The taxman has said there will be further delays to the payment of some research and development (R&D) tax credit claims as it cracks down on suspected fraud.
HM Revenue & Customs (HMRC) has said the delay is to allow more time to check suspect or irregular claims. For the majority, it now aims to pay within 40 days, which is up from the standard 28-day processing timeframe.
Earlier in the year, the tax authority allocated 100 new compliance officers, and says it is working to understand the nature and scale of the error and fraud associated with the reliefs.
The estimated total amount of R&D tax relief support claimed for the year ending March 2020 is £7.4 billion, an increase of 19 per cent from the previous year. This corresponds to £47.5 billion of R&D expenditure, 15 per cent higher than the previous year.
What has caused the delay?
A post on the HMRC agent forum says, “We appreciate agents’ and claimants’ patience while we handle these claims”. HMRC also requests that this guidance is followed:
- To help HMRC process R&D payments quickly, ensure all entries are completed on the R&D section of the corporation tax return (CT600 form).
- Submitting additional information to support the claim, such as the R&D report, will help HMRC process the claim quicker.
- Review the latest guidance on completing the CT600 form on UK.
If a claim is submitted that is incorrect, inflated, or fraudulent then you may be liable to a penalty. Read HMRC: standards for agents.
What is the definition of R&D grants?
R&D grants are non-repayable Government funding for research and development of innovative products, services and processes.
The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology.
R&D grants cover a number of areas including:
- Start-ups with high potential
- Developing new or improved products, processes or services
- IT development
- Prototype development
- Feasibility studies
- Collaborative research
To get R&D relief HMRC says you need to explain how a project:
- Looked for an advance in science and technology
- Had to overcome uncertainty
- Tried to overcome this uncertainty
- Could not be easily worked out by a professional in the field
For help and advice on R&D tax credits contact a member of our expert team today.