Delays to R&D Tax Credit payments

HMRC and the Government did a fantastic job during the pandemic of keeping R&D Tax Credit processing times in line with the Key Performance Indicator (KPI) of 95% in 28 days from filing.

But unfortunately, this summer very significant delays have arisen. While we do not know for sure, it appears likely, that perhaps for several months 0% of R&D Tax Credit claims were processed in 28 days. At one point the KPI was changed to 40 days but in our experience, this was also not met. Communication has been patchy on the issue in general and on specific late claims. In fact, HMRC have asked advisers not to chase claim progress at all. It is very hard to know what we are supposed to say to a client whose claim was filed on 1st?March 2022, when many claims filed later have been processed and in the absence of any communication. The only option seems to be talking to HMRC about the delay. Without chasing is the claim supposed to be lost forever?

This approach creates obvious difficulties. In the past when similar backlogs created problems, HMRC did put in place some good processes to improve a bad situation. It would be helpful to all involved if they could return to these good practises at this difficult time.

Weekly emails to the R&D Forum members informing us on the processing position. These used to be supplied and had dates that claims were processed up to and set out a reasonable timetable process beyond those dates. This helped all involved and reduced chasing. These emails simply stopped which is pity as they represented a highly efficient way of managing expectations.

Call handling staff to handle enquiries over late claims.?It is understandable that taking staff off claim processing to handle claim chasing is not a good situation and creates a vicious circle where claim processing time is lost, and delays increase causing more chasing. But it does seem that some claims have been “lost” completely in the system. These need identifying. During earlier backlogs HMRC did employ specific call handling staff to handle chasing queries and not take front line staff of processing. Again, this was a good measure and made total sense. This should be reintroduced so that “very” late claims can be chased.

These are simple measures which do not require R&D! But recycle old HMRC ideas and processes.

Where HMRC cannot be criticised is if the Government is not giving them the resources to do the processing job in an acceptable way. If this is the problem, then it needs fixing long term so the KPI is met. R&D claims matter to many companies.

My personal view at present is that everyone should show patience but if nothing is showing on the company CT account 12-16 weeks from filing it would be irresponsible not to seek answers and contact HMRC. I have seen situations in the past where claims are “lost” in the system. Chasing has been the only way they are discovered. E.g. on one claim filed on 1st?March 2022 we are chasing every week and will be until we get clear answers.