The preparation of your claim and subsequent processing by HMRC generally takes around 12 weeks, depending on the claim size and time of year. However, if your R&D Tax Credits claim is selected for a compliance check or enquiry, then it could take substantially longer!
“How long will my R&D claim take?” can be one of those “how long is a piece of string?” questions!
Essentially there are three main stages to your claim:
All R&D Tax Credit claims will go through stages one and two, and around 15-20% will go through stage three. Below we explore these stages in more detail:
The time needed to prepare a claim will depend on the claim size. A very small claim can be prepared in a couple of weeks. A large company claim running into the £millions could take several months. At TBAT Innovation, we usually say that an average claim will take about six weeks to completed from start to finish. This includes interviewing R&D staff, preparing the technical report, analysing and preparing the finances, asking further questions and providing final documents. This sounds like a long time but the client’s involvement in that process is typically no more than a day if managed effectively.
So, the technical report is written, the finances analysed and the R&D Tax Credits claim numbers generated. First step is to submit the technical report through the Additional Information Form, an HNRC portal. Next step is to incorporate the R&D numbers into the company accounts. This is explained in a separate article on How do I submit my claim to HMRC? Your accountant can incorporate the numbers into the financial years required and submit it to HMRC using their accounting software. This is done at the same time as the preparation of the CT600 and Tax Computation.
HMRC’s target is to process 85% of R&D claims within 28 days of receipt. They may have read the report, they may not. Your claim being processed does not mean that it is ‘approved’.
Depending on the financial circumstances of the business, one of the following will happen:
How do you know when HMRC have processed your claim? This is a good question and the honest answer is a mystery! If you are seeking a repayment then you may only find out that your claim has been accepted when the cash lands in your bank account! Others ways to check if over 2 months is to call the HMRC CT telephone line, check you online gov.uk account or send an email to the specialist R&D section.
If you submit your claim and HMRC process it with no further actions, then recently HMRC have been hitting their target of four weeks to process and a further two weeks to make payments. Timescales can vary, especially around March/April and December/January when they will receive a higher volume of accounts, both with and without R&D Tax Credit claims.
All of the above predominantly applies to the SME and ERIS Schemes. If you are an SME and make a combined SME and RDEC claim, then processing times can be similar. However, if you are a Large Enterprise and claiming the RDEC only, processing times can be slightly longer.
If you receive a compliance check letter from HMRC in relation to an R&D Tax Credits claim, this could be for a number of reasons:
In terms of how long the R&D Tax Credits claim take after an initial compliance check? – We are now into a whole new timescale! Unfortunately, compliance checks can take weeks, but usually months to resolve, some up to 2 years, before any further payment is processed. HMRC will initially contact your accountant by letter, with all other correspondence being dealt with over email. Due to their workload, HMRC responses can take several weeks to arrive, and with each communication there can be further questions until the claim is resolved.
On most enquiries the initial focus will be providing evidence that the R&D is correct for tax purposes. If you’re looking for additional help with your R&D Tax Credits claim, please contact us. At TBAT Innovation our team has a technical background and understand what HMRC want to understand to agree your R&D claim.
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