R&D claim under HMRC compliance check, what to do this week
HMRC has opened a compliance check on your R&D tax credit claim. Your R&D advance lender has been notified or will be. The advance is almost certainly paused. You have a 7-day window to engage your accountant, talk to the lender, and stabilise working capital before the gap shows up in payroll.
What just happened
An HMRC compliance check is a formal enquiry under Schedule 18 of the Finance Act 1998. The opening letter will request evidence supporting the technical novelty of the project, the qualifying expenditure split, the competent professional sign-off, and (since 1 August 2023) confirmation of the additional information form submitted at filing.
As of early 2026 the unit is reviewing approximately 1 in 5 SME-scheme claims, up from roughly 1 in 30 pre-2023. Most checks are procedural rather than fraud-suspicion based, but every check delays payment and triggers any contractual pause clauses in your R&D advance.
The 7-day window
- Day 1: read the HMRC letter end-to-end. Note the response deadline (usually 30 days). Forward to your R&D specialist or accountant.
- Day 2: notify the R&D advance lender in writing before they find out independently. Lenders treat self-notification much more leniently than late discovery.
- Day 3-4: meet with the R&D specialist to scope the response. Identify whether the claim is defensible as filed, defensible at a reduced figure, or weak.
- Day 5: map the cashflow gap. The advance drawdown stops; what does that mean for the next 8 weeks of payroll, supplier payments and HMRC PAYE/VAT?
- Day 6-7: apply for bridging working capital via the FundBiz matcher. The application takes 24 to 72 hours from there.
Your 3 options
Option 1: Defend the claim, keep the advance paused. The right answer if the technical case is strong, the documentation is in order, and the company can survive 6 to 12 months without further drawdown.
Option 2: Settle at a reduced figure, restructure the advance. The right answer if the claim is partially defensible. HMRC settles at a lower number, the advance is repriced against the lower expected payment.
Option 3: Withdraw the claim, refinance the advance. The right answer only if the technical case is weak and continued defence will cost more than the claim is worth. The advance becomes immediately repayable.
What to avoid
- Hiding the enquiry from the lender. The contract requires disclosure. Late discovery is treated as a material breach.
- Responding to HMRC without specialist input. The first response sets the framing for the rest of the check.
- Drawing on the advance after notification. If the lender's pause clause has triggered, any drawdown is a breach.
- Stacking a second R&D advance. No reputable R&D advance lender will fund a second facility while the first is in enquiry.
FAQs
What is an HMRC R&D compliance check?
A formal enquiry into a submitted R&D tax credit claim under Schedule 18 of the Finance Act 1998. HMRC requests evidence supporting the technical and financial basis of the claim, with a typical response window of 30 days. Compliance check rates have risen sharply since 2023 with the dedicated R&D Anti-Abuse Unit reviewing roughly 1 in 5 SME-scheme claims.
Does an HMRC enquiry pause my R&D advance?
Yes, in most cases. R&D advance lenders fund against an expected HMRC payment. An open compliance check breaks the certainty of that payment, so the lender either pauses further drawdown, pauses interest accrual on the assumption of clean repayment, or formally suspends the facility pending the outcome.
What happens to the R&D advance if HMRC reduces or denies the claim?
The advance is structured as a loan to the company, not as an assignment of the claim, so a reduced or denied claim does not erase the debt. The company still owes the advance plus accrued interest. If the claim is reduced, the lender often allows extended repayment from trading cashflow. If the claim is fully denied, the lender will usually require an alternative repayment route.
How long does an HMRC R&D compliance check take?
Typical SME-scheme checks take 6 to 12 months from opening to settlement. Complex or contested checks can extend beyond 18 months. The R&D Anti-Abuse Unit has a backlog as of early 2026 with median response times around 8 weeks per round of correspondence.
Should I withdraw the R&D claim if HMRC opens a check?
Only with specialist tax advice. Withdrawing a claim is sometimes the right answer if the underlying technical case is weak, but it does not automatically close the compliance check, and any advance against the withdrawn claim becomes immediately repayable.
Will an HMRC enquiry affect future R&D advances?
Most R&D advance lenders treat a clean closure (claim accepted as filed) as no impact on future facilities. A reduction or denial is a material credit event and usually closes the door at most R&D-advance specialists for 12 to 24 months. The HMRC check itself becomes a permanent disclosure on future application forms.
Are there alternative finance products if my R&D advance is paused?
Yes, depending on the business. Working capital alternatives include MCA against card flow, asset refinance against owned equipment, invoice finance against B2B receivables, and term loans from Allica Bank or OakNorth if trading and turnover support it.
Run the matcher
Tell us your R&D advance lender, balance drawn, expected claim value and trading metrics. We surface the working-capital bridges most likely to fund inside 7 days while the enquiry runs.
Open R&D bridge matcher →By Oliver Mackman. Last reviewed 10 May 2026.