I blogged recently about questions we asked and suggestions we made about R&D claims during the Covid-19 situation.
HMRC have issued an update through the RDCC (HMRCs R&D committee).
I will summarise this in an image and go into more detail below it.
UPDATE 12/05/2020 HMRC processing 95% of claims in 28 days. Payment takes @8 days. The first place you will see a processed claim is in the company online CT account.
- Processing claims. Two issues here. Given financial pressures on companies could HMRC process claims faster? Given pressures on HMRC could they achieve the KPI of 95% of claims in 28 days? Not unsurprisingly they cannot go quicker, HMRC have a lot to manage at present. But pleasingly they do seem committed to doing what it takes to keep up with the KPI. They appear to understand how important that is at present. This is really good news. But March claims will be a big test, as the March volumes have thrown processing off track in the past. It will be very bad for struggling companies if these payments start to take 12-20 weeks as they did at points in time last year. Maintaining 28 days is really critical.
- Filing & Amendment dates. No changes here. that would require legislation. HMRC do have some discretion. But you would have to show illness or a technical issue genuinely prevented filing. The general covid-19 situation would not be enough. They will be sympathetic but I would assume reason must be “reasonable”. If you have missed a deadline it is worth putting a claim in an writing a letter explaining why. You would have to post the return in as the online system does not allow returns beyond 2 years after the accounting period end. But get the claim in on time if you can!
- Going Concern Requirement. This remains as it is in CTA2009. To claim SME R&D Tax Credits the company must be a going concern. The only way to mitigate this is to claim as soon as possible. If this funding is crucial consider shortening your year end to get some of it in. To put it bluntly if a company goes “bust” it cannot claim.
- Liabilities to HMRC v Payments from HMRC. This gets technical. RDEC (Large companies), for a payable RDEC HMRC have no discretion. It will be offset it is one of the RDEC steps. SME R&D Tax Credit Claims, with no agreement in place to defer tax payments (TTP Time to Pay) at present they offset. But are looking at this. SME R&D Tax Credit Claims, with an deferal agreement in place (TTP) we were told by the units they would not offset. But this was not mentioned in the RDCC update. We are checking this.
- Coronavirus Business Interruption Loan Scheme (CBILs). A slightly catchy issue here. These are a State Aid. If these loans name an R&D project which an SME seeks to claim on then it would prevent them being included in an SME R&D claim. This is a complex issue. Consult an advisor like ourselves before agreeing one of these loans so we can work out if it impacts (reduces) any R&D claim payments.
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