The UK’s R&D scheme is an excellent way to get rewarded for innovation – especially for startups and SMEs. But recent changes from HMRC have resulted in notable delays to R&D claim approval and pay-outs. This is frustrating for many claimants – especially those looking to plug cashflow gaps and plan for future growth.
At Addition, we work closely with businesses to submit and track ongoing R&D claims on a regular basis.
Whether you’ve named us your agent or have made use of our R&D tax credits service to submit your claim, this blog will offer clarity on some burning questions you may currently have.
In the Spring 2022 Statement, the Government announced changes in criteria for the R&D scheme. The changes, which come into effect from April 2023, aim to reduce fraudulent claims and drive more resources towards UK-based innovation.
While the changes have yet to formally come into effect, HMRC have begun enhanced compliance checks already. This comes off the back of its announcement in May 2022, temporarily suspending R&D claim pay-outs due a high volume of irregular claims which needed investigating. HMRC noted that claims under £50,000 in particular were now subject to scrutiny.
In June 2022, HMRC also informed the public that processing times for R&D claims were being extended from 28 days to 40 days. This new timeline is applied across the board – even to claimants with R&D Advance Assurance.
TOP TIP: While it’s true that HMRC has extended its processing time, it has also assured the public that it intends to return to its 28-day timeframe as soon as possible – so fingers crossed for a rapid resolution.
HMRC is still sticking to its 40-day processing period for the time being. Once a claim has been approved, most businesses will still need to wait an additional length of time for payment to be released.
The good news is that (as stated above) HMRC wants to return to the standard 28-day processing timeframe soon. However, no indication has been given as to when this will occur – so it’s safe to assume longer wait times will linger for a while.
TOP TIP: The best way to check on your claim’s status is through the HMRC portal. When a claim is approved, or if payment and approval are simultaneous, it will show up there.
There are several factors to keep in mind when submitting your claim.
September and December are peak times for R&D submissions overall – meaning HMRC will be dealing with a much higher volume of claims and will take longer to process yours. So if you’re able to submit your R&D claim during quieter months, it will likely work in your favour.
Inconsistent or inaccurate submission details could cause significant delays to your claim being processed – especially with HMRC’s new level of scrutiny. Make sure that every document you submit includes your company’s bank details and UTR (Unique Taxpayer Reference).
TOP TIP: CT600L forms are an essential part of your claim, so be sure to fill out and file yours alongside any claim you make.
Addition’s dedicated finance team are experts at supporting SMEs through the R&D process, from claim to credit.
1. We’ll work with you to identify projects that meet HMRC’s criteria. After an in-depth review of your spend, we’ll calculate the total amount you can claim.
2. Next, we put together a comprehensive technical report and include supporting documentation that backs up your claim.
3. Lastly, we’ll submit your R&D tax credit claim on your behalf to HMRC. If they have any follow-up questions about the claim, we’ll answer them for you.
TOP TIP: If you’re already an Addition client, we’ll handle all of the above, plus regularly check the HMRC portal for updates on your behalf.
To find out more about our R&D product, as well as how we can support with any current or future claims, please get in touch with us today.