HMRC aims to process the majority of R&D claims within 40 days. However, how long it takes HMRC to process your claim may depend on the complexity of your structure and accounts, the nature of the claim itself and even the time of year your claim is submitted.
R&D claim processing times for SMEs
HMRC aims to process R&D claims within 40 days of your SME claim being submitted. However, as with most businesses, the speed at which claims are processed by HMRC depends on availability of resources and workloads. Claims filed over the Christmas, Easter and summer months may take longer than those filed outside of these seasons due to annual holidays. Additionally, the peak periods for company financial year-ends, such as March, September and December, may also take a little longer due to the volume of claims being processed, as well as impacting turnaround times in the periods immediately following these dates.
Processing also depends on how complex the claim is: the length of its supporting documentation, and if the company has any other special areas of risk that HMRC may need to consider. A claim is part of the company’s tax return and therefore it may not be looked at in isolation; the VAT, PAYE and tax affairs of the company may all be considered as well.
R&D claim processing times for large companies
The seasonal peaks and processing delays are mostly the same for large companies. But RDEC claims for large companies usually take longer to process, often because these are inevitably part of more complex Corporation Tax returns. These longer processing periods are more likely if the company has other specialist areas, such as transfer pricing, that need to be considered when reviewing the Corporation Tax return for the whole year.
How long does it take to receive the money once a claim has been processed?
Once a claim has been processed, it can take up to 10 days for the money to arrive in your bank account. Large payments can take longer due to additional security checks.
For most companies, this means you should expect it to take around 50 days in total from the submission of your claim to receiving your R&D tax credit.
Corporation Tax repayments generally take less time to process and pay than your R&D tax credit. This is because they can often be issued through an automatic process that doesn’t require an HMRC inspector’s direct intervention to make the payment.
If there are any complexities to the payment – such as refunds generated by carrying back losses to earlier years – the claim might require manual intervention as HMRC’s automated systems won’t always recognise them. This, in turn, can influence payment processing times.
REMEMBER: HMRC processing and payment of R&D claims is separate to its compliance process. Just because your claim has been processed and you’ve received your money does not mean your claim has been checked or ‘approved’ by HMRC. A compliance check could still be opened at a later date and, if the value of your claim is adjusted, you could be required to pay back some or all of the funds received.
What happens when an R&D tax credit claim is made after a company’s Corporation Tax due date?
Where an R&D tax credit claim is made after the company’s Corporation Tax due date, assuming tax has been paid, HMRC will need to generate a refund when the claim is processed. However, if the R&D tax credit claim is finalised and submitted with the tax return prior to the tax due date (typically nine months and one day after the end of the accounting period), the company can ensure it pays the correct amount in the first instance. For companies paying tax in quarterly instalments, proper planning of the R&D claim preparation can have a positive impact on cash flow.
At ForrestBrown, we can work with you to facilitate the preparation and submission of claims to ensure that both the quality and the timing of those submissions is optimum.
We ensure that we take into account your tax payment deadlines, business timelines, and HMRC’s ‘off-peak’ periods, with a view to minimising the time lag between the submission of your claim and receiving your benefit.
Here at ForrestBrown, we benefit from policy-level insight into HMRC’s workings and are in constant contact with them about our clients’ claims.
If you’d like advice on a claim you’ve made, or are thinking about making, please do get in touch. We’re always happy to help.