R&D tax rebate delays ‘threaten UK business innovation investment’

Scott Henderson

According to Jumpstart, one of the UK’s leading R&D tax relief specialists, the backlog of claims and resulting delays in tax rebate payments is especially impacting smaller firms with high growth potential.

Currently SMEs claiming R&D tax relief are facing a delay of over 90 days as HMRC is just beginning to administer claims made at the start of April 2019, significantly later than the agency’s four week target.

RDEC claims, for larger companies, are experiencing even greater delays, with HMRC currently not processing any submitted after 20 December 2018.

HMRC’s practice notes for the R&D specialist units include an expected turnaround time for SME R&D tax credit claims of 28 days which, according to the agency, are achieved in 95 per cent of cases.

Earlier this month press reports highlighted how Wales-based advanced materials company Haydale had experienced delays in R&D tax credit receipts that had adversely impacted its cash position.

Jumpstart has also reported a number of its clients across the UK are also facing fiscal challenges and putting off further investment or expansion plans due to the delay in claim processing.

Scott Henderson, managing director of Jumpstart, said: “We have heard from our own clients as well as other companies that the unprecedented delays in HMRC’s processing of R&D tax relief claims is beginning to impact on investment and growth plans.

“Along with a backlog in RDEC and R&D tax relief claims, the same situation also applies to any of the creative tax reliefs. Previously HMRC was turning claims around within their four week target but are currently taking up to 13 weeks from receipt to payment.

“This backlog is particularly affecting small, innovative businesses that truly accelerate their growth through reinvestment of the funds received from making an R&D tax credit claim. While we’ve not seen any businesses facing closure because of this issue, the R&D tax relief payment is an important source of revenue for many, required to help fund continued research programmes, contribute to further investment in the business or simply pay the bills.

“While we have been able to support some clients in finding alternative funding sources, HMRC urgently needs additional resources as a matter of urgency so it can effectively address this back log. At a time where the UK is facing a high degree of economic uncertainty, it is essential the Government addresses this problem.”