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At ETC Tax, we are being regularly asked about HMRC’s approach to R&D tax relief and how the government’s latest coronavirus funding might have an impact on the eligibility of companies to claim this generous relief.
Processing of R&D claims
Firstly, we appreciate there are concerns relating to the processing of R&D claims and in particular claims for payment and whether these can be accelerated.
HMRC are ensuring that payments in respect of R&D claims reach companies quickly during this period. They have deployed additional resources to help with processing R&D claims and are aiming to process 95% of claims within 28 days.
According to HMRC’s guidance, they have received requests for guidance in respect of filing and amendment dates. It is appreciated that clients are facing operational issues and HMRC will be sympathetic to those facing problems. For example, time limits for R&D claims are set in legislation so that R&D claims should be received by HMRC within 12 months of the statutory filing date of the company’s tax return. If a client is unable to meet this time limit, they should submit the claim as soon as possible and HMRC may be able to accept a late claim.
Going concern and R&D tax relief
The going concern condition is a statutory requirement whereby the claimant company is required to have been a going concern according to its last published accounts. In many cases, these will have been prepared before the effects of COVID-19 so that there should not be any issue caused by the going concern requirement. HMRC will be monitoring the impact of COVID-19 on clients’ ability to meet this and other requirements and clients should approach HMRC if there are genuine operational difficulties being encountered.
State aid, R&D tax credits and COVID-19 relief measures
From an R&D tax relief perspective, it is important to note that SME R&D tax credits are a notified State aid and a project cannot be included in an SME R&D claim if it has received another form of notified State aid.
From an R&D tax perspective, when considering the impact of any loan or grant on a company’s R&D claim, the first thing to consider is whether the loan or grant is a notified State aid.
In terms of the COVID-19 funding measures:
If you have any queries about any of the measures announced as part of Coronavirus business support schemes and their impact on R&D tax relief, then please get in touch with us and we will be happy to assist.