When submitting an R&D Tax Credit claim, a common question asked is how long it takes to receive the benefit. The truth is that how quickly you receive payment will depend on various factors, including the scale and complexity of the claim.
How quickly will you receive a successful R&D Tax Credit claim?
R&D Tax Credit payments are just one of two ways R&D Tax Reliefs are issued, the other being a Corporation Tax (CT) reduction.
It is important to recognise that processing times may be longer when there is a higher volume of claims to process, such as December and March at popular financial year-ends and also that the processing of R&D Tax Credit claims can be subject to HMRC’s resourcing levels.
Naturally, if HMRC have any questions about the R&D claim, they will aim to raise an enquiry and ask for additional information before processing the claim. This does not always happen though and it is not unusual to receive an enquiry notice about the claim after you have received the refund.
These issues may include errors, failure to meet the qualifying criteria, or offering inadequate or no supporting information. This is one of many reasons why it’s essential to ensure R&D Tax Relief claims are done properly.
SME Scheme
For businesses claiming under the SME scheme, HMRC aims to pay out on qualifying claims within 40 calendar days (6 weeks) of submission, or if it has questions about the claim, raise these within 60 days of receiving the claim. At certain peak times HMRC processing times can be significantly longer, although they do try to allocate additional resources to maintain the 40 day target for 95% of claims.
The 40 days target is an increase on the previous target of 28 days and was extended to 40 days to allow HMRC to check more claims before they are processed. This was partly to do with tacking the perceived error, abuse and fraud in the SME scheme. HMRC are hoping to return to the 28 days target at some point.
It is also important to note that this time period does not factor in the time taken for a processed claim to reach your account. You can expect this to be a further 3-10 days or longer if you have not included BACS details on the CT600 Corporation tax return. Note: HMRC request you include BACS details for all claims, otherwise it will fall out of the 40 days processing target.
RDEC Scheme
Larger businesses claiming R&D Tax Credits can often expect a longer wait than SMEs. This is for a variety of reasons, including the complexity of the Corporation Tax return, the size of the business, and the amount of supporting documentation that must be reviewed.
R&D Tax Reliefs done properly
The Radius team at Shorts understands that businesses want their R&D Tax Relief as soon as possible. However, we will never rush a claim – instead, we systematically consider every possible way in which claims can be maximised within legislative parameters.
If you have a question about R&D Tax Credits, whether it is current or historical, get in touch with the Radius team today and we’ll be happy to help.
Darryl Hoy
Darryl is the Technical Director of the Radius team. He is a specialist in Research & Development tax reliefs, having previously worked at HMRC as an R&D Tax Inspector.
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