HMRC delay R&D tax credit claims

Published by Sandra Smith on

R&D tax credit delays

Up until early 2022, we could be confident of HMRC processing an R&D tax credit claim within 4-6 weeks. Since Spring 2022, we have experienced much higher than normal delays with R&D tax credit claims.

So, what is causing these processing delays? One of the reasons is down to the announcement in the Spring 2022 statement regarding the ‘tightening in the criteria of R&D tax credits’. There have been many reports of fraudulent claims and HMRC are trying to prevent this from occurring.

HMRC are focusing their efforts on ensuring R&D tax credits are being correctly distributed which has resulted in more stringent compliance checks, these extra checks are having a knock-on effect across the whole department and resulting in claimants having to wait much longer to receive their R&D tax credit.

HMRC announced back in May that they were temporarily postponing some R&D tax credit claims in an effort to clear their backlog and to research some irregular claims. An increase in the overall volume of R&D tax credit claims by nearly 11% year on year has only added to HMRC’s processing issues.

However, the delay in payments is impacting businesses that are already starting to struggle due to increased business running costs such as power, recruitment and materials. It is also causing frustration as businesses are waiting for these claims to be approved and paid by HMRC.

At the moment, there is no firm guidance on how delayed payments currently are. Technically they should be working to a 40-day claim processing deadline, but this is not the case in reality. HMRC have allocated additional resources to R&D tax relief compliance and are looking to further increase the resource with the creation of a new cross-cutting team focussed on abuse of the R&D tax credit relief scheme. HMRC do intend to return to their 28-day target, but we have no confirmation of when this will happen.

Unfortunately, there is no way to speed up the current processing time. Ensuring you submit a fully completed claim which contains all the information and details will all help the process. With more stringent compliance checks in place, it is vital that your claim is well-structured and a technical report is included in order to avoid any potential penalties.

R&D Taxbox are actively looking at being involved and participating in future Research and Development Communication Forums held by HMRC. This will give us the opportunity to ask questions and to be informed of the current delays in order that we can continue to be transparent with current and future clients with the most up to date information.