HMRC processing of R&D claims… a further update…

Following on from last month’s announcement from HMRC that a number of R&D tax credit payments had been paused whilst ‘irregular claims’ were being investigated, a further announcement was made last week explaining that the standard processing time for a payable tax credit would be ‘temporarily’ increasing from 28 days to 40 days. This increase has been attributed to extended compliance checks with claims being processed rather than a general increase in volume of such claims. 

HMRC has always sought to process 95% of R&D claims within 28 days of being made, but with the influx of R&D tax agents entering the industry in recent years it has undoubtedly resulted in a larger than usual number of claims being made which are overinflated in size and/or include claims for non-qualifying activities and projects. These steps that HMRC are taking are intended to ensure that genuine claimants are still paid in a timely manner whilst stemming the flow of incorrect claims being paid out by the Treasury.

There are a number of steps that can be taken by agents and advisers in order to prevent SME tax credit payments from being delayed any further than they need to:

  • Ensure that the CT600 and CT600L documents are filled in correctly and completely. Common errors that arise include missing out the R&D enhanced expenditure box (660), not filling in bank details in full (boxes 920 to 940) or missing out the SME R&D expenditure boxes on the CT600L form (boxes L166 to L210).
  • Filing the computation through the company’s main agent, as opposed to making a manual amendment to the CT600 and supporting computation, will generally result in a claim being processed a lot more swiftly. The main agent can also track the progress of the claim via the company’s online account.
  • Ensure that the company does not have any outstanding liabilities with HMRC such as PAYE/NI arrears or VAT debt. Although this does not necessarily prevent the claim from being processed, if the company intends to settle this debt separately it makes sense to do this before submitting to avoid set offs against the credit.
  • Communication between client, adviser and main agent is extremely important to ensure that all documentation is submitted in a synchronous manner. Where agents submit too early it will often result in a claim being rebuffed, whilst waiting too long can result in an enquiry letter being issued by HMRC. Both of these will, of course, result in any payment being delayed.

In these times of rapid inflation and rising costs of borrowing, it is imperative that any cash flow advantage that can be gained should be taken by R&D claimants; therefore, we recommend, following the above steps to help avoid further financial stress.

As experienced advisers with over 80 years of combined experience, YesTax strives to alleviate issues with processing R&D tax relief claims by liaising effectively with its clients and accountants to minimise business disruption whilst maximising customer value.

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