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HMRC R&D INSIGHT

Apr 9, 2020

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We have received our first snippets of information from HMRC regarding the R&D tax relief claim handling, so well worth updating everyone with the main noteworthy items:

  1. HMRC have made it a priority to maintain their published aim of clearing 95% of SME tax credit claims within 28 days of submission. I think it’s been recognised that this aim had slipped a little in recent weeks and claims had been delayed whilst they adjusted to the current working arrangements. HMRC have implemented contingency plans to support this, including applying additional resource, and they expect to have cleared any outstanding claims, that are beyond 28 days as we stand, by 20th April.
  2. HMRC will be sympathetic to claims submitted late for customers facing operational difficulties. Claims should be made within 2 years of the accounting period end being claimed for, and normally this is a very hard, absolute, deadline. HMRC have advised that companies should submit their claim as soon as possible and they may be able to accept a late claim.
  3. The going concern condition, where relevant, requires the claimant company to have been a going concern according to the last published accounts. In many cases, these will have been prepared before the effects of COVID-19, so HMRC feels that there should not be any issue caused by the going concern requirement but advises companies to approach them if it is causing genuine operational difficulty.
  4. As per my previous article here, the Government has notified CBILS as State aid. Therefore SMEs (c25% benefit) need to be careful in the wording of their CBILS application, so as not to be left with only the large company (c10% benefit) scheme to claim under.
  5. HMRC have reiterated the good news from the budget, including:
  • The introduction of the PAYE cap on the payable tax credit in the SME R&D scheme will be delayed until 1 April 2021.
  • A consultation will be held on whether expenditure on data and cloud computing should qualify for R&D tax credits.

All of this points to an overall, continued, commitment from HMRC to keep supporting R&D tax relief claims, and be as helpful as possible, and so, especially in the current environment where cash is vital, we are continuing to encourage companies to submit their claims as soon as you can.

If you have any questions about any of the above, please get in touch with our R&D Partner Chris Knott.

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