What happens during an R&D tax credit enquiry?

The short term impact of an enquiry will typically delay the payment of the R&D tax credits or the tax repayment. HMRC will typically pause settlement of the claim until they are satisfied that the information provided supports the position taken.

During the enquiry, an HMRC inspector will be assigned to review the claim in further detail. Their focus will be on understanding the qualifying activity undertaken, the presence of technical uncertainty and whether the eligible expenditure has been calculated correctly. This often involves requesting further detail on both the technical narrative and the cost breakdown.

The inspector will usually do this by:

• Submitting questions via letter or email
• Meet with professionals involved in the R&D tax credit claim
• OR a virtual call through which the necessary questions are asked

At Alexander Clifford, we will be on hand to manage the enquiry process for you. This includes handling correspondence with HMRC, coordinating responses and identifying what additional information is required to achieve smooth progression through this stage. If a meeting with HMRC is requested, worry-not, we will brief you in advance and support you through the discussion so that the relevant technical points are clearly explained.

If your R&D tax credit claim has been handled internally or by another company, we can still provide assistance by discussing enquiry support. This will usually involve reviewing the original submission, identifying potential areas of challenge and assisting with structured responses to HMRC’s questions.

Once the investigator is satisfied that the supporting information addresses the areas of concern raised, the enquiry will be closed. HMRC will then process the claim and arrange payment of any R&D tax relief due. This may be issued as a reduction in Corporation Tax or a payable credit to the company.

In cases where the investigator is not satisfied, the enquiry will continue. In practice, it is often possible to reach an agreement on specific areas of the R&D claim. This may involve refining the scope of qualifying R&D activities or adjusting the eligible expenditure. Where an agreement is reached, the enquiry can be concluded.