HMRC is scrutinising R&D tax claims more closely. This practical guide explains what compliance means in 2025, how to prepare evidence, and how to avoid the red flags that trigger enquiries.
If your business claims UK R&D tax relief, HMRC compliance is no longer a box-tick. It is an operating discipline that runs from project scoping to audit-ready records. This article shows finance and technical teams how to build a robust file, prepare the Additional Information Form, and respond if HMRC asks questions. Research for this article has been drawn from FI Group’s article investigating the reasons why HMRC flags claims for review and the compliance breaches they show.
What is HMRC compliance for R&D claims?
HMRC compliance means your R&D claim is complete, accurate and supported by contemporaneous evidence, in line with legislation and current guidance. In practice, it covers:
- Clear technical rationale for why work qualifies as seeking an advance in science or technology.
- A defensible link between qualifying activities and costs.
- Accurate completion of returns and supporting forms.
- Record-keeping that stands up to enquiry.
How a compliant R&D claim works, step by step
- Define the R&D boundary
Identify the projects that meet the definition of R&D for tax purposes. Separate qualifying activities from routine work. Capture uncertainties, hypotheses and iterations. - Map activities to costs
Link eligible staff time, consumables, software, subcontractors and EPWs to specific R&D tasks. Keep a simple audit trail explaining why each cost is in scope. - Capture evidence while you work
Store lab notes, sprint boards, Git logs, test plans, failed trials, regulatory advice and design revisions. Evidence beats retrospective narratives. - Prepare the Additional Information Form (AIF)
Draft concise technical summaries, list qualifying projects, state methodologies for apportionment, and cross-reference your evidence pack. - Complete the return accurately
Ensure CT600/CT600L entries align with the claim schedules and AIF. Reconcile totals and check that figures tie to your statutory accounts. - Run a Red Team review
Have someone who did not write the claim test eligibility logic, costing, and form entries against HMRC guidance and common risk flags. - Submit and archive
File cleanly. Store a read-only pack with all schedules, calculations, governance notes and evidence, organised by accounting period.
Evidence: what “good” looks like
- Technical narrative: Problem, uncertainty, approach, outcomes. Avoid marketing language.
- Design and test artefacts: Versioned designs, protocols, results, failure analysis.
- Time records: Timesheets or justified estimations with methodology and samples.
- Cost files: Payroll extracts, invoices, subcontractor statements, and allocation notes.
- Governance: Internal approvals, risk logs, and decision records that show control.
Tip: Build a one-page evidence index for each project so reviewers can find proofs quickly.
The Additional Information Form (AIF) in practice
Treat the AIF as a structured summary, not a sales pitch. Keep it consistent with your calculation schedules and statutory accounts. Use plain language to explain:
- Why the work meets the definition of R&D.
- How you distinguished qualifying vs non-qualifying tasks.
- How you apportioned time and costs.
- Any third parties used and the nature of their work.
- How you avoid double counting with grants or other reliefs.
Common risk flags that trigger HMRC questions
- Copy-paste narratives that do not match your tech stack or sector.
- Excessive apportionments with weak methodology.
- Subcontractor cost claims without clear statements of work.
- Projects that look like BAU process change or implementation rather than genuine R&D.
- Inconsistent figures between the AIF, CT600L and accounts.
- No evidence of failure or iteration in the project history.
How to respond to HMRC if you receive an enquiry
- Acknowledge and organise. Create a response plan with owners, deadlines and a document index.
- Answer the question asked. Keep replies specific, reference the evidence pack, and avoid introducing new claims or scope.
- Provide samples. If HMRC asks for timesheets or invoices, give a reasoned sample first, then expand if requested.
- Explain methodology. Show how you arrived at apportionments with examples and sensitivity checks.
- Escalate sensibly. If you disagree on eligibility or quantum, set out the technical basis and supporting documents calmly and clearly.
CFO checklist for a clean claim
- Eligibility boundary agreed by technical and finance leads.
- Evidenced time apportionment methodology with worked examples.
- Subcontractor scopes on file and aligned to eligible tasks.
- AIF drafted early, not the night before filing.
- CT600/CT600L reconciled to schedules and accounts.
- Archive pack assembled and locked, with a contents index.
Interactions with grants and other incentives
- No double funding. Do not claim the same cost line twice. Record grant coverage, match funding and any subsidy-control conditions.
- Cost classification. If a cost is grant-funded, document how it is treated in the claim and why.
- Portfolio view. Align grant reporting with R&D tax evidence so you can reuse artefacts and avoid rework.
Governance model you can implement this quarter
- Monthly evidence cadence: Add project evidence to a shared folder with a standing agenda item in engineering or R&D meetings.
- Quarterly eligibility review: Reconfirm the boundary, update methodologies, and spot emerging risks.
- Pre-year-end dry run: Draft AIF sections and reconcile draft figures to management accounts.
- Independent review: Run a Red Team check before submission to test eligibility and numbers.
- Post-submission lessons learned: Capture improvements for the next period.