Quick answer: A compliance check is HMRC's formal enquiry into a company's R&D tax relief claim, opened under the compliance framework and typically requesting timesheets, invoices, and technical evidence supporting the claim. It closes either with a closure notice confirming the claim or an amendment notice reducing or disallowing it, with appeal rights to the tribunal.
What is a compliance check in an R&D tax claim?
A compliance check is a formal statutory enquiry into a company's self-assessment return. In the R&D context, it is typically a "partial" enquiry: HMRC opens the compliance check specifically into the R&D claim rather than the whole return. The notice opening the compliance check specifies the aspects of the return under review. HMRC then issues information notices under Schedule 36 Finance Act 2008 requesting the evidence that supports the claim. The company is legally required to provide the requested information within the specified timeframe.
HMRC's guidance on compliance checks is at CIRD Manual. The general compliance framework is covered in HMRC's Compliance Handbook.
What does HMRC typically request in a compliance check?
In an R&D compliance check, HMRC typically requests: a description of the specific projects claimed, explaining the uncertainty at the outset; time records supporting the staff-cost apportionment (see vouching standard); invoices for subcontractor and consumables costs; the Additional Information Form if not already submitted; payroll records confirming salary figures; and any technical documentation (design documents, lab notebooks, sprint retrospectives) showing the investigation was genuine.
How is an R&D compliance check closed?
A compliance check closes by one of two routes. Either HMRC is satisfied that the claim is correct and issues a closure notice confirming the claim is accepted. Or HMRC concludes that the claim is incorrect and issues an amendment notice that reduces or disallows the claim. If the company disagrees with the amendment notice, it can appeal to the First-tier Tribunal.
HMRC does not have an unlimited period to keep a compliance check open. Case law has established that HMRC must act with reasonable expedition, and if an officer has all the information they need, the company can apply to the tribunal for a direction to close the enquiry.
What common mistakes arise during an R&D compliance check?
The most common mistake is not having an R&D-specialist adviser engaged at the point the compliance check opens. Responding to an officer's information requests without understanding the legal framework can lead to disclosures that concede more than necessary. A second mistake is providing documents in an unstructured way, making it harder for the officer to match costs to projects. A well-organised response that maps each cost to a specific qualifying project is more likely to result in a quick closure.
If you have received a compliance-check notice, the free assessment can connect you to a specialist.
Related terms
Frequently asked questions
A compliance check is a formal statutory enquiry HMRC opens into a company's self-assessment return. In the R&D context it is typically a partial enquiry opened specifically into the R&D claim, with HMRC issuing information notices under Schedule 36 Finance Act 2008 requesting evidence to support the claim.
HMRC typically requests a description of the specific projects claimed, time records supporting staff-cost apportionment, invoices for subcontractor and consumables costs, the Additional Information Form if not already submitted, payroll records, and technical documentation showing the investigation was genuine.
A compliance check closes in one of two ways: HMRC issues a closure notice accepting the claim, or HMRC issues an amendment notice reducing or disallowing it. If the company disagrees with the amendment notice, it can appeal to the First-tier Tribunal.
The most common mistake is not having an R&D-specialist adviser engaged when the compliance check opens, which can lead to responses that concede more than necessary. Providing documents in an unstructured way that does not map costs to specific projects is a second frequent mistake. If you want to check your claim's strength before a compliance check ever opens, the eligibility calculator gives an indicative starting point.