I was recently invited to attend HM Revenue and Customs Research and Development Consultative Committee meeting in the Churchill Room in Whitehall.
Over the past 6 months the team processing and enquiring into claims for Research and Development Tax Credits have been overwhelmed by the volume of claims that they have received.
This has led to delays and backlogs from February to September, it was the same last year. This year HMRC thought they were ready for the increase in workload, but nearly 9,000 claims were received in March 2019, that’s nearly 20% of the number of claims submitted last year and they were already dealing with a backlog of claims from December.
The member in charge of the department explained to those of us at the committee meeting, the issues they had faced and the plans they had put into practice.
It’s not often that people go out of their way to praise HM Revenue and Customs, but here I go.
HMRC have been very good at communicating with myself and my fellow professionals over the last 9 months on the processing of claims for R&D Tax Relief. They do this by e-mail almost every Monday for members or pending members of their Research and Development Consultative Committee and also meet with members every 6 months to discuss everything there is to know about R&D Tax Relief.
The last meeting was in mid-September and as I mentioned above, I was lucky enough to receive an invite to the meeting. HMRC have now realised that the small niche team that they have assembled to handle the processing and enquiries into claims, just can’t handle the volume of claims being received from Small and Medium-sized businesses like yours.
They have identified that their skill and expertise is in the handling of the enquiries, so over the past three months, together with trying to handle the backlog, they have been busy training members of the larger. Business Tax & Operations team on how to process the refund claims. This team have already been overseeing the processing of the claims that have simply reduced a claimant’s corporation tax charge.
Such a change is to be applauded, some of the companies that are claiming are pre-funding start-ups, or loss making businesses who have spent their limited funds on R&D and were happy in the knowledge that HMRC were trying to process claims within 28 days. I am sure there are one or two companies who have really struggled and may have even folded as a result of the delays, I have one or two who have been desperate for their refunds to have been received. So to have to be waiting over three months for your R&D Tax Credit can be a killer of businesses.
This change should allow HMRC to return to their stated goals of 28 days and to hopefully stay there for a longer period of time. We are all used to expecting a slight delay when there are peaks in use , but I think even HMRC were brave enough to admit that their service to their customers over the last six months has been bordering on unacceptable. It’s probably good news for them that they operate a monopoly on taxation, otherwise we might have taken our business elsewhere.
Why is this relevant to you I hear, well, if you are developing a new or appreciably improved product, process, service or device that has required you to overcome a scientific or technological challenge, as a result of these changes in how HMRC process claims, it means that there has never been a better time to claim. You won’t have to wait over three months for your refund, you should have it within 28-35 days (it takes some extra time to process the repayment)
We can help you to determine whether your project meets HMRC’s criteria and work with you to prepare a robust technical report and calculations for your R&D Tax Relief claim.