HMRC recently announced that they are extending their processing times when dealing with R&D (Research & Development) claims.
In the 2022 Spring Statement, it was announced that the criteria for R&D schemes would be tightened. The promised changes come into effect from April 2023 and are designed to refocus on UK-based innovation and to clamp down on fraudulent claims.
Extra compliance checks
Due to HMRC’s enhanced compliance checks into many of the claims they receive, there have been general delays across the service.
These checks have led to payments being temporarily halted while HMRC carry out their investigations.
HMRC also announced that they were extending their timeframe to process claims from 28 days to 40 days.
Before this announcement, processing was taking around 40 days in practice anyway, so it remains to be seen if the new regime will further increase the timeline. Moreover, in many cases, companies face a further wait to receive payment even after their claim is approved.
It is also worth noting that HMRC is investigating claims under £50,000 more thoroughly than before.
Why the need for extra checks?
HMRC have commented:
‘To prevent abuse of the relief we will be enhancing our extensive compliance checks. These additional checks will mean our standard processing times will increase.’
It can be seen that there are a number of issues with R&D claims, despite their helpfulness to a business.
Sometimes rogue consultancy firms have been seen to encourage some companies to make R&D claims which do not always stand up to scrutiny.
While it is a good thing that HMRC are cracking down on these false claimants, most businesses could certainly do without the long delays before payments are made, especially at this time of great financial instability for many.
What to do to avoid your R&D claim being challenged by HMRC
To give your business the best chance of not being impacted by HMRC’s stricter compliance checks, you should follow the below steps:
- Submit your R&D claim as soon as possible to mitigate any delays in payment.
- Make sure you clearly define your case and how you arrived at the decision to prevent any potential challenges and complete all entries on the R&D section of the CT600 form.
- Submit a well-structured, technical report to support your R&D claim.
- Choose an experienced and knowledgeable R&D tax specialist who can guide and support you through the process.
As it appears that HMRC is coming down hard on suspected fraud, it is clear that when considering claiming R&D relief you should be absolutely sure that your business is entitled to the relief and there are no errors in your application that may delay processing.
Let Williamson & Croft help
If you are planning to embark on an R&D project, Williamson & Croft can assist with claiming the associated tax relief.
Our dedicated tax team are fully equipped to provide specialist tax advice and support clients through events such as R&D claims.
Our advice is clear and concise, and we manage the entire process of the tax relief claim to remove any stress or risks involved.
If completing an R&D tax claim for your business is something you would be interested in, contact us today. We will ensure you get the best and safest result managed by our expert team at every step of the way.
As always, if you would like any further information regarding the above, please feel free to contact our offices by email email@example.com.