Due to the current Coronavirus outbreak, HMRC have contacted businesses to confirm their current processes and new updates for R&D claims.
R&D returns & payments
HMRC state their first priority is to continue to clear 95% of SME tax credit claims within 28 days. They are currently meeting this target and have implemented contingency plans, including allocating extra resource, to continue to be able to do.
HMRC remind businesses that claims for R&D payable tax credit and Research & Development Expenditure Tax Credit should be received within 12 months of the statutory filing date of the company’s tax return. Due to the Coronavirus, if a customer is unable to meet these dates, they should submit the claim as soon as possible and HMRC may be able to accept a late claim. More details about late claims can be found on their website.
The Going Concern status
The going concern status, which is the assumption a company will remain in business for the foreseeable future at the time of their last published accounts, shouldn’t be affected by the Coronavirus. This is due to most accounts having been prepared before any effects of COVID-19 on their business. HMRC say: “We will be monitoring the impact of COVID-19 on customers’ ability to meet this and other requirements and you should approach us if it is causing genuine operational difficulty.”
Government support schemes and making a claim under the SME scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) is classed as a State Aid under the European Commission’s new Temporary Framework for COVID-19. Businesses should be aware of this when using the CBILS on their R&D projects (rather than to support the company) as there may be restrictions on any claim under the SME scheme.
Budget 2020 announcements
There were a number of announcements in the March Budget relating to R&D reliefs.
The introduction of the PAYE cap on the payable tax credit in the SME R&D schemes will be delayed until 1 April 2021 to allow time for further consultation. HMRC are asking for written responses by the closing date of 28 May 2020. More details on the consultation are on their website.
Expanding scope of qualifying costs
The government will also consult on whether expenditure on data and cloud computing should qualify for R&D tax credits. The consultation will be published in due course.
Due to the delay in the IR35 off-payroll reforms from April 2020 to April 2021, consequential amendments in relation to R&D legislation will not be made until April 2021. More details can be found on their website.