So, maybe you're waiting on an R&D claim…
…Or maybe, you've read about delays across HMRC…
If so, you might have some questions 👀
Well, we have some answers 🙋
Below, we explain what's going on with HMRC delays, R&D claims, current timespans, and future changes.
Here's the long and short of it, though:
- A delay in claim approval doesn't mean rejection ⏳
- There are nationwide delays 🇬🇧
- This is largely because HMRC is enforcing stricter criteria 🔍
- Delays are temporary, and there is an ongoing effort to speed things up ⏱️
Read on for the latest on the situation, processing, and payment delays, and what we're doing to help.
Tighter Criteria for R&D Tax Relief
So, what's going on with the R&D tax credit program?
Things kicked off when, in May 2021, the efficacy of the R&D tax credit scheme was brought into question. And, there were also concerns about the approximate £15 billion gap between R&D estimates from claimant tax returns and (lower) figures released by the Office for National Statistics (ONS).
(It's worth noting the ONS recently readjusted its figures, significantly closing the gap.)
Then, about a year later in May 2022, the HMRC announced it was tightening criteria for R&D claims to reduce the number of ‘incorrect claims’ and fraud. In order to further investigate, the HMRC also reported a temporary pause on the payment of some claims.
The measures are designed to ensure that what does get processed is legitimate, clamping down on potentially fraudulent or incorrect claims. Measures include, for example, conducting additional compliance checks (both on the claim and on the payment).
There also seems to be a particular focus on software claims under £50k. However, HMRC has not divulged many details, other than announcing a lengthening of their processing time from 28 to 40 days.
To note: the 40 days are an internal target, not a ceiling. Many companies have unfortunately been waiting far longer. And, final spot checks done on the payment details can cause additional 2-4 weeks of processing time.
👉 So, to recap: HMRC is working through a backlog from the pause in the spring, while also handling new claims and implementing/following stricter parametres to be met.
Still, things have been evolving since the official announcement, with multiple communications throughout the year and claims being handled.
This is likely in part thanks to a dedicated HMRC fraud team put in place to handle some of the additional due diligence and increased staff.
Lately, some arrests were even made, after several individuals allegedly conspired to commit tax fraud on a large scale.
What does the future hold for R&D?
This is an ongoing process: for example, there are ongoing House of Lords sub-committee reviews to discuss changes to the scheme. In the meetings, they hear statements from experts and interested parties in order to evaluate the effectiveness of the changes, with a full report expected around the end of the year. As a leader in the space, Claimer has also contributed evidence.
There have been revisions proposed to the R&D tax credit scheme which include making hosting costs and pure mathematics eligible, as well as no longer allowing most subcontracted overseas expenditure. These were set to go live in April 2023, but have not yet been ratified by the government, and may now be brought back to the drawing board.
We expect more information to be revealed in the autumn budget. Meanwhile, many in the industry worry that drawn-out delays – and overly draconian restrictions – may undercut the support for innovation that R&D was originally meant to foster or drain dwindling SME funds.
While HMRC has communicated they are "working through the claims as quickly as possible," they have not given any timeframe for improvement.
🗓️ Fortunately, the extended 40 calendar day target was confirmed to be temporary. In July 2022, the Research and Development Communication Forum announced HMRC would indeed be returning to their 28-day timeline, although they did not yet say when.
Additionally, Claimer’s team understands that several new agents have been added to HMRC's R&D team in order to more quickly work through the backlog, and they have been seeing the effects of this since late September.
At this stage, it isn't clear when or if HMRC will relax the additional checks or whether they will introduce new means to manage the backlog besides adding the extra workers.
I filed a claim…now what?
Ultimately, delays are unlikely to mean anything is wrong with a claim. There are currently nationwide lags in the processing and payment of R&D claims.
If your claim has been processing for longer than 40 calendar days and you haven’t heard anything yet, this is not a cause for concern.
Remember, 40 calendar days is just a target and doesn't necessarily accurately reflect when companies will actually receive their payments.
A delay (while frustrating) does not necessarily speak to the validity of a claim. If HMRC finds an issue, they will issue a letter outlining the cause.
If you are a Claimer customer, we handle HMRC communication on your behalf - including any letters you may receive relating to your R&D claim. We send out weekly status updates, chase claims, and give you advanced notification of your payment arrival.
Claimer works closely with HMRC and is a member of the Research & Development Communication Forum (RDCF), and our experts receive frequent updates on what's happening. We are dedicated to communicating these updates openly with customers.
If you’re not a Claimer customer, the best way to understand what’s happening with your claim is to check your ‘Corporation Tax dashboard’, or call HMRC’s Corporation Tax line:
📞 Phone: 0300 200 3410 (Options 6, 6, hold)
🕰️ Normal opening times: Monday to Friday, 8am to 6pm
💡 TIP - It’s best to contact them as soon as the lines are open (8am) in order to get the quickest response. In the afternoon, wait times can be 30 minutes or more before you can speak to an advisor. Whilst the hold music is pretty good, it gets repetitive very quickly...
It may not be all good news, but once you know the problem you can start to tackle it!
If you’re interested in seeing how Claimer could help with your claim, chat with us using the live chat (bottom right) or pop us an email. You could also get started with your claim today.
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