You are not alone. The turnaround time for R&D tax credit claims reached 95 days last month. That’s more than three times HMRC’s own target of 28 days.
It’s even worse for those companies that have submitted a Research and Development Expenditure Credit (RDEC) claim. HMRC’s processing time for these type of claims is now at more than 200 days. Although the 28 day deadline does not apply to RDEC claims, the whole process should be completed within a more reasonable time frame.
On behalf of their members, the Chartered Institute of Taxation raised the issue of delayed R&D Tax Relief processing with HMRC. They feel it is important to explain the effects of any delay on the businesses involved. HMRC have responded with reasons for the delay, their solutions to the problem and a predicted time scale for their rectification.
Why has the R&D Tax Relief claim system got so backed up?
HMRC informed CIOT that a combination of two circumstances have resulted in the backlog of work and subsequent delays to claim processing. The first is that they are a victim of their own success. We all know that this is an amazing tax relief and HMRC say that increasing numbers of businesses are applying.
This is great news. Too many companies have been missing out.
Unfortunately, this increase has coincided with large staff losses. Some of which have been cut as part of the government’s austerity programme and some have been reassigned into preparations for leaving the EU.
No one wants the scrutiny of R&D tax relief submissions to be compromised for the sake of speedy processing. But increasing the promotion of the schemes without ensuring the necessary staff numbers seems a little unwise.
What are HMRC doing about this?
HMRC totally accept that there is an issue here and have set out four things they are doing to sort out the processing times for claims.
- Training extra staff specifically for R&D tax credits and RDEC claim processing.
- At department level, claims processing is being moved under the customer services umbrella. As there are simply more people in this group, they will “be able to cope better with seasonal fluctuations in demand”.
- HMRC include both RDEC and R&D Tax Credit claims altogether within their processing procedures. They intend to clear the backlog of both types of R&D tax relief claims.
- The R&D Consultative Committee will get HMRC’s usual updates which, hopefully, will soon be full of positive improvements.
How do things look in the near future?
If you’ve got an RDEC or R&D Tax Credit claim in the works, be reassured that things are getting better. HMRC aim to be back to their 28 day turnaround time by the end of this September. One of CIOT’s technical officers, Sacha Dalton, told AccountingWeb: “The situation is slowly improving, although there is still some way to go, particularly for RDEC claims. But we hope that HMRC will get back on top of things by the end of September.”
Don’t be put off
If you’re thinking about making a claim, don’t let this put you off. You are not starting a horrible cycle of incessantly chasing HMRC. Part of our R&D tax relief process is doing that for you.
Whatever industry, whatever niche within that field, if your company is creating scientific or technological innovation it’s worth the call.
Our average claim is £49,000.
Our phone number is 0330 053 9112.
Speak to you soon.