What is an HMRC enquiry?
An HMRC enquiry (often described as a compliance check) is HMRC formally asking questions and requesting documents to confirm your Corporation Tax return is accurate, including any R&D tax relief claimed. Because R&D relief is claimed through self-assessment, HMRC may review it whether the claim results in a repayment, a reduction in Corporation Tax, or a credit carried forward, and this can happen before or after HMRC processes the return.
When HMRC can open an enquiry
For Corporation Tax, HMRC generally needs to issue a notice of enquiry within the statutory time limits. If a return was delivered on or before the filing date, notice may be given up to 12 months from the day the return was delivered.
Enquiries can feel late because repayments may be made before checks are finished. Don’t assume “we’ve been paid” means “we’re done”.
Why HMRC enquiries happen more often now
HMRC scrutiny has increased as part of a wider push to reduce error and fraud in R&D claims. You can see this in the newer compliance expectations and the supporting guidance HMRC has published for claimants.
The compliance environment has changed
For most claims, you now have extra process requirements that affect validity and how HMRC risk-scores claims, including:
Common triggers for an R&D enquiry
HMRC doesn’t publish a single definitive trigger list, but in practice enquiries often follow patterns such as:
- Weak or generic technical narratives (hard to see the uncertainty/advance)
- Costs that don’t reconcile cleanly to accounts/payroll/ledgers
- Heavy reliance on subcontracting/EPWs without clear contractual intent and R&D rationale
- Large year-on-year movement in qualifying spend without a clear project story
- Missing process steps (AIF, claim notification where required)
What HMRC typically asks for
Most enquiries focus on two things: eligibility and costs.
Eligibility questions (the technical story)
Expect requests that test whether you:
- Aimed for an advance in science/technology
- Faced scientific/technological uncertainty
- Used a competent professional
- Carried out systematic work to resolve uncertainty (including failures)
HMRC’s GfC3 is a good benchmark for the level of clarity and record-keeping they expect.
Cost questions (the numbers and the link to activity)
Expect HMRC to test:
- How staff time was allocated and evidenced (timesheets vs reasonable apportionment with support)
- Why specific roles were included/excluded
- How subcontractor/EPW costs were treated and apportioned
- How software/cloud/consumables were tied to qualifying activity
- Reconciliation to payroll reports, invoices, trial logs, and your computation
Step-by-step: how to handle an enquiry
This is the part most businesses find the most useful: a clear, repeatable process you can run internally, even if you don’t deal with HMRC enquiries every day. An enquiry can feel personal, but it’s usually just HMRC working through a checklist to validate eligibility, costs and the links between them. The goal here is to help you respond calmly and efficiently, with the right level of detail, in a way that makes it easy for HMRC to follow your reasoning and close the check.
Step 1: Triage the letter and lock down deadlines
- Identify exactly what HMRC is asking for and the period(s) covered
- Log the response date and assign a single internal owner
- If the deadline is tight, request an extension early and keep the tone factual
Step 2: Build an “enquiry pack”
Aim to send a single, structured response with indexed attachments. A good enquiry pack usually includes:
A) Claim overview (1-2 pages)
- What was claimed (period, scheme route, headline figures)
- Project list and short summaries
- How you approached eligibility and cost capture
B) Technical evidence bundle
- Baseline + uncertainty + advancement for each project
- Experiments/trials/test reports
- Design logs, lab notes, simulation outputs
- Version control extracts or ticket evidence (where relevant)
- Who the competent professionals were and what decisions they made
C) Financial evidence bundle
- Staff cost workings and apportionment logic
- Payroll reports (gross, employer NIC, pension) supporting staff totals
- Invoices/contracts for third parties and a short explanation of treatment
- Ledger extracts for software/cloud/consumables and apportionment notes
- Reconciliation from claim schedule → trial balance → statutory accounts (where possible)
D) Process compliance evidence
- AIF submission confirmation/token and what was filed
- Claim notification submission (where required)
Step 3: Answer the questions in HMRC’s order
This is where most enquiry responses go off track: people send a long narrative that feels comprehensive, but doesn’t directly answer what HMRC asked. Make it easy for the reviewer to tick things off. Follow HMRC’s sequence, keep each answer tightly focused, and signpost the exact evidence that supports it. You’re not trying to win an argument, you’re helping HMRC verify the position quickly.
- Repeat HMRC’s question
- Answer it directly in 3–6 lines
- Point to the exact document/page that supports it
Step 4: Be consistent across narrative, AIF and cost schedules
Inconsistencies are enquiry fuel. Even small mismatches can trigger follow-up questions, delays or a loss of confidence in the submission. Before you send anything, do a quick sanity check that every part of the claim tells the same story:
- Project names match across AIF, report and schedules
- The “uncertainty” described lines up with who you costed in
- The apportionment method is stated once and used everywhere
Step 5: Keep an audit trail of what you send
Maintain:
- A comms log (date, sender, what was sent)
- A version-controlled folder for all documents shared
- An “issue list” of open points and how you answered them
Outcomes: what can happen at the end of an enquiry
Enquiries typically end in one of these outcomes:
- accepted with no change
- amended (some projects/costs removed or adjusted)
- repaid amount reduced or partially recovered
- penalties/interest where HMRC considers the inaccuracy careless/deliberate (fact-specific)
GfC3 flags the importance of getting the fundamentals right and correcting errors where you find them.
Can HMRC ask for more after you respond?
Yes. An enquiry can run in multiple rounds. The fastest resolutions usually happen when the first response is properly structured, evidenced and easy to follow.
How to reduce enquiry risk next time
This article is focused on responding to an enquiry, but the best way to reduce risk next time is to build a simple, repeatable approach that keeps your technical story and your numbers aligned from the start. For example:
- Keep contemporaneous technical records, not retro stories
- Capture staff time logic as you go (even if not timesheets)
- Keep contract and scope evidence for subcontracted R&D
- Make sure AIF/project lists are clean and consistent
- Use GfC3 as your internal checklist for “would this stand up?”
Handled well, an HMRC enquiry doesn’t have to derail your team or drag on for months. If you respond in a structured way, with clear signposting and evidence that ties eligibility to costs, you give HMRC what they need to close the check efficiently. Treat each enquiry as a chance to tighten your process too, the strongest future claims are usually built on the lessons learned from the last one.
Is an HMRC enquiry the same as a compliance check?
An enquiry is HMRC formally checking your Corporation Tax return, including any R&D relief. HMRC also uses the term “compliance check” more broadly for checks into tax positions. In practice, you’ll receive a written request/notice and a set of questions or document requests.
How long after filing can HMRC open an enquiry into an R&D claim?
If your Corporation Tax return is filed on time, HMRC generally has up to 12 months from the date the return is delivered to open an enquiry. Late returns can extend the window, and there are longer time limits for certain corrections or behaviours.
Does receiving the repayment mean the claim has been accepted?
No. A repayment can be processed and HMRC can still enquire within the time limits.
How long do HMRC R&D enquiries take?
It varies. Simple checks can close quickly if the first response is complete and well-evidenced. More complex enquiries (multiple projects, subcontracting, weak records, group structures) often take longer and can run through several rounds of questions.
Can we speak to HMRC by phone to speed things up?
You can, but always confirm anything important in writing and keep a clear audit trail.
Can we ask for more time to respond?
Yes. If the deadline is tight, request an extension early, explain why, and propose a realistic date. Keep it factual and cooperative.
Do we need to provide all project documentation, or only what HMRC asks for?
Start with what HMRC asks for, but include enough context to answer properly. If you only send partial snippets, HMRC often comes back with more questions. A concise but complete evidence pack tends to reduce the number of rounds.
If we find an error, should we tell HMRC?
Usually yes. Correcting issues proactively is often better than letting HMRC find them, but handle it carefully.
Can HMRC widen the enquiry beyond R&D?
Sometimes. If they spot inconsistencies, they may ask wider Corporation Tax or payroll questions.
What if our records aren’t great?
Focus on what you can evidence credibly, be consistent and consider narrowing the claim if needed.
Do we need an adviser to handle an enquiry?
If the amounts are material, the records are messy, or the eligibility story is complex, specialist help can prevent avoidable mistakes. The most useful support is someone who can translate technical work into HMRC’s framework and reconcile costs cleanly.
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