COVID-19 cashflow tip: how to get your R&D tax credit cash sooner than you may think

Like many others, the Claimer team are all at home watching the situation unfold in the UK as the country battles to contain the novel coronavirus. The impact on businesses is also becoming clear, with increasing reports of decimated sales, closures, and layoffs.

If your company is experiencing cashflow issues, and spends money on innovation, one way you could get an injection of cash is via the R&D tax credits scheme.

You may know this already - certainly if you've made claims before.

But what you might not know: there's a way you can make a claim at any point, even if the end of your accounting period ('company year end') isn't for a few months. Here's how:

Your company is still a few months away from its year end ('accounting period')

You can shorten your company's accounting period as many times as you like, for whatever reason. This is a relatively easy thing to do and means that you can file your accounts and tax return early, effectively allowing you to do an R&D claim, reaping the benefit ASAP.

For loss making companies, this means you get a cash credit potentially much sooner than you would otherwise.

For example: we're in March 2020, but the end of your company's accounting period end date isn't until June 2020. You could shorten the company's accounting period to 31 March 2020, allowing you to make an R&D claim from 1st April 2020 (instead of waiting until 1 July 2020). If you submitted your claim in early April you would likely receive the cash in May (based on an average turnaround time of 6 weeks).

If you're not sure what your accounting period end date is, you can check on the Companies House website. Just search for your company, view the details, and check the date listed after 'Next accounts made up to'.

Your company is just a few months past its year end ('accounting period'), and you haven't yet filed an R&D claim for that period

In this case, you can lengthen your previous accounting period to cover the additional few months up to now. This would maximise the credit you get and mean you only need to file one set of accounts rather than two.

Note that lengthening the period can normally only be done once every 5 years, unless Companies House give you special permission to do it more than once.

For example: We're in March 2020 and your company's accounting period end date is December 2019. You could lengthen the period to 28 Feb 2020, benefiting from another 2 months of expenditure, increasing you R&D tax credit. In this case, you would only need to file a single set of accounts covering 1 January 2019 to the 28 Feb 2020.

How can I do this?

If you have an accountant, they should be able to help you change your company's accounting period in addition to filing your accounts and tax return. If you don't, please get in touch with us and we can help.

Whilst your accounts and tax return are being prepared and filed, you'll want to get started on your R&D claim as quickly as possible - in most cases this is best done using a specialist.

Claimer is an R&D specialist built for speed, with a platform that can process your claim quickly. As a helping hand during this time, we're offering a discount of 10% on our fees for the next 8 weeks (just use this link to sign-up). An additional 10% of our fee will also be donated to the NHS Charities COVID-19 Urgent Appeal.

A word of warning

With many workers either self-isolating or practicing social distancing, HMRC's team will not be operating at 100% capacity. In addition, we're seeing a big uptick in companies trying to get their claims filed ASAP, and so we expect a backlog to form over the coming few weeks. As a result, we recommend companies get their claims in as soon as possible.

But I need the money now!

HMRC usually takes 6-8 weeks to make payments for claims - this can seem like an eternity when you're running out of money. Fortunately, there are some options.

The least expensive option is likely to be the Coronavirus Business Interruption Loan Scheme. Businesses with a turnover up to £45m can borrow up to £5m for a maximum term of six years, interest free for the first 12 months.

There are 40 accredited lenders able to offer the scheme, including all the major banks, so to find out more about how to apply give your bank a call.

Another option we offer is a special R&D tax credits bridging loan. We can arrange to pay up to 75% of your claim upfront, with the remainder paid when HMRC pays out the claim. Have a chat with us to find out more.

We're here to help

If you'd like some help in working out if the tips in this article can help you, don't hesitate to get in touch.

To keep posted on the situation as it relates to the R&D scheme, you can subscribe for updates here.