What Triggers an HMRC R&D Compliance Check?

Since the Research & Development online Additional Information Form (AIF) became mandatory on 8 August 2023, HMRC has significantly stepped up scrutiny of R&D claims - now referred to as the Research & Development Expenditure Credit (RDEC). 

• Around 20% of  R&D claims are now picked for review, up from around 1% before the AIF, and up from around 10% in 2022–23. 

• HMRC has hired 500+ compliance staff (up from ~100 in 2020–21), aiming to process 92% of R&D claims within 40 days while also opening checks within 12 months.

This means there is now a 1 in 5 possibility that your R&D claim will be subject to an enquiry.

Historically most of the R&D enquiries were received after an R&D claim had been settled, but there is some evidence that HMRC is now also looking into some claims before any claim settlement is made.

So What Triggers an HMRC Enquiry Into Your R&D Claim?

HMRC does not publish their methodology for conducting a compliance check, but scanning information and discussions online and looking at our own experience as specialist R&D advisor, gives some indication. Here are some pointers:

1. Inconsistent financials:

Discrepancies between numbers in the AIF and company accounts—for instance, overstated subcontractor costs—trigger alerts. 

2. Weak technical justification:

Vague or shallow explanations of eligible R&D—like confusing business challenges with technical uncertainties—or failure to clearly define baseline, advance, and uncertainty in the AIF. 

3. Large or sudden increases in claim size:

A spike in the claim size without adequate explanation (e.g., doubling year-on-year or large single claims). 

4. High-risk sectors where R&D is deemed less likely:

Claims from sectors with historically high error rates (care homes, hospitality, construction, retailers) tend to attract more scrutiny. 

5. Poor-quality AIF submissions:

Missed sections, lack of detail on all listed projects, or overbroad language can trigger HMRC to follow up.

6. Complex contractor relationships:

.Post-April 2024, subcontracted R&D is under intense scrutiny.

Key question: Who is actually bearing the technical risk and driving the R&D?

If this isn’t clear, HMRC will investigate.

7. Using an aggressive specialist advisor: 

HMRC monitors claims submitted by firms known for pushing boundaries or making aggressive R&D interpretations.

How to reduce the risk of enquiry

• Align your AIF cost data with your financial accounts—no mismatches.

• Ensure the AIF contains detailed, project-by-project descriptions, clearly explaining the baseline, the technical advance being sought, and the scientific and/or technological uncertainties that necessitated R&D.

• Highlight and justify any year-on-year claim increases.

• Avoid using vague or “marketing” language like “unique” or “bespoke” without clear explanation.

• Retain robust documentation and involve your Technical Professionals in the identification and writing up of your technical descriptions.

Read more about how the AIF can be a critical point of failure for R&D claims.

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