A recent note from the Chartered Institute of Taxation reveals the extent of the current delays in processing R&D Tax Credit and RDEC claims. With the majority of submissions taking around 13 to 14 weeks to be settled, Ian Batkin shares some advice for claimants on the best way to submit a claim in light of these HMRC delays.

The delays

HMRC is mandated to settle R&D Tax Credit claims within 28 days wherever possible. However, the majority of claims are presently taking around 13 to 14 weeks to be settled. HMRC is presently only guaranteeing that claims received before 11 April 2019 will have been processed, which suggests the situation is showing no sign of improvement.

The Chartered Institute of Tax (CIOT) wrote to HMRC last month (June 2019) to express concern at the current delay in processing claims for R&D Tax Credit and RDEC (Research and Development Expenditure Credit) claims. In response, HMRC stated the reason for the delays as a combination of recent staff losses and a significant increase in the number of submitted claims. HMRC affirms that action is being taken – more employees have been recruited and staff have been deployed from other areas to help manage the problem.

However, as of yet, there has been no official announcement as to how long the current situation will continue, or when claims will return to being processed and settled within 28 days.

Advice for claimants

In light of this, our advice to anyone thinking about submitting a claim is:

1) Submit Corporation Tax repayment and/or Payable Cash Credit claims as soon as possible – don’t wait for the 12-month CT600 submission deadline. Get these types of claims filed at the earliest opportunity, so they are in the ‘settlement queue’ as soon as possible.

2) Don’t wait to make claims retrospectively i.e. within 2-years of APE’s (as you are allowed to). Instead, make claims for each year that eligible R&D is undertaken, by inclusion within the original / first CT600 that is submitted for that year. The best and fastest way of recovering an R&D Tax Credit is by deduction from Corporation Tax that would otherwise be owed. Keep the money in your own bank account, rather than paying over the higher amount of tax due and then reclaiming the tax (and waiting over 3-months for this to be repaid).

3) Ensure R&D Tax Credit claims are supported by a full and proper explanation of the costs being claimed and the eligible R&D work undertaken. Work closely with your Accountant or an independent R&D Tax Credits specialist to ensure compliance.

4) Be aware that R&D Tax Credits will not be settled if there are other ‘crown arrears’ (VAT, NIC’s or Tax) owed to HMRC. These will be cleared before any resultant monies owed are paid over.

Get in touch

For more information regarding the current situation for R&D Tax Credit delays, or advice about R&D eligibility, contact Luvo Financial on Tel: 01902 244210, E: enquiries@luvofinancial.co.uk

Luvo Financial, which is based near Wolverhampton, works with businesses and independent accountancy practices across the Midlands and elsewhere in the UK. Founded in 2015, Luvo’s Partners Ian Batkin and Vicki White are both qualified accountants.