HMRC R&D Enquiry Defence
Expert defence when HMRC challenges your R&D tax credit claim, opens a compliance check, or rejects your submission
Former KPMG Senior Manager & Crowe UK Partner | 20+ Years Defending R&D Claims | Successfully Defended Claims Worth £200K to £1M+
Get Expert Enquiry Defence Support →Facing an HMRC R&D Enquiry or Compliance Check?
HMRC enquiries into R&D tax credit claims have increased by over 400% since 2022. Whether HMRC is challenging your R&D claim, you've received a compliance check letter, or your claim has been rejected entirely, you need specialist R&D enquiry support. A poorly defended claim can result in full denial, repayment demands, penalties, and reputational damage.
Why HMRC R&D Enquiries and Compliance Checks Are Increasing
Since 2022, HMRC has dramatically intensified scrutiny of R&D tax credit claims. The introduction of the Additional Information Form (AIF), revised BIS Guidelines, and increased compliance resources have led to:
- 26% drop in total claims between 2022-23 and 2023-24
- 31% reduction in SME claims as HMRC challenges eligibility
- Widespread fraud allegations against legitimate claims
- Full claim denials based on documentation insufficiencies
- Extended enquiries lasting 18-24 months
- HMRC R&D compliance checks targeting specific claim elements
Companies that prepared claims without specialist R&D tax expertise are particularly vulnerable when HMRC opens an enquiry. Generic accountants and high-volume claims factories often lack the technical knowledge to defend claims under the current level of HMRC scrutiny.
Our Enquiry Defence Results
Proven Track Record: Successful Enquiry Defence
I have successfully defended R&D tax credit claims against HMRC enquiries for over 20 years. Here are two recent examples:
Software Company - Fraud Allegations Overturned
The Challenge: HMRC opened an enquiry with initial allegations of fraud, claiming the software development did not qualify as R&D and that costs were inflated.
Our Defence: Comprehensive technical documentation demonstrating genuine technological uncertainties, systematic investigation methodology and full cost substantiation. Direct engagement with HMRC inspectors to clarify qualifying activities.
Software Company - £1M+ Claim Defended
The Challenge: HMRC challenged the technical eligibility of the software development, questioning whether the work represented genuine R&D or routine engineering.
Our Defence: Incumbent R&D tax advisors failing to make headway. We were appointed to seek a breakthrough with robust technical arguments.
"Steve! We had a message today saying that HMRC have approved our claim! It's a good day at our offices. Thank you again for your advice and guidance. It made the difference. Thanks again. Ceryl"
How to Respond to an HMRC R&D Enquiry Letter
Receiving an HMRC enquiry letter can be alarming, but your response in the first 48 hours is critical. Here's what you need to know when HMRC is challenging your R&D claim:
First 48 Hours: Critical Actions Checklist
- Do NOT respond to HMRC immediately without strategic review
- Engage specialist R&D enquiry support before providing information
- Preserve ALL project documentation, emails, and technical records
- Review your original claim submission for potential weaknesses
- Identify gaps in documentation and begin gathering evidence
- Understand HMRC's statutory timescales (usually 30 days to respond)
- Assess whether this is a compliance check or full enquiry
What NOT to Say to HMRC
Companies often damage their position through poorly considered initial responses. Common mistakes include:
- Admitting uncertainty about whether activities qualify as R&D
- Providing incomplete or contradictory technical descriptions
- Offering to reduce the claim before HMRC has challenged specific elements
- Sending hundreds of pages of documents without strategic curation
- Allowing non-technical staff to respond to technical questions
- Missing statutory deadlines due to inadequate internal coordination
Your first response sets the tone for the entire enquiry. Get it right with expert R&D enquiry support from day one.
What Happens When HMRC Rejects Your R&D Claim
If HMRC has rejected your R&D claim, you face serious financial consequences, but rejections can often be overturned with proper technical defence. Here's what you need to know:
Common Reasons HMRC Rejects R&D Claims
- Activities deemed "routine engineering" rather than R&D advancement
- Insufficient technical uncertainty demonstrated in project descriptions
- Inadequate cost substantiation or inability to link costs to R&D projects
- Missing or poor quality contemporaneous records of R&D activities
- Subcontractor costs not meeting qualifying criteria
- Overhead allocations deemed excessive or unjustified
Your 30-Day Appeal Window
Critical: When HMRC issues a closure notice rejecting your R&D claim, you typically have 30 days to appeal to an independent tribunal. Missing this deadline can make overturning the rejection significantly more difficult and costly.
Case Study: £42K Rejected Claim Overturned
A renewables company received a compliance check from HMRC who were questioning the validity of the company's activities in line with the BIS Guidelines. We worked with the company to provide further detailed technical descriptions along with carefully curated supporting evidence.
Within 48 hours of receipt of the HMRC letter, we reviewed the questions, conducted detailed technical interviews with the development team and identified multiple areas of genuine R&D advancement that had been inadequately articulated. We prepared comprehensive technical reports demonstrating systematic investigation of scientific uncertainties and within a couple of rounds of correspondence with HMRC, we secured their R&D claim. For this company, it was critical that they could also claim in future periods so this was a double-win!
Result: Claim reinstated with no penalties.
Warning Signs Your Claim May Be Challenged
HMRC targets claims with certain characteristics. If any of these apply to your claim, you should prepare for potential enquiry:
- Your claim was prepared by a non-specialist accountant or high-volume claims factory
- Technical descriptions are generic and could apply to any company in your sector
- No contemporaneous project documentation or scientific records exist
- Costs include significant overhead allocations or subcontractor expenses
- You're claiming for software development HMRC may view as "routine"
- Your claim represents a significant percentage of qualifying expenditure
- You've changed advisors and claim values have increased substantially
- HMRC has opened "aspect enquiries" into specific parts of your return
What Makes Effective R&D Enquiry Defence
Successfully defending R&D claims under HMRC compliance checks and enquiries requires a unique combination of technical tax knowledge, scientific understanding and strategic negotiation skills. Here's what sets our approach apart:
Technical Tax Expertise
Deep knowledge of BIS Guidelines, CIRD manual, and HMRC internal guidance. Trained at KPMG and partner-level experience at Crowe UK.
Scientific Understanding
Ability to articulate complex technological advances in terms HMRC inspectors understand. We work with your technical teams to build bulletproof narratives.
Enquiry Strategy
Strategic approach to HMRC engagement when they're challenging your claim - knowing when to negotiate, when to stand firm, and when to escalate. 20+ years handling HMRC enquiries.
Documentation Excellence
We build enquiry-defence documentation from day one. Every claim assumes HMRC scrutiny and is prepared to withstand detailed technical review.
Cost Substantiation
Comprehensive financial records linking costs to specific R&D projects. Full audit trail demonstrating qualifying expenditure.
Litigation Support
If necessary, preparation of cases for First-tier Tribunal, including expert witness coordination and legal team collaboration.
Our Enquiry Defence Process
When HMRC opens an enquiry or compliance check into your R&D claim, time is critical. Here's how we respond:
Immediate Assessment
Within 48 hours of receiving HMRC's enquiry notice, we review your original claim, identify potential areas of challenge and develop an initial defence strategy. We assess the strength of your position and potential exposure.
Information Gathering
We work with your technical and finance teams to gather all contemporaneous documentation, project records and cost substantiation. We identify any gaps and work to fill them before HMRC requests specific information.
Technical Documentation
We prepare comprehensive technical reports that clearly articulate the scientific or technological advances achieved, the uncertainties resolved and the systematic investigation methodology employed. These are written for HMRC inspectors, not technical peers.
HMRC Engagement
We handle all correspondence and meetings with HMRC inspectors. Strategic communication is essential - knowing what to provide, when, and how to frame technical arguments in tax-compliant terms.
Negotiation & Resolution
Most enquiries can be resolved through negotiation without litigation. We work to achieve the best possible outcome - whether that's full claim acceptance, negotiated settlement, or preparation for tribunal if necessary.
Frequently Asked Questions About HMRC R&D Enquiries
What happens in an HMRC R&D enquiry?
An HMRC R&D enquiry is a formal investigation into your R&D tax credit claim. HMRC will request detailed technical documentation, cost substantiation and evidence of qualifying activities. Enquiries typically last 8-24 months and can result in claim amendments, repayment demands, or full acceptance. The quality of your defence documentation and technical articulation determines the outcome.
How long do HMRC R&D enquiries take?
HMRC R&D enquiries typically take between 8-24 months, though with expert representation, many can be resolved in under 12 months. The timeline depends on the complexity of your claim, quality of documentation and responsiveness to HMRC requests. Poor initial responses can extend enquiries significantly.
Can HMRC reject my R&D claim?
Yes, HMRC can reject R&D claims entirely if they believe activities don't qualify, costs aren't properly substantiated, or documentation is insufficient. However, rejections can often be overturned with proper technical defence and robust evidence. You typically have 30 days to appeal a closure notice rejecting your claim.
Do I need a specialist for HMRC R&D enquiries?
Yes, specialist R&D tax expertise is crucial for enquiry defence. Generic accountants often lack the technical knowledge and HMRC negotiation experience needed to successfully defend claims under intensive scrutiny. Poor defence can result in full claim denial, penalties and even damage to your relationship with HMRC for future claims.
What's the difference between an HMRC compliance check and a full enquiry?
An HMRC compliance check typically focuses on specific aspects of your claim (e.g., cost calculations or whether particular activities qualify), while a full enquiry scrutinises the entire claim in detail. Compliance checks can escalate to full enquiries if HMRC identifies concerns. Both require strategic, technically robust responses.
Why Companies Choose Us for R&D Enquiry Defence
Big 4 Training
Trained at KPMG and progressed to Senior Manager before joining Crowe UK as Partner. I have a good understanding of how HMRC thinks and what they're looking for in compliance checks and enquiries.
20+ Years Experience
Over two decades advising on R&D tax credits and defending claims against HMRC enquiries. I've seen many types of challenge and know how to respond when HMRC is challenging your R&D claim.
Partner-Led Service
You work directly with me on every aspect of your defence. No junior staff, no handoffs, no gaps in knowledge or strategy.
Proven Results
Successfully defended claims ranging from £50K to £1M+. Track record of overturning HMRC challenges, fraud allegations and rejected claims.
Compliance-First
We never take aggressive positions that create future problems. Every claim is prepared to withstand HMRC scrutiny from day one.
Strategic Thinking
Beyond just defending the current enquiry, we consider the long-term implications for your R&D programme and future claims.
Prevention Is Better Than Defence
The best way to handle an HMRC R&D enquiry or compliance check is to prevent one from happening. When we prepare R&D claims, we:
- Build enquiry-defence documentation from day one - every claim assumes HMRC scrutiny
- Prepare technically robust narratives that clearly demonstrate qualifying R&D
- Ensure full cost substantiation with audit-grade documentation
- Conduct internal compliance reviews before submission
- Consider HMRC's likely questions and address them proactively in the claim
- Integrate with broader tax strategy including Patent Box
If your existing advisor hasn't prepared your claims to this standard, it may be time to reassess your approach - especially before HMRC opens an enquiry.
Who We Help With R&D Enquiry Defence
We specialise in defending R&D claims and providing enquiry support for:
Manufacturing Companies
Advanced manufacturing processes, novel materials, production optimisation and engineering innovation.
Engineering Firms
Civil, mechanical, electrical engineering projects involving technological uncertainty and systematic investigation.
Life Sciences & Biotech
Drug discovery, medical devices, diagnostics and biotechnology research programmes.
Renewables & Clean Tech
Solar, wind, energy storage, and clean technology innovation.
Software & Deep Tech
Complex software development where genuine technological advances can be demonstrated beyond routine engineering.
Scale-Up Companies
Well-funded growth companies with substantial R&D programmes and significant claims at stake.
Need Help Defending Your R&D Claim?
If HMRC has opened an enquiry or compliance check into your R&D tax credit claim, or if your claim has been rejected, time is critical. Don't face HMRC alone with inadequate representation.
Book a confidential consultation to discuss your enquiry, assess your position, and explore defence strategies.
Book Confidential Consultation →Or email: steve@iptaxsolutions.co.uk | Call: 0161 961 0096
About Steve Livingston LLB FCA
Steve Livingston is a UK Chartered Accountant and the founder of IP Tax Solutions Ltd. After training at KPMG and progressing to Senior Manager, he joined Crowe UK as a Tax Partner specialising in company taxation.
With over 20 years' experience advising on R&D tax credits, Steve has successfully defended multiple HMRC enquiries and compliance checks, including fraud allegations, full claim denials, rejected claims and complex technical challenges across manufacturing, engineering, life sciences and technology sectors.
Steve's approach combines Big 4 technical expertise with boutique attention and strategic thinking. He works directly with clients on every engagement, ensuring consistency, quality and the best possible outcomes when facing HMRC scrutiny.
"Most enquiries are won or lost based on documentation quality and technical articulation. Companies that invest in proper R&D claim preparation are less likely to face prolonged enquiries. Those that cut corners often face significant challenges. My job is to help companies get this right from the start - or fix it when things go wrong." - Steve Livingston