HMRC R&D Tax Enquiries: What to Expect and How to Respond (2026)

An HMRC R&D tax enquiry is a formal or semi-formal process in which HMRC examines a company's claim for R&D tax relief under the merged scheme, ERIS, or the legacy SME and RDEC schemes. Enquiry rates rose sharply after HMRC's 2024 publication showing £4.1bn in estimated error and fraud in the R&D tax relief system. If you have received a letter from HMRC about your claim, or you want to understand the risk before filing, this guide covers everything you need to know. Use the eligibility checker to gauge your position before reading further.

Why HMRC Enquiry Rates Are Rising

The short answer: HMRC estimates the R&D relief system lost around £4.1bn to error and fraud in the three years to 2023-24. That figure comes from HMRC's own publication, Measuring Tax Gaps 2024, which places the R&D tax relief error rate at approximately 4.9% of total relief expenditure. To put that in context, HMRC paid out roughly £7.6bn in R&D reliefs in 2021-22 alone, per the R&D tax credit statistics publication.

Three structural factors drove the spike in non-compliant claims between 2020 and 2023:

• A proliferation of claim factories. Hundreds of unregulated firms entered the market, typically charging a high percentage fee with no ongoing responsibility for claim accuracy. Some used templated narratives that bore no resemblance to the company's actual technical work.
• Overstated apportionment percentages. Many claims included 100% staff apportionment for technical employees, without evidence. For a software developer who attends stand-ups, does code reviews, fixes production bugs, and takes holidays, 100% is rarely defensible.
• Incorrect cost categorisation. Overseas contractors, production hosting costs, and post-launch maintenance work were routinely included in claims where they did not qualify.

HMRC's response was a multi-pronged compliance programme: the Additional Information Form (AIF) mandatory from August 2023; the merged scheme reform from April 2024; the MREP (Mandatory Random Enquiry Programme); sector-targeted campaigns; and a large increase in one-to-many nudge letters. The practical effect is that any claim filed in 2024 or later carries a meaningfully higher probability of examination than claims filed before 2022.

The Three Types of HMRC R&D Enquiry

Compliance Check

A compliance check (sometimes called a section 9A enquiry under the Taxes Management Act 1970) is HMRC's standard tool for examining a self-assessment return. For R&D purposes, HMRC can open a compliance check into the CT600 that includes the R&D claim at any time within 12 months of the date the return was filed, or within four years if HMRC believes there may be an error. Where careless behaviour is suspected, the window extends to six years; for deliberate inaccuracies, 20 years.

In practice, most R&D compliance checks begin with an opening letter requesting information. HMRC is required to issue this under Schedule 36 of the Finance Act 2008 if it wants documents, and must give the company a reasonable time to respond, which is normally 30 days. The letter usually asks for the technical narrative, time records, and cost reconciliations.

See the week-by-week enquiry timeline for the typical sequence of events from letter receipt to closure.

Full Enquiry

A full enquiry is a more intensive review, often triggered when the initial compliance check raises unresolved questions or when HMRC has broader concerns about the claim. Full enquiries typically involve multiple rounds of information requests, and in some cases, a meeting between HMRC's specialist officer and the company's adviser. They can also involve HMRC requesting access to internal communications, project management records, or interviewing technical staff.

If HMRC disagrees with the company's position at the end of a full enquiry, it issues an amendment notice under section 28A of the Taxes Management Act 1970. The company then has 30 days to appeal. For the options at that stage, see the guide on when to appeal an HMRC R&D decision.

MREP: Mandatory Random Enquiry Programme

The Mandatory Random Enquiry Programme (MREP) is a statistical sampling exercise. HMRC selects a proportion of R&D claims at random, regardless of any risk indicators, and examines them to estimate the population-wide error rate. The £4.1bn figure cited in HMRC's 2024 publication is partly derived from extrapolating MREP findings across the whole claims population.

An MREP enquiry follows the same procedural path as a standard compliance check. The company has the same rights to appeal and the same obligations to provide information. The fact that the selection was random does not mean the claim will necessarily be accepted without question; the officer still examines the claim on its merits.

What HMRC Typically Asks For

Information requests in R&D enquiries are generally consistent across sectors, with some variation depending on the company's cost profile. A typical first information request covers:

• Project narratives. A description of each qualifying project: the advance sought, the uncertainty that existed at the start, what experiments or iterations were carried out, and how the company's competent professional team assessed the boundary of known technology. This is tested against the BIS Guidelines published at gov.uk.
• Staff time records. Timesheets, sprint logs, project board exports, or a written methodology explaining how apportionment percentages were calculated. HMRC will cross-reference these against payroll figures.
• Payroll reconciliation. A reconciliation from gross claimed staff cost back to individual payroll records, showing that employer NIC and pension contributions have been correctly calculated.
• Subcontractor and EPW contracts. Signed agreements for every subcontractor or externally provided worker included in the claim. HMRC will look at the direction-of-control question and, for periods from April 2024, the UK provision question.
• Cost workings. A spreadsheet reconciling total qualifying expenditure to the figures in the CT600 and the Additional Information Form.
• AIF cross-check. HMRC will compare the narrative in the Additional Information Form against the technical description in the enquiry response. Inconsistencies are frequently cited in amendment notices.

The Additional Information Form, mandated from August 2023, can be found on gov.uk. Any claim filed from that date should have a corresponding AIF on file.

When to Appeal, When to Settle

The decision to fight or settle is one of the most important calls in any enquiry. It depends on three factors: the strength of the technical evidence, the amount in dispute, and the cost of fighting.

HMRC's recent tribunal record suggests the courts will uphold HMRC's position where the company cannot produce contemporaneous evidence of qualifying activity. In cases such as Hadee Engineering Co Ltd v HMRC and Quinn London Ltd v HMRC, the tribunals found in HMRC's favour because the claimants could not demonstrate that genuine scientific or technological uncertainty had existed at the project start. Where a company has strong technical documentation and HMRC is disputing the interpretation of the advance or uncertainty tests, the tribunal is a more viable option. See the tribunal case law guide for case summaries and the patterns that emerge.

The appeal route is: HMRC internal review (30 days to request; 45 days for HMRC to conclude) then First-tier Tribunal (Tax Chamber), then Upper Tribunal on a point of law. The full decision framework is in the when-to-appeal guide.

Nudge Letters: A Special Category

A nudge letter is not a formal enquiry. It is a one-to-many communication sent by HMRC to a group of claimants. HMRC has run several nudge letter campaigns targeting sectors including software, construction, and professional services. Receiving a nudge letter means your company's claim profile matched criteria HMRC used to define the campaign group; it does not mean HMRC has risk-assessed your specific claim.

The critical mistake companies make with nudge letters is to withdraw or amend automatically, without reviewing whether the claim was actually correct. For a full breakdown of the four nudge letter formats, the deadlines, and the response options, see the nudge letter response playbook.

Sector-Specific Enquiry Risk

HMRC publishes sector-specific compliance guidance and runs targeted campaigns. The sectors that have seen the highest enquiry concentration in recent years include:

• Software and technology. The main risk area is overseas development labour, which has been outside the scheme for periods from April 2024. HMRC also scrutinises claims for routine development, product maintenance, and front-end work that does not cross the advance/uncertainty threshold.
• Construction. HMRC has run targeted campaigns on construction R&D claims, questioning whether on-site work constitutes scientific or technological advance or merely the application of existing techniques. The CIRD manual at CIRD81300 sets out the qualifying activities test.
• Professional services. Management consultancy, financial services, and similar sectors face a high bar on the advance and uncertainty tests.
• Food and agritech. Reformulation projects are frequently challenged on the grounds that the uncertainty involved is commercial rather than scientific.

Protecting Future Claims From Enquiry

The single most effective way to reduce enquiry risk is to build contemporaneous evidence as the R&D work proceeds, not when the claim is being prepared. Five practical steps:

1. Introduce project codes or tags in your project management system (Jira, Linear, GitHub) so that qualifying activity is identified at the time it occurs.
2. Agree staff apportionment percentages with the finance function at each quarter-end, using sprint records or task-level data as the basis.
3. File the Additional Information Form with genuinely bespoke technical narratives; HMRC is alert to templated language.
4. Review subcontractor and EPW contracts before the claim is filed to confirm the UK provision rule is met for post-April 2024 periods.
5. Keep the working papers used to prepare the claim; these will be the first thing requested in any enquiry.

For the full qualifying expenditure rules, see the eligible expenses guide. For a definition of the competent professional test, see the R&D tax glossary.

This Cluster: Four Detailed Guides

This pillar page gives the overview. The four cluster pages go deeper on specific aspects:

• Nudge Letter Response Playbook: the four letter formats, what to do, deadlines, and how to engage if the claim needs reviewing.
• R&D Tribunal Case Law: case summaries from Get Onbord, Hadee, Grazer, and Quinn; what patterns emerge.
• Week-by-Week Enquiry Timeline: from letter receipt to closure or amendment, with HMRC service standard targets.
• When to Appeal an HMRC Decision: appeal routes, decision framework, fee and time data.