R&D Tax Relief and Coronavirus

26 May 2020

HMRC says it is doing all it can to process Research and Development (R&D) tax credit claims as quickly as they can in the difficult current climate.

In an e-mail on 2 April 2020, sent to the Chartered Institute of Taxation, the HMRC has sought to clarify how it is dealing with claims, given the present situation and the urgency for companies to have cash while the COVID-19 crisis is affecting businesses.


R&D Returns and Payments

HMRC says its main concern is to stick to its published intention of clearing 95% of SME tax credit claims within 28 days and has brought in extra resources with which to achieve this.

While time limits for claims are proscribed in legislation, the department says it may be able to accept late claims after the 12 months of the statutory filing date of a company’s tax return. However, it should still submit the claim as soon as possible.

Statement of Practice 5/01, states that HMRC has discretion on accepting late claims.


Set off of R&D claims against other taxes

HMRC has also been asked whether claims will be paid in full, even if a business has other liabilities owing.

With regard to Research and Development Expenditure Credit (RDEC), HMRC has no discretion under the law to do this, however, for claims to SME R&D tax credits, they are considering their position.


HMRC phone app


Going Concern Requirements

Under the current rules, a claimant company needs to have been a going concern according to their last published accounts.

In numerous cases, these accounts will have been prepared prior to the effects of coronavirus, so there should not be any issue caused by the going concern requirement.

HMRC says it is watching carefully the impact of COVID-19 on the ability of companies to meet this and any other requirements, and that companies should approach HMRC if it is causing genuine operational strain.


State Aid

Government support schemes ushered in, in response to the coronavirus pandemic such as the Coronavirus Business Interruption Loan Scheme (CBILS) has the potential to compromise a company’s ability to make a claim under the SME R&D tax credits scheme, with regard to EU state aid rules.

The Government has notified CBILS as a state aid under the European Commission’s Temporary Framework for COVID-19.

Because of this, the restriction on receipt of other State aid potentially applies, if the CBILS relates explicitly to the company’s R&D expenditure rather than being intended in more general terms to support the company.

This will of course depend on the facts at hand, but HMRC says it will be monitoring the application of this rule and welcomes opinion.



Workplace temporarily closed due to coronavirus (COVID)


R&D Tax Credits and the Job Retention Scheme

There is also a concern that furloughed worker grants under the Coronavirus Job Retention Scheme (CJRS) could compromise R&D Tax Credit claims.

The Incentives and Reliefs team at the department has confirmed that the grants will not compromise R&D Tax Credit claims, that the grants, notwithstanding, are state aid. This is because the grants are for funding principal trade and not an R&D project, and furloughed staff cannot work and, therefore, cannot be involved in a project.



Maple Accountancy can help with your R&D tax credit claim

If you are concerned about making an R&D tax relief claim during the coronavirus, contact Maple Accountancy for help. We have a team of R&D tax relief experts who can help you claim for R&D tax relief, and ensure you receive every penny you are entitled to. It costs nothing upfront to start your claim with Maple. Our experts can provide a free R&D analysis and will be more than happy to discuss your situation and provide help and advice.

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