Earlier in the year we reported that HMRC announced they were pausing some R&D Tax Credits payments whilst irregular claims were investigated. This led to delays in processing times which are still ongoing. They have now provided further information to explain their reasons for doing this and how processing times will be affected going forward.
HMRC have confirmed that since April there has been a further increase in fraud within R&D tax relief, some of which was opportunistic and some of which was linked to organised criminal gangs. It was in quick response to this that on 28th April 2022 payments were put on hold. HMRC have said that while they want to minimise delays for legitimate claimants, they have a duty to protect the R&D schemes from such attacks.
Following on from this, systems have been strengthened with further risk assurance checks being put in place. Since 1st April, HMRC have received over 8,000 claims for R&D Tax Credits which all need to go through further scrutiny processes.
Whilst HMRC state that they cannot go into detail about their continuing investigations and compliance checks, they do want to make it clear they have a duty to challenge irregular claims and request additional information where necessary. To date they have issued over 1,000 letters to claimants they have identified as high risk.
40-day Turn-around Target
Although payments resumed from 10th May 2022, processing times have since been affected and HMRC have stated that it is not currently feasible to offer a 28-day turnaround time. They aim to be processing 80% of claims within 40 days by the end of August and ask R&D claimants to bear with them as they are committed to tackling abuse of the schemes.
HMRC have once again requested that claimants do not contact them via the R&D helpline or mailbox during this time, advising that agents should check a company’s online account to see the status of a claim. Further updates will be shared by HMRC in due course.
HMRC’s recent clamp down on abuse of R&D tax relief comes ahead of the reforms announced at the Autumn 2021 budget. R&D Funding Group welcomes the further measures put in place to ensure non-compliant claims are challenged. If you would like any help or advice regarding your R&D Tax Credit claims, please get in touch.