Quick answer: An HMRC enquiry is a formal check into a submitted corporation tax return, opened under Finance Act 1998, during which HMRC can request project evidence, cost schedules and a competent professional’s account before amending or accepting the R&D claim. Most enquiries conclude with the claim substantially upheld once the requested evidence is supplied.
What is an HMRC enquiry?
An HMRC enquiry is a formal investigation into a corporation tax return, opened under paragraph 24 of Schedule 18 to Finance Act 1998. For R&D tax relief, enquiries typically focus on whether the claimed activities meet the BIS definition, whether the competent professional has been correctly identified, and whether the expenditure is qualifying and accurately apportioned. HMRC's R&D compliance activity increased materially from 2022 with the creation of a dedicated R&D Anti-Abuse Unit.
How does HMRC define an R&D enquiry?
The statutory basis is at paragraphs 24 to 37 of Schedule 18 to Finance Act 1998, with specific R&D procedures set out in HMRC's Enquiry Manual from EM2000 onwards. HMRC's published Guidelines for Compliance GfC3, titled Help to see if your work qualifies as R&D for tax purposes, describes the information HMRC expects to see. Mandatory random enquiry volumes were increased in 2023.
What does an R&D enquiry look like in practice?
A software SME receives a formal enquiry letter nine months after filing its CT600. HMRC requests project descriptions, the competent professional's CV, cost breakdowns and a response to specific queries on the qualifying expenditure categories. The enquiry is handled by the specialist adviser and resolved over a period of several months, with most of the claim upheld. Companies preparing for a first claim can check likely eligibility with the free eligibility calculator before investing in a full technical narrative.
Worked example: how long an R&D enquiry typically runs
HMRC’s own service targets aim to resolve well-evidenced enquiries in weeks to a few months, though contested cases can run well over a year. Of the 46,950 R&D claims HMRC processed in 2023-24, a meaningful minority were selected for a compliance check, reflecting the R&D Anti-Abuse Unit’s expanded post-2022 caseload. A claim supported by a clear, CIRD-referenced narrative is materially faster to close than one relying on generic project descriptions - see the CIRD Manual entry for how advisers build that narrative.
What happens if the claim is challenged
If HMRC rejects part of a claim after enquiry, the taxpayer can request a review or appeal to the First-tier Tribunal - see Tribunal (R&D Cases) for how these disputes are resolved. Most enquiries conclude with the claim substantially upheld once the requested evidence - project records, qualifying cost schedules and a competent-professional account of the technical work - has been supplied; very few reach tribunal. Claimants should also keep in mind that an enquiry can be opened up to twelve months after the filing date for an in-time return, so the absence of an enquiry letter in the first few months after submission is not a guarantee the claim has been accepted.
Related terms
Frequently asked questions
Common triggers include claim size relative to company turnover, first-time claims, sector risk flags, and random selection under the mandatory enquiry volumes HMRC increased in 2023 - see HMRC’s Guidelines for Compliance GfC3 for the risk factors HMRC itself publishes.
HMRC’s own service targets aim to resolve well-evidenced enquiries in weeks to a few months, though contested cases can run well over a year. A claim supported by a clear, CIRD-referenced narrative is typically faster to close than one relying on generic project descriptions.
If HMRC rejects part of a claim after enquiry, the taxpayer can request a review or appeal to the First-tier Tribunal. Most enquiries conclude with the claim substantially upheld once the requested evidence, including project records, qualifying cost schedules and a competent-professional account, has been supplied; very few reach tribunal.
Not necessarily. HMRC can open an enquiry up to twelve months after the filing date for an in-time return, so the absence of an enquiry letter in the first few months after submission is not a guarantee the claim has been accepted.