You know your business qualifies for R&D tax relief, but there's a nagging concern: will submitting a claim put you on HMRC's radar? It's one of the most common questions Finance Directors ask us.
The short answer is no. Making an R&D claim doesn't automatically trigger an HMRC enquiry. However, certain factors do increase scrutiny. This blog explains what actually prompts HMRC enquiries, how to reduce your risk, and what to expect if HMRC does investigate your claim.
Does Claiming R&D Tax Relief Automatically Trigger an Audit?
Short answer: No.
• Making an R&D claim doesn't automatically trigger an HMRC enquiry.
• Hundreds of thousands of companies claim R&D tax relief each year without issue.
• HMRC expects legitimate R&D claims and has processes to handle them efficiently.
However, HMRC has increased scrutiny of R&D claims in recent years. According to HMRC's latest statistics, compliance checks have become more frequent, particularly for first-time claimants and larger claims.
Claiming R&D tax relief is a normal part of doing business if you're innovating. HMRC's concern is with those who overclaim, lack proper documentation, or submit vague technical narratives that don't clearly demonstrate qualifying R&D activity. If you’re making a valid claim with solid evidence, you might still get an audit, but you’ll be in a better position to defend your claim.
What Actually Triggers an HMRC R&D Tax Enquiry?
HMRC carries out regular Mandatory Random Enquiry Programmes (MREP) to assess the level of error and fraud in the scheme. During an MREP, compliance checks are opened randomly, even for perfectly compliant claims.
However, specific patterns and red flags increase the likelihood of scrutiny. Understanding these can help you submit a compliant claim from the outset.
HMRC has been clear about its priorities. As stated in their compliance review: "Reducing the level of non-compliance in R&D tax relief schemes is a priority for HMRC."
First-time claims with large values
Sudden, substantial claims from companies with no R&D history raise questions.
Even first-time claims with smaller values are at risk. Take the XL Industries case study: a relatively modest first claim still triggered an HMRC enquiry because the company hadn't claimed before.
Claims that spike significantly year-on-year
Major increases without clear business justification can prompt a compliance check.
Inconsistent claiming patterns—claiming one year, skipping the next, then claiming again—may suggest uncertainty about what qualifies. Even legitimate changes to business direction or sector can trigger reviews if not properly explained.
High claim-to-turnover ratios
When R&D expenditure seems disproportionate to company size or revenue, HMRC may investigate to ensure the claim is accurate.
Sector misalignment
Claims from industries HMRC considers low-risk for genuine R&D, such as retail, hospitality, or professional services, receive extra attention unless there's clear evidence of innovation.
That doesn't mean companies in these sectors can't claim (they absolutely can!) but they need to clearly articulate the scientific or technological advance they pursued. It’s crucial to identify advances in science and technology in these cases, not just in your general sector.
For example, a large retail operation may qualify for a project related to a software improvement for its ERP, but it will not qualify for any projects related to store improvements.
Poor quality submissions
Vague project descriptions that don't explain the uncertainty or advance could be a red flag to HMRC. When submitting an R&D tax credit claim, you must include an Additional Information Form that details why your projects qualify. Generic claims that do not demonstrate specific R&D activities could trigger audits on the basis of their project descriptions.
Agent-related triggers
Agents with a history of non-compliant claims can bring additional scrutiny to your submission, even if your claim is legitimate. When using an R&D tax credit adviser, you should ensure that they have a solid reputation, including with HMRC.
How Has HMRC's Approach to R&D Claims Changed?
Over the past few years, HMRC has significantly tightened its oversight of R&D tax relief. These changes to the scheme are mostly aimed at reducing fraud and error.
Recent compliance measures include:
• Introduction of mandatory advance notifications (from April 2023): First-time claimants and companies meeting certain criteria must notify HMRC before submitting their claim.
• Additional information requirements: The Additional Information Form now requires more detailed breakdowns of costs and project descriptions.
• Enhanced scrutiny processes: HMRC has invested in technology to review claims more thoroughly.
• Increased resources for R&D compliance teams: HMRC has significantly expanded its capacity to investigate R&D claims. Over 500 people currently work on R&D compliance, compared with around 100 people a few years back.
There was a rise in fraudulent or inflated claims, as claims fell through the crack and some claimants sought to exploit HMRC’s blind spots.
Since the introduction of the above changes, error and fraud rates have decreased. According to HMRC's Annual Report and Accounts for 2024-2025, an estimated 9.9% of R&D claims contain errors (compared to nearly 17% in the year before). The government is committed to protecting the scheme's integrity while ensuring it continues to support genuine innovation.
Legitimate claims will still succeed. The vast majority of well-documented, accurate claims pass through without issue. However, documentation standards have risen. What might have been acceptable five years ago may not be sufficient today. You should expect more questions, even for valid claims.
How Can You Reduce the Risk of an HMRC Enquiry?
While you can't eliminate the possibility of an enquiry entirely, you can significantly reduce your risk by following best practices for R&D claims.
Maintain robust documentation
Documentation is your strongest defence during an enquiry. Keep records that clearly demonstrate your R&D activities:
• Detailed project descriptions explaining the scientific or technological uncertainty you faced.
• Time records showing which staff members worked on R&D projects and for how long.
• Meeting notes, project plans, and reports that show your problem-solving process.
For guidance on creating strong documentation, see our guide on preparing robust R&D tax technical reports.
Only claim genuine R&D activities
• Understand what qualifies as R&D under HMRC's guidelines.
• Don't inflate hours or include routine development work that doesn't involve overcoming scientific or technological uncertainty.
• Be conservative in your claims; it's better to claim slightly less than you might be entitled to than to overclaim and face HMRC reducing your claim and, worst case, imposing penalties.
Provide technical detail
• Explain the advance you sought in your sector and why it wasn't readily deducible by a competent professional.
• Describe the uncertainties you faced and why standard approaches wouldn't work.
• Show how you attempted to overcome these uncertainties through systematic investigation or experimentation.
Work with reputable advisers
• Choose consultants with strong HMRC compliance records and technical expertise in your sector.
• Ensure your adviser will support you through any enquiry.
See our guide on whether you should use a specialist for R&D tax credits.
Submit advance notifications, if necessary
• These are required for first-time claimants and companies that haven’t made a claim in the last three years.
• If a claim notification form is required and you don’t submit it, your claim .
Learn more about the claim notification form.
Keep claims proportionate
• Ensure your R&D expenditure aligns with your business activities and sector norms.
• Be prepared to explain any significant year-on-year changes in your claim value.
What Happens If HMRC Does Open an Enquiry?
If HMRC does open an enquiry into your claim, don't panic. An enquiry doesn't mean your claim will be rejected, it simply means HMRC wants to verify the details.
Understanding HMRC's R&D tax compliance checks can help you navigate the process:
• HMRC sends an information request asking for supporting documentation.
• You (or your adviser) provide the requested documentation: project descriptions, cost breakdowns, time records, and technical evidence.
• HMRC reviews your submission and may ask follow-up questions or request additional clarification.
• Your claim is either accepted in full, accepted with reductions, or rejected.
• If you disagree with HMRC's assessment, you can appeal or take the compliance check further through alternative dispute resolution or tribunal.
Simple enquiries can take 3-6 months for straightforward claims with good documentation. Complex cases may be resolved in 12-18 months or longer if there are multiple projects, significant expenditure, or technical disputes.
You should respond promptly to information requests, as delays can extend the enquiry unnecessarily. Try to provide comprehensive, accurate documentation that clearly demonstrates your R&D activities and work cooperatively with HMRC.
Should the Risk of an Audit Stop You Claiming?
Absolutely not.
R&D tax relief exists to support innovation. If you're genuinely investing in research and development, you should claim.
Compliant businesses have nothing to fear from scrutiny. If your claim is accurate and well-documented, an enquiry is simply an administrative process.
The real risk is missing out on funding you're entitled to. For a company with £200,000 in qualifying R&D expenditure, that's potentially £53,940 in lost tax relief under the Enhanced R&D Intensive Support (ERIS) scheme; money that could fund further innovation or support your business growth.
Key Takeaways
• Making an R&D claim doesn't automatically trigger an audit—hundreds of thousands of companies claim successfully each year.
• HMRC focuses on specific red flags: first-time large claims, poor documentation, disproportionate claim values, and sector misalignment.
• Strong documentation and technical detail are your best defence; they significantly reduce enquiry risk and speed up resolution if HMRC does investigate.
• Even if HMRC opens an enquiry, compliant claims with proper evidence succeed. An enquiry is a verification process, not a rejection.
• The risk of missing out on legitimate relief far outweighs the risk of scrutiny.
• Work with reputable advisers who support compliance and can help you navigate enquiries if they arise.
An HMRC enquiry shouldn't stop you claiming R&D tax relief you're entitled to. If you'd like expert support preparing an audit-ready claim or handling an existing enquiry, get in touch.
