The compliance landscape in 2026
HMRC identified significant levels of error and fraud in R&D tax relief claims in its 2024 Annual Report. In response, it substantially increased compliance activity — including targeted enquiries, pre-payment checks, and a new advance assurance pilot launching in Spring 2026.
The risk is not evenly distributed. Claims prepared by specialist advisers with deep R&D tax knowledge are significantly less likely to attract scrutiny than self-prepared claims or those prepared by general accountants without R&D expertise.
The highest-risk factors
No specialist adviser
Self-prepared claims and those prepared by general accountants have the highest error rates. HMRC data shows these are disproportionately represented in enquiries.
Claim value high relative to company size
A large claim from a small company with few technical staff triggers automatic scrutiny. The numbers need to be consistent and defensible.
Vague project descriptions
HMRC requires specific explanation of the technological uncertainties being resolved. Generic descriptions of innovation without specific technical detail are a red flag.
First-time claimants
First claims carry higher error rates than established claimants. HMRC pays particular attention to first-time submissions.
High-scrutiny sectors
Construction, architecture, and digital agencies face higher scrutiny levels. Not because they don't qualify, but because qualifying activity is less straightforward to evidence.
Missing Additional Information Form
Since August 2023, an AIF must be submitted before or alongside the CT return. Missing this — or submitting an incomplete one — is a common and avoidable error.
What happens during an HMRC enquiry?
HMRC can open an enquiry into any R&D claim within a defined window — typically 12 months from the filing deadline, though this can extend in cases of suspected fraud or careless errors. An enquiry does not mean HMRC believes your claim is wrong — but it does mean they want to understand it better.
During an enquiry, HMRC will typically request:
- Detailed descriptions of the R&D projects, including specific technological uncertainties
- Evidence that the uncertainties were genuine and could not be resolved by competent professionals without experimentation
- Payroll records supporting staff cost allocations
- Timesheets or other evidence of time spent on R&D
- Subcontractor agreements and invoices
- Technical documentation such as specifications, test records, and version histories
How to reduce your audit risk
1. Use a specialist R&D tax adviser
This is the single most effective risk reduction measure. A specialist who prepares claims daily understands exactly what HMRC expects to see and how to present it. Their preparation typically results in better-evidenced claims that withstand scrutiny.
2. Document as you go
The best time to document R&D activity is during the project, not retrospectively. Time records, technical meeting notes, project specifications, and test logs all provide contemporaneous evidence that is far more credible than retrospective reconstruction.
3. Be specific about technological uncertainty
Generic statements like "we developed innovative software" do not satisfy HMRC's requirements. Qualifying R&D must involve resolving genuine uncertainties that competent professionals in the field could not resolve using existing knowledge. Be specific about what the uncertainty was, what approaches were tried, and what was learned.
4. Be conservative with time allocation
Overclaiming staff time is one of the most common errors. Not all development time qualifies — routine work, project management not directly related to R&D, and client-facing activity do not count. A conservative approach that can be evidenced is far safer than an optimistic one that cannot.
HMRC advance assurance pilot (Spring 2026): HMRC is launching a new targeted advance assurance service in Spring 2026. This allows SMEs to apply for assurance that their claim approach will be accepted before submitting. While voluntary, it provides certainty for businesses uncertain about their position.
If HMRC enquires into your claim
If you receive an enquiry notice, do not respond without specialist support. An experienced R&D tax adviser or tax lawyer will understand the enquiry process, know what HMRC is actually looking for, and be able to present your case effectively. Early specialist involvement in an enquiry almost always leads to better outcomes than self-representation.
If you used a specialist to prepare your original claim, contact them immediately — they will typically support you through any related enquiry.