and cooperative in return.

The reality most UK SMEs meet is more demanding. HMRC's compliance activity around R&D has been at multi-year highs since 2023, enquiries into R&D claims are more frequent than they were, and the bar for evidencing a claim is higher than it was three years ago.

This article covers what an R&D enquiry looks like in 2026: HMRC's stated service aims, what actually triggers an enquiry, the questions HMRC will ask, and the practical steps a company should take when a letter lands. It pairs with our R&D Advance Assurance Pilot and R&D Claim Notification Form pieces, which cover the two other formal touchpoints in the current compliance landscape.

Who this applies to

The material below is aimed at:

• UK SMEs that have filed, or are about to file, an R&D Tax Relief claim under the merged scheme or Enhanced R&D Intensive Support (ERIS).
• Companies that have received a letter from HMRC opening an enquiry into an R&D claim, or a request for further information under a compliance check.
• Finance directors, CFOs, and in-house tax leads preparing a claim they expect HMRC to scrutinise.
• Accountants and advisers supporting SME clients through an enquiry.

HMRC's stated service aims

HMRC publishes two operational aims for the handling of R&D claims:

• Where a payable tax credit is due, HMRC aims to pay 85% of claims within 40 days of receiving the claim.
• Where HMRC has concerns about a claim, it aims to open an enquiry within 60 days of receiving the claim.

Both figures are service aims, not statutory deadlines. Processing times extend where claim volumes are high, where BACS details are missing or wrong, or where a claim is unusually complex.

One point that catches out many first-time claimants: payment does not mean the claim has been approved. HMRC can, and does, open enquiries after paying. The statutory enquiry window under Schedule 18 to the Finance Act 1998 is generally 12 months from the date the Company Tax Return was filed. A discovery assessment under paragraph 41 can extend that window to 4 years (or 6 years for careless behaviour, or 20 years for deliberate).

What triggers an R&D enquiry

HMRC risk-assesses every Company Tax Return. R&D claims are screened as part of that wider assessment, with a set of factors that consistently trigger closer scrutiny:

• A large year-on-year jump in claim size. An unexplained increase against last year's baseline draws attention.
• A weak or generic technical narrative in the Additional Information Form (AIF). HMRC officers read every AIF: if it does not clearly identify the advance, the baseline and the uncertainty, that is a flag.
• Inconsistencies between the AIF and the accounts. Cost categories that do not reconcile to the CT600 or the trial balance are one of the most common issues raised at opening.
• Sector risk profiling. HMRC's own statistics show materially higher non-compliance rates in certain sectors (accommodation and catering, retail, some care and childcare providers). Companies in those sectors are more likely to see a compliance check.
• First-time claimants who have not filed a Claim Notification Form where required. A missing notification form invalidates the claim outright.
• Claims prepared by advisers on HMRC's watch list. Not published, but real. Where an adviser has a track record of poorly evidenced claims, HMRC will look harder at all claims submitted by that adviser.
• Overseas expenditure that does not sit inside the narrow post-1 April 2024 exception. Claims for offshore EPW or subcontractor cost invite questions where the geographical, environmental, social or regulatory conditions test is not clearly met.
• Random sampling. Even a well-prepared, low-risk claim can be selected.

Types of letter HMRC may send you

Not every letter from HMRC about an R&D claim is a formal enquiry. Recognising which kind of correspondence has landed matters, because the right response is different in each case.

One-to-many (nudge) letters

An informal letter sent to a cohort of companies where HMRC has identified a common risk indicator (recent examples have covered overseas subcontractor cost, and claims by companies in low-risk sectors). The letter asks you to review a specific point and either confirm the claim is correct or file an amendment. It is not a statutory enquiry, but it can escalate to one if the reply is unsatisfactory or ignored.

Compliance check letter (formal enquiry)

Issued under paragraph 24 Schedule 18 FA 1998. This is the standard opening of an R&D enquiry. It sets a response deadline (typically 30 days), attaches specific questions on the technical narrative and the costs, and puts the statutory enquiry window firmly on the clock.

Schedule 36 information notice

Where HMRC has asked for specific documents or information and the company has not provided them, HMRC can issue a formal notice under Schedule 36 to the Finance Act 2008. Non-compliance carries statutory penalties.

Fraud Investigation Service (FIS) letter

Reserved for cases where HMRC suspects deliberate behaviour rather than error. A Code of Practice 8 (COP 8) letter opens a civil investigation of serious tax fraud. A Code of Practice 9 (COP 9) letter opens the Contractual Disclosure Facility for suspected serious fraud. These are materially different situations from a routine compliance check. Specialist advice should be taken the day the letter arrives.

Closure notice

Issued under paragraph 32 Schedule 18 FA 1998 at the end of the enquiry. It sets out the officer's conclusions, any adjustments to the R&D claim, and any tax now due. The company has 30 days to appeal to the First-tier Tribunal.

What HMRC will ask: the nine questions

HMRC's guidance at CIRD80560 on R&D records is often read as a checklist of documents to keep. It is more useful read the other way round: as HMRC's framework for assessing whether a genuine R&D project took place. An officer working through an enquiry will effectively ask nine questions:

1. The advance. What scientific or technological advance was being sought?
2. The baseline. What was already known in the field before the project began?
3. The uncertainty. What specific scientific or technological uncertainty was blocking the advance?
4. The plan. Was the work structured and systematic, with objectives and a route to resolution?
5. The expertise. Who worked on the project, and what qualified them to judge that the uncertainty was real?
6. The investigation. What testing, experimentation, analysis or prototyping was carried out?
7. The evolution. How did the project change as knowledge was acquired (or as approaches failed)?
8. The resolution. How were the uncertainties resolved, or why did the project fail?
9. The evidence. What contemporaneous records show all of the above?

A claim built around these nine questions from the outset is considerably easier to defend than one that answers them retrospectively.

HMRC's aims vs claimant obligations

CIRD80525 sets out mutual expectations for the process. A simplified view of the two sides:

What HMRC aims to do	What HMRC expects from you
Pay 85% of payable tax credits within 40 days	Submit a complete, accurate AIF before the CT600
Open an enquiry within 60 days where concerns arise	File a Claim Notification Form on time where required
Keep record requests proportionate to the issues	Provide records that support the technical and cost claim
Communicate progress and next steps during the enquiry	Respond openly, clearly, helpfully and cooperatively
Give post-enquiry feedback to improve future claims	Apply the feedback to the next period's return

Common enquiry pitfalls

The mistakes we see most often when we take on companies mid-enquiry:

• No documented baseline. The company cannot show what was already known before it began the project.
• Generic uncertainty statements. "We were not sure it would work" is not a technological uncertainty.
• Marketing materials submitted as evidence. Product brochures describe commercial value. HMRC needs evidence of technological challenge.
• Reconstructed narratives. Technical reports written years after the project, with no contemporaneous notes, meeting minutes, test records or version-controlled documentation to back them up.
• Answering the wrong question. Explaining why the customer buys the product, rather than what technological uncertainty had to be resolved to build it.
• No credible competent professional. The statutory definition of R&D turns on what a competent professional in the field would (or would not) find readily deducible. Where the company cannot name who the competent professional was, or where the person named lacks the qualifications, experience or authority to make that judgement, HMRC will challenge the whole basis of the claim.
• Silence. Missing deadlines set out in the enquiry letter. HMRC's tone hardens quickly.

Worked example: a typical enquiry timeline

A UK precision engineering SME files a Company Tax Return for the 2024-25 accounting period, with an R&D claim of £220,000 and a supporting AIF.

• Day 0: Return and AIF received by HMRC.
• Day 55: Enquiry letter issued under paragraph 24 Schedule 18 FA 1998. Twelve technical and cost questions attached. Response deadline: 30 days.
• Day 85: Company responds with a written narrative addressing each question, cost apportionment workings, and a bundle of contemporaneous project documentation.
• Day 130: HMRC follow-up letter with four supplementary questions and a request for a technical meeting.
• Day 180: Technical meeting held with the competent professional (the SME's engineering director), the company's finance lead, and Lexmore as adviser. HMRC officer and technical specialist attend.
• Day 220: HMRC issues a closure notice under paragraph 32 Schedule 18. Two of the three projects accepted in full. One partially disallowed on the overseas cost point. Net result: £185,000 of the original £220,000 claim upheld.

Not every enquiry lands like this. Some resolve on paper. Some run for eighteen months. But the shape of the process is consistent, and the difference between the good outcome above and a claim reduced to zero is almost always the quality of contemporaneous evidence and the discipline of the response.

If a letter lands: practical steps

1. Read the letter carefully and diarise the deadline. A 30-day deadline is typical. If more time is needed, ask HMRC for an extension in writing before the deadline passes.
2. Do not respond off the cuff. Everything you write becomes part of the record. Draft the response, put it to a competent professional in the field, and only send it when both the technical narrative and the numbers are consistent with the AIF.
3. Gather contemporaneous evidence. Project notes, meeting minutes, test records, timesheets, version-controlled documentation, funding applications, and internal emails from the period of the R&D. Not reconstructed after the fact.
4. Address the nine questions, not the twelve questions. HMRC's questions are the surface. The nine underlying questions from CIRD80560 are what an officer is actually working through.
5. Bring in a specialist early. Enquiry costs escalate fast if the first response misses the point. Getting a specialist R&D adviser into the conversation before the first response is filed usually reduces total cost and improves the outcome.

Lexmore’s View

The current R&D compliance environment is not a soft one. HMRC's stated approach is collaborative, and in many enquiries it is. But the volume of activity is high, the technical bar has risen, and the space between a well-prepared claim and a rejected one has narrowed.

Two structural moves reduce enquiry risk before a claim is filed. First, run the claim against the nine questions at CIRD80560 and make sure each has a clear, evidenced answer. Second, where the claim contains a specific high-risk point (a boundary R&D definition, an overseas cost, a contracted-out question, or a PAYE/NIC cap exemption), consider the Advance Assurance pilot for that point before submission.

If a letter has already landed, the priority is a first response that closes down the questions HMRC has asked, rather than opening new ones. That means answering with evidence rather than assertion, addressing each of the nine underlying questions, and matching every number to the accounts and the AIF.

Clear evidence. Clear scope. Clear claim.

How Lexmore can help with an R&D compliance enquiry

Lexmore Tax Advisory supports UK SMEs across the full lifecycle of an R&D claim: preparation, submission, and defence if HMRC opens an enquiry. Our compliance service is set out in more detail at lexmore.co.uk/compliance.

Three points worth flagging:

• Free claim assurance appraisal. If you have a draft R&D claim, or one that has already been submitted, we will review it against HMRC's framework at CIRD80560 and give you honest feedback on where the claim is strong and where it is exposed. No fee, no obligation.
• HMRC compliance protection. HMRC compliance protection is included as standard for Lexmore Tax Advisory clients. Where an enquiry opens on a claim we have prepared, we handle the response at no additional cost.
• Fee guarantee. Our fees on R&D claims are fixed and disclosed upfront, and our engagement terms give clients clear cover if an eventual HMRC adjustment materially alters the claim we prepared.

If you are already in an enquiry with a claim that someone else prepared, we can still help. The first step is a review of the letter, the Additional Information Form, and the evidence you hold.

References

• HMRC CIRD80525: Practice note on handling R&D claims and enquiries | gov.uk
• HMRC CIRD80560: R&D records and evidence | gov.uk
• Submit detailed information before you claim R&D tax relief (Additional Information Form) | gov.uk
• Tell HMRC you want to claim R&D tax relief (Claim Notification Form) | gov.uk
• Check if you can apply for advance assurance for your R&D tax relief claim | gov.uk
• Guidelines on the meaning of research and development for tax purposes (DSIT) | gov.uk
• Schedule 18 to the Finance Act 1998 (Company Tax Return enquiry framework) | legislation.gov.uk
• Schedule 36 to the Finance Act 2008 (HMRC information and inspection powers) | legislation.gov.uk
• Code of Practice 8: HMRC investigations where fraud is not suspected | gov.uk
• Code of Practice 9: Contractual Disclosure Facility | gov.uk