April 14, 2024

Business Bib

Business & Finance Blog

What you need to know about the processing time for R&D tax credits

3 min read

Understanding R&D tax credits processing time

When you’ve submitted a claim to HMRC for a big chunk of money under the research and development tax credits scheme, how long do you have to wait before you receive the payment?

The good news is, not long. HMRC says that it aims to process 95 per cent of successful claims by small businesses within 28 days. (You can then add between five and ten days for the money to appear in your account.)Sometimes it’s even quicker: some claims are settled within one or two weeks. Others, however, can take up to three months.

What can make my claim take longer?

Time of year. December, March and September are when many companies’ financial years end, so HMRC has a lot more tax returns and applications to deal with at these times. Christmas, Easter and over the summer are also popular times for annual leave, so they may have fewer staff.

Company size. In general, claims for larger companies take longer, often simply because their corporation tax returns are more complicated.

Complexity. Your application can take longer to process if your claim or your business affairs are particularly complex or considered risky. For example, if your company isn’t financially secure, HMRC will want to be doubly sure it’s not paying you money in error that it might then have trouble getting back. First-time claims by large companies, or claims involving more than £25 million of research and development expenditure, are also examined more thoroughly.

Your claim is part of your tax return and therefore your VAT, PAYE and other tax affairs may also be looked at, and again, if anything about these is complicated it may slow things down.

Sometimes HMRC will still have questions through no fault of either you or your accountant, for example because of company changes, or if you’re making a much bigger claim than in previous years.

This is where it really pays to use a specialist research and development tax accountant, who can make sure your claim is properly prepared, clearly presented, and contains all the necessary information but nothing unnecessary. If HMRC have to ask questions it can slow the process down by weeks or even months.

Advance assurance

Advance assurance is a guarantee from HMRC that your R&D claim will be accepted if it is in line with what you’ve outlined.

You’ll need to give HMRC some information about your company, and detailed information about your research and development work. HMRC will then contact you for a discussion – probably just by phone, but possibly involving a visit if your claim or activity is complex – and let you know by letter if you’ve been successful. Only SMEs which haven’t made a research and development tax claim before can apply for advance assurance.

For the best chance of a prompt payout, looks for an R&D Tax Solutions specialist to help with the claim. Not only can they help to verify that your claim is eligible, they can also take on the paperwork and liaise with HMRC on your behalf – making the whole process much smoother and simpler for you.