Questions •7 min read

What is an HMRC nudge letter about R&D, and what should I do?

MJ

Matthew Jones ACA CTA

Last reviewed September 2026 · Editorial standards

A nudge letter is a standard letter HMRC sends to many companies at once, asking directors to check that an R&D claim was complete and correct. HMRC calls the technique a one to many approach, and its guidance says that approach is not a compliance check. No power sits behind it, and not replying carries no penalty of its own; the penalty risk lives in the claim, not in the letter. What the letter tells you is that HMRC has put your company in a group it is watching, and that you have the cheapest opportunity you will get to check the claim yourself before HMRC’s compliance side does.

How is a nudge letter different from an enquiry?

An enquiry starts with a particular document: HMRC opens one by giving the company a notice of enquiry, and where it wants records it issues a written information notice. Both are made under named powers, and the letter says which. A nudge letter names none. HMRC’s January 2023 R&D letter is explicit on its face: it is not a compliance check into the company tax return, and it is there to help directors make sure their claims are complete and correct.

So look at what the letter cites and what it demands. The three R&D letters HMRC has published set no deadline, attach no certificate to sign and require no reply, though the January 2023 letter tells a director who is unsure to contact HMRC. Other campaigns are not so mild: ICAEW’s tax faculty records that some nudge letters attach a certificate, and that some state HMRC will open a compliance check if no response arrives. A letter that quotes no legislation is not automatically a nudge letter either: HMRC also opens informal compliance checks, and those are about your return.

What are the R&D letters actually asking?

The January 2023 campaign went to 2,024 companies that had claimed before, with a seven-point checklist for the director: have you read HMRC’s guidance; is the project seeking an advance in the field of science and technology; do you understand what you are claiming for; who has helped with the supporting report and are they qualified to do so; have you read it and do you agree with it; has the third party answered your questions; does the claim seem too good to be true.

The two sector campaigns are aimed at a sector rather than at a claim history. HMRC wrote to care homes and nursing homes in July 2023, around 7,500 of them, asking directors to review any R&D claims already made on the company’s behalf. It wrote to companies selling goods by mail order or on the internet in May 2025, where its stated aim was to reach companies before they claim at all. Each lists what HMRC keeps rejecting: day-to-day business activity, digitising administration, off-the-shelf platforms adapted to the business. Underneath all three letters is the same test: an advance in science or technology for the field as a whole, not just the company’s own knowledge. A care home claim that failed it reached the First-tier Tribunal.

The care home letter puts one point plainly. HMRC says a no win, no fee arrangement does not mean there is little or no risk to the company: where a claim is wrong, it “must pay back the full amount claimed, including any agent fees”, and HMRC may charge interest and a penalty on top.

What are the options once the letter arrives?

Four, and which applies turns on the claim, not the letter.

The claim stands. Do the review properly and record what was checked and who confirmed the technical position; that is what you will want if a compliance check follows later. Where the letter asks for a reply, reply.

The return is still open to amendment. The correction goes there, where HMRC’s own letter points; it is the cheapest route. Backdated R&D claims sets out how long a return stays open.

The amendment window has closed and there is money to repay. HMRC runs a disclosure service for overclaimed R&D relief. R&D voluntary disclosure covers what it involves, what it costs, and the two-step route where an SME claim should have been RDEC.

The claim was knowingly wrong. Then the disclosure service is not the route, and advice comes before anything goes in writing.

If you cannot tell which of the four applies, that is a question about the claim rather than about the letter — and suspecting a claim was wrong is not the same as knowing it. R&D voluntary disclosure starts from the same point.

Why is ignoring it the worst option?

Because it changes nothing except the price. The letter neither opens an enquiry nor closes the window for one, and after that window HMRC can still assess by discovery, on time limits set by behaviour — can HMRC make me pay back an R&D tax credit? sets out both. Waiting does not make the claim safer; it means somebody else reads it first.

One penalty point is worth understanding first. A penalty for an inaccurate return is reduced according to whether the disclosure was unprompted — made when the company had no reason to believe HMRC had discovered, or was about to discover, the error. Whether a disclosure is unprompted is an objective test on the facts. HMRC’s guidance to its own officers says that a national campaign highlighting an area HMRC will be concentrating on does not stop a disclosure from being unprompted, and that being contacted to say HMRC wishes to check the return does. A nudge letter sits between the two: it says on its face that it is not a compliance check, but it arrives addressed to your company. ICAEW’s tax faculty records that the position is unsettled for letters of this kind, so this is an argument to be made on the facts rather than an outcome to rely on — and it stops being available at all once a notice of enquiry arrives. Where reasonable care was taken, no penalty arises either way. What penalties can HMRC charge if an R&D claim is wrong? shows what the difference is worth.

For an independent read of the claim first, our free claim review is a confidential second opinion on claims already filed, including those another firm prepared. There is no obligation to take anything further, and nothing goes to HMRC on your behalf without your instruction. If the letter has already become a compliance check, HMRC R&D enquiries explains what follows.

Sources

This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us.