R&D tax relief can be valuable for innovative companies, but claims are increasingly scrutinised. If HMRC opens a compliance check or asks detailed questions about a claim, the response needs to be accurate, organised and supported by evidence.

An R&D tax relief investigation may focus on whether the project qualified, whether the costs were eligible, whether the claim was prepared correctly and whether the company took reasonable care. If HMRC suspects the claim was knowingly overstated or misleading, the risk can move beyond a simple tax adjustment.

Why are R&D claims investigated?

HMRC may investigate an R&D claim because the figures look unusual, the description of the project is unclear, the supporting evidence is limited, or the claim has been prepared in a way that raises concerns. HMRC may also focus on sectors or types of claim where it considers there is a higher risk of error or abuse.

A compliance check does not automatically mean the company has acted dishonestly. However, it should still be taken seriously because the outcome can affect tax repayments, penalties, future claims and the reputation of the business.

What evidence may HMRC ask for?

HMRC may ask for project descriptions, technical evidence, cost breakdowns, staff time records, subcontractor information, accounting records, correspondence with advisers and explanations of how the claim was calculated.

The key is not simply to provide a large bundle of documents. The response should explain the claim clearly and connect the evidence to the requirements of the scheme. Poorly organised information can make it harder for HMRC to understand the position.

Common issues in R&D tax relief enquiries

Common issues include claims for work that does not meet the qualifying criteria, overstated staff costs, unsupported subcontractor costs, weak project narratives, copied wording, reliance on adviser-led claims without proper review, or a lack of contemporaneous evidence.

If the claim was prepared by an external adviser, the company should still review its own position. HMRC may ask what the directors understood, what checks were carried out and whether the claim reflected the actual work undertaken.

When can an R&D enquiry become serious?

An R&D enquiry can become more serious where HMRC believes there has been deliberate misrepresentation, inflated figures, false projects, repeated inaccurate claims or a failure to correct known errors. In those circumstances, there may be penalty exposure and, in the most serious cases, fraud allegations.

If you receive correspondence suggesting dishonesty, deliberate behaviour or potential fraud, do not respond without advice. A careful response at the start can make a significant difference to how the matter develops.

How Adkirk Law can support your business

Adkirk Law advises businesses and individuals accused of R&D fraud or facing HMRC investigation. We can help you understand the allegations, prepare a response, protect your position and work with tax advisers where technical calculations or claim analysis are needed.