This week, the ICAEW (Institute of Chartered Accountants in England and Wales)  announced that HMRC is haltering payments on several R&D tax credit claims while it focuses on combating fraud and abuse of the scheme. This is expected to cause delays to usual processing times.  

It’s no secret that HMRC’s top priority is preventing abuse of the incentive. But you may not know how this slowdown impacts you and what you can do to stay ahead of it.

If you’re considering a claim but not sure where to start

Don’t wait. The longer you wait, the more people will be potentially ahead of you in the queue. Find out if you’re eligible, then make time to talk to a specialist R&D provider about your claim.

If you’re about to start your claim

Your future claim might take longer to be processed. As HMRC aims to prevent abuse of the relief, a large backlog of claims is expected.

The good news is that you can do a lot to get ahead:

1. Be selective about who you choose to work with on your R&D tax credit claim
You can’t prevent an HMRC payout slowdown, but you can make sure your claim is prepared quickly and effectively while also ensuring that it is strong enough to withstand HMRC’s scrutiny.

Ask yourself:

  • Can they move at your speed? I.e. do they use technology to speed up the process of collecting the cost and technical data, or do they use slower methods like in-person interviews that drain time you can’t afford to lose?
  • Do R&D tax professionals handle your claim? Look for ex-HMRC inspectors or expert R&D claims advisors with years of experience. 

2. Look for an R&D specialist that offers an HMRC follow-up service
Some advisors will wash their hands of your claim one submitted, meaning it’s up to you to follow it up with HMRC. Instead, choose an R&D tax credit advisor that provides an HMRC follow-up service once your claim is submitted. This can help to speed up the receipt of your funds drastically, so ask if this is a service your advisor provides. 

3. Start your claim now!
Capture costs to help ensure no costs are missed, and jot down the technical details whilst they’re fresh in your mind. This will ensure your claim is accurate and prepared for your year-end. Just because your claim can’t be completed until the tax year has ended doesn’t mean you can’t work on it incrementally.

If you’re nearly ready to submit your claim

It’s very likely you’ll be affected by the slowdown. Before you submit, do two things:

1. Check and check again
Check and double-check that every element of your claim stands up to scrutiny from HMRC. Get rid of any iffy costs, and make sure you have a robust technical narrative that explains the R&D work undertaken.

2. Need funds faster? Consider Advance Funding
If you need to unlock working capital and reduce the strain on cash flow quickly, most specialist R&D advisors provide R&D advance funding. This allows you to get around an HMRC payout slowdown and access 80% of your future R&D tax credits up to 9 months before your year-end. Chat to your advisor about your options.

If you’ve already submitted a claim

You’re most likely to be affected by any slowdown. Once submitted, your claim is in HMRC’s hands, and there’s nothing you can do to make it move any faster. 

If your claim was calculated on the back of an envelope, assembled by someone who isn’t a specialist, or doesn’t include a technical narrative, you’re more likely to be hit with questions or an enquiry, which can cause delays of up to 6 months.

HMRC are increasing their compliance checks

The level of scrutiny isn’t going to drop – HMRC will only get stricter in their efforts to stamp out fraudulent claims. Protect yourself by making sure you’re up to date on the scheme rules – read our Ultimate R&D Tax Credits Guide