R&D claims need to be submitted early

HMRC is warning businesses to submit research and development (R&D) claims as soon as possible to avoid a delay in receiving payments between December and January

A short review,

Projects that count as R&D

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science - like economics - or a theoretical field - such as pure maths.

The project must relate to your company’s trade - either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:

looked for an advance in science and technology
had to overcome uncertainty
tried to overcome this uncertainty
could not be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.

Types of R&D relief

Small and medium sized enterprises (SME) R&D Relief

You can claim SME R&D relief if you’re a SME with:

less than 500 staff
a turnover of under 100 million euros or a balance sheet total under 86 million euros

You may need to include linked companies and partnerships when you work out if you’re a SME.

SME R&D relief allows companies to:

deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss

Between December 2021 and January 2022, HMRC expects to be dealing with higher volumes of R&D claims. The tax authority said it was committed to processing 95% of R&D tax credit claims submitted online within 28 days of receipt, but could take longer during the peak period.   

The 28-day processing aim does not apply to:

claims not filed by the electronic portal; and
claims where BACS details have been omitted or incorrectly supplied.

Businesses are also advised to not chase the progress of claims due to pressure on HMRC services.

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