HMRC is increasing from one to two months the time it takes to pay out on R&D tax relief requests.
Due to an increase in fraudulent or incorrectly filled out applications, small firms may have to wait longer to get R&D tax relief.
The taxman is requesting further details to verify the validity of the R&D tax credit claims made by small and medium-sized enterprises, which totalled £5.9 billion in the year ending in April.
In the year leading up to April, fraudulent claims grew to 4.9% of all claims made by smaller enterprises, at an estimated cost of £469 million.
This increased from £336 million (3.6%) of all claims the prior year.
According to the Office for Budget Responsibility, the price of the reliefs will rise from £7.7 billion in 2021–22 to £11.9 billion in 2026–27.
Rishi Sunak, the chancellor at the time, was said to seek to restrict which businesses may get tax incentives for research and development since smaller businesses had spent less money on R&D since the tax credit was established in 2000. This was reported back in March.
How to make sure you get your R&D tax paid
- Before the conclusion of the financial year, pre-notify your intention to claim no later than six months before the conclusion of the financial year. This rule will be in effect for accounting periods starting on or after April 1, 2023.
- There are specialized experts available if your accountant has questions about claiming research and development tax credits:
RDS
Haysmacintyre
Catax
Leyton - Expenses that are not covered by relief should not be included. R&D efforts like the following generally qualify:
– Software development
– Designing new products
– Precision engineering
– Products with new materials
– Enhancing existing products or technologies
– Typical R&D expenses might include employee salaries and subcontractor fees.
