Research and Development Tax Credit payments paused

Corporation Tax, HMRC, News, Research & Development,

We’ve talked previously about the changing HMRC stance around Research & Development (R&D) Tax Credit claims, and now HMRC have paused payments.

The suspension is to allow HMRC to investigate ‘irregular claims’. The move may cause delays to the processing times for other R&D claims, but the suspension was necessary to ‘prevent abuse of the relief’.

HMRC have requested that claimants don’t chase their claims by contacting HMRC, but through their agents (accountants!) and their online account, where they’ll be able to review the status of claims.

HMRC went on to say that they hope to provide more information next week. A reminder was also issued that incorrect, inflated or fraudulent claims are submitted a penalty may be issued.

A HMRC spokesperson said: ‘We have paused some research & development tax credit payments while we investigate some irregular claims. The majority of R&D relief claims are unaffected but there will be some delays to our usual processing times. This is to ensure we prevent abuse of the relief.’

A report in December 2021 stated that rogue R&D advisers were targeting small businesses and making inappropriate claims. The monetary value of fraudulent R&D claims in 2021 was £303m, up from £271m in the previous year.

Furthermore, the Chancellor announced reforms to the R&D tax credits scheme in the Autumn Budget 2021 which will take effect in April 2023. These reforms included measures designed to target abuse of the scheme.

If you have a pending R&D Claim payment:

We’ll keep an eye on your online account to watch for it being released, but the reality is that by the time updated status shows, you’ll probably have received the funds into your bank account. With luck HMRC’s update next week will offer more information on timescales and guidance should payments be further delayed.

The suspension of R&D payments proves again that it’s essential that any claim meets the qualifying criteria. We have a long history of successful claims and are happy to discuss any development activities with you to clarify whether they qualify. 

Please be wary of agencies who may contact you purporting to offer an R&D Service; whilst some are respectable and legitimate, there are many who are overly expensive and who are happy to submit claims that don’t accurately meet the required criteria. 

If you’d like to discuss your R&D claim, or the potential for a claim, please get in touch.

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