HMRC’s Research and Development (R&D) Incentives Reliefs department may sometimes seem akin to Roald Dahl’s famous Willy Wonka Chocolate Factory – a wonderland offering untold delights that often appear to defy logic.
Sadly, here at Claritas, we do not have a golden ticket (albeit we think Willy Wonka would’ve had a great R&D claim for some of the innovative chocolate manufacturing techniques and products), however, what we do have is some welcome advice that stands companies in the best stead to receive payment in respect to their R&D claims as quickly as possible.
If you have followed the news regarding HMRC and the payment of R&D tax credits, you will be more than familiar with the news of delays and extended processing, notwithstanding the increasing scrutiny on speculative claims which any reputable company or advisor will gladly welcome.
Unfortunately, delays on both SME and RDEC (Research and Development Expenditure Credits – Large company claims) appear to be becoming par for the course in the submission of R&D claims, with most delays beyond the target repayment dates set out by HMRC leaving claimants wondering when any cash benefit may be incurred, leaving cash flow forecasts in a state of perpetual flux.
Some may put these delays down to the impact of Covid-19, however prior to delays caused by the pandemic the average R&D tax credit repayment was already in excess of HMRC’s target turnaround time of 28 days.
Taking into account HMRC’s estimated 10 days for the money to arrive in a claimant’s bank account (on top of the 28-day turnaround time), an ideal claim will still take around 6 weeks from claim submission to cash landing.
Following an update from HMRC last month, we have also now heard that HMRC are upping their target from 28-days to 40 days for the time being, with the hope of this turnaround returning to 28 days in the future. So, while in an ideal word the total turnaround time stands at 6 weeks, we now know this is up to 8 weeks for the foreseeable future. However, if the initial claim triggers any enquiries from HMRC, these timeframes can spiral and even end up heading for the garbage chute along with Verruca Salt.
Whether these enquiries are received in a formal letter from HMRC or of a lesser severity whereby HMRC simply want to take a second look at a company’s claim, one thing is for certain; this will add waiting time to any repayment due.
Considering this, the best chance companies have to see the cash benefit from their R&D claims in the shortest time possible is to form a robust claim from the outset. A robust claim will be prudent, reasonable and accompanied by a clear, concise supporting narrative. This document should satisfy all HMRC’s criteria in sufficient detail to ensure HMRC have no need for any pushbacks or second looks, with all their questions being answered proactively by the initial claim documentation.
At Claritas, we use our R&D team’s extensive experience to satisfy this requirement, working closely with our clients throughout the claim process to understand their business thoroughly and form a robust claim. This stands our clients in the best position to receive any repayments due in the timeliest manner possible.
For any company looking to make an R&D claim, please reach out to us at Claritas and we’d be happy to help.
