HMRC R&D Enquiry Success: dns Protects Tech Client’s Claim

A UK technology company faced an HMRC enquiry into their Research and Development (R&D) tax credit claim. HMRC questioned whether the project involved genuine technological advancement or was simply routine IT development. For many businesses, such an enquiry can be stressful and time consuming, with large sums of potential tax relief at risk.

HMRC raised several concerns, including:

• Whether the work was simply adapting existing AI tools for business use
• Whether the project could be considered a true technological advance
• Whether there was sufficient evidence of experimentation and professional involvement
• How staff and subcontractor costs were linked to qualifying R&D activity

The client needed a detailed, evidence-based defence to prove that their project met the BEIS definition of R&D.

A successful defence required a detailed, technical, evidence-based response that mapped the project squarely to HMRC’s R&D criteria.

The Solution -H3 Our R&D specialists followed a structured, methodical approach to address HMRC’s concerns:

1. Aligning with HMRC Guidance

Aligning with HMRC Guidance The project was analysed against HMRC and BEIS criteria. We defined the baseline technology, identified uncertainties and documented systematic investigations to show that the work met the statutory definition of R&D.

2. Gathering Evidence

We worked closely with the client’s development team to collect project logs, test results, technical diagrams and proof of professional involvement. Costs were linked directly to qualifying R&D activities.

3. Addressing HMRC’s Enquiry Schedule

Each of HMRC’s questions was answered using the evidence already gathered. The response clearly demonstrated the technological advances, uncertainties and systematic development methods used.

4. Preventing Further Challenges

Benchmarking against public tools and research showed that the work went beyond standard IT development. This confirmed that the project involved genuine scientific and technological advancement.

HMRC accepted the full R&D claim with no adjustments. The client retained their R&D tax relief in full and avoided any reduction or recovery. The enquiry was closed on the basis of our technical, evidence-based defence.

This case shows how a well-prepared, evidence-driven claim built on HMRC’s own criteria can withstand scrutiny and protect valuable tax benefits for innovative businesses.

Why this matters

R&D enquiries increasingly focus on the fine technical distinctions between routine IT and true technological innovation. This case demonstrates that:

• A well-documented, technically precise submission built around HMRC/BEIS criteria is persuasive.
• Early and systematic evidence collection (logs, prototypes, tests and decision records) is critical.
• Specialist advisers who can translate technical development into tax-compliant narratives materially reduce the risk of unsuccessful enquiries.

Key takeaways for innovative businesses

• Document continuously. Maintain project logs, test results and technical minutes throughout development.
• Define the baseline. Clearly state what you were starting from and what technical uncertainty you addressed.
• Link costs to activities. Ensure staff time and subcontractor work are traceable to qualifying R&D tasks.
• Benchmark objectively. Where possible, show how your work differs from public or commercial tools.
• Engage specialists early. Specialist advisers improve the quality of submissions and the chance of a favourable outcome.

Call to action

If HMRC has opened an R&D enquiry or you want a pre-submission health check, DNS’s R&D tax specialists can assess your position, advise on evidence-gathering and represent you through the enquiry process. Contact us for a confidential discussion.