Why scrutiny has increased
HMRC's R&D compliance campaign — which began in earnest in 2022 — was a direct response to a sharp rise in claims from sectors and business types that had not historically used the relief. Many of these claims were submitted by non-specialist advisers chasing volume, and a significant proportion turned out to be overclaimed, incorrectly structured, or in some cases entirely fraudulent.
The response was a wave of compliance checks, rejected claims, and in some cases penalties. The Additional Information Form requirement introduced in August 2023 was one outcome. The overall effect has been that R&D claims now face much higher scrutiny than they did before 2022 — and businesses using generalist accountants rather than specialist advisers carry meaningfully more risk.
The key audit risk factors
HMRC uses a risk-based approach to select claims for enquiry. While they do not publish their exact methodology, the following factors are widely understood to increase the probability of a compliance check:
Claim prepared without specialist adviser
Generalist accountants frequently miss qualifying costs or misapply the technological uncertainty test.
Sudden large first-time claim
A first claim that is disproportionately large relative to turnover or headcount is a common trigger.
Digital agency or construction sector
HMRC applies heightened scrutiny to sectors where overclaiming has historically been most prevalent.
High subcontractor costs
Subcontractor-heavy claims require careful documentation. The 65% cap is frequently misapplied.
Missing or incomplete AIF
The Additional Information Form has been required since August 2023. Incomplete forms trigger automatic checks.
Specialist adviser, consistent annual claim
Well-documented, consistent claims from specialist advisers attract significantly less HMRC attention.
The three things HMRC focuses on most
1. Is there genuine technological uncertainty?
This is the central eligibility test, and it is the most frequently challenged. HMRC looks for evidence that the technical challenge your business was trying to solve was not already known to a competent professional in the field — that it required experimentation, iteration, and a real risk of failure. Vague descriptions of "improving our software" or "developing a new product" are not sufficient. The claim needs to articulate specifically what was uncertain and what was done to resolve it.
2. Are the costs correctly apportioned?
Only the time your staff actually spent on qualifying R&D activity can be claimed — not their full salary. HMRC looks for evidence of how staff time was allocated between R&D and non-R&D work, and claims that do not have a clear methodology for this apportionment are frequently challenged. A simple time-tracking or project-coding approach, consistently applied, goes a long way toward demonstrating this.
3. Has the Additional Information Form been correctly completed?
Since August 2023, every R&D claim must be accompanied by an AIF submitted directly to HMRC, separately from the CT600. The AIF requires a description of the qualifying projects, the key technological uncertainties involved, and the costs claimed per project. Claims submitted without a correctly completed AIF are rejected automatically. Despite this requirement having been in force for over two years, it is still frequently missed or incompletely filled in by non-specialist advisers.
If you receive a compliance check letter from HMRC, do not respond without specialist advice. The way you respond to an initial enquiry significantly affects the outcome. A specialist adviser who has handled HMRC R&D enquiries before is the right person to manage the response.
How to reduce your risk
The most effective risk reduction is using a specialist R&D tax adviser rather than your general accountant. This is not a criticism of accountants — it is simply that R&D tax relief is a specialist area that changes frequently and requires deep familiarity with HMRC's current approach to claims. Specialist advisers know what HMRC is looking for, document claims accordingly, and are equipped to handle any resulting enquiry.
Beyond that, maintaining contemporaneous project records — notes, commit logs, test results, meeting minutes — is the most practical thing any business can do. You do not need a formal R&D diary system. You need enough documentation to demonstrate that the work happened, what the technical challenge was, and that the outcome was genuinely uncertain at the outset.
Check your eligibility and risk profile
Our free grader gives you an audit risk rating alongside your eligibility score — no registration required.