Coronavirus and the impact on making R&D tax credit claims

By PM+M Chartered Accountants

14 Apr 2020

Delays in HMRC processing R&D claims

As a result of the recent downturn in the markets and the ongoing coronavirus pandemic, some businesses are already feeling a significant financial impact. For many, their greatest concern is around cash flow management. Making a R&D claim now could help with short-term cash flow potentially benefitting businesses throughout the pandemic.

We are seeing several businesses bring forward their R&D claim submissions. HMRC has said that although they are seeing pressure on their operational resources, their priority is to maintain their aim of clearing 95% of SME tax credit claims within 28 days. They have implemented contingency plans to support this, including applying extra resource and are currently meeting this aim.

The impact of the Coronavirus Business Interruption Loan Scheme (CBILS) on SME R&D claims

The CBILS has been notified as a state aid under the European Commission’s new temporary framework for COVID-19. As this is a notified state aid, companies who would otherwise make SME R&D claims could instead potentially be forced to claim the less generous Research and Development Expenditure Credit (generally used for larger companies).

The critical factor will be whether the CBILS relates specifically to the company’s R&D project or R&D expenditure, or whether it will be intended to be used more generally to support the business. If the latter, we would expect that R&D tax credits should still be available. Outlining the purpose of the loan will be key to maximising the potential relief over the next 18 months. HMRC have said they will be monitoring the application of this rule and welcome feedback.

Liabilities owed to HMRC and R&D claims

For those who make SME R&D claims, HMRC are considering this and the hope is that they will prioritise payment of R&D credits over collection of other liabilities in the current environment. For RDEC claims the offset is required.

Setting aside the ‘going concern’ requirement in the SME scheme

It is a statutory requirement that companies making R&D tax credit claims can certify that their business is a going concern, hence HMRC cannot ignore it. HMRC’s latest update on this indicates that they will look to the last published accounts. In many cases, these will have been prepared before the effects of COVID-19 and there should therefore be no impact on the going concern requirement.

The suggestion here is that such companies would be able to submit claims now even if they would have some doubts about their current going concern status due to any uncertainty surrounding coronavirus.

For companies currently finalising accounts, the position is less clear. HMRC are monitoring the impact of the pandemic on their customers’ ability to meet the going concern requirement and they suggest that if you fall into this category you should approach them if it is causing genuine operational difficulty.

Support during the coronavirus crisis

Please get in touch with Jon Connor at [email protected] for further advice on claiming R&D tax as a way to boost cash flow during the pandemic.

For the latest information and advice on how to access the Government's support schemes available to businesses, please check PM+M's free coronavirus support hub over on the PM+M website, which is updated regularly as new initiatives are announced.

Latest news

1

Plan moves forward for new £13.2m Innovation Hub Councillor Phillippa Williamson and Coun Aidy Riggott

Plan moves forward for new £13.2m Innovation Hub

22 Jan 2025

2

Record turnover as Napthens continues to grow Stephen Faulkner

Record turnover as Napthens continues to grow

22 Jan 2025

3

Ranvir Singh to host Convention of the North 2025 in Preston Ranvir Singh

Ranvir Singh to host Convention of the North 2025 in Preston

22 Jan 2025

4

Lancashire Business Board chairman takes centre stage at Festival of Business Mo Isap

Lancashire Business Board chairman takes centre stage at Festival of Business

21 Jan 2025

5

Early handover success for £1.7m youth centre expansion in Blackpool Representatives from Blackpool Council, Blackpool Boys and Girls Club, Warden Construction and Cassidy and Ashton

Early handover success for £1.7m youth centre expansion in Blackpool

21 Jan 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
The Lancashire Festival of Business
FOB 315
Exhibitions
30 Jan 2025

The Lancashire Festival of Business

Impact Conferencing, Burnley, BB12 6QP

09:30 - 16:00

Skills Bootcamp in Procurement - Cohort 3
Blue-Modern-Land-Travel-Youtube-Thumbnail-2-1024x576.png.png
LBV Hub Awards
14 Jan 2025 - 18 Mar 2025

Skills Bootcamp in Procurement - Cohort 3

Community & Business Partners CIC, Blackburn, BB2 3UA

09:30 - 13:00

North West Holiday Home Show
PLG - NWHHS - Social - Jan 2024.jpg.jpg
LBV Hub Exhibitions
18 Jan 2025 - 26 Jan 2025

North West Holiday Home Show

South Lakeland House Showground, Yealand Redmayne, LA5 9RN

09:00 - 14:58

Level 3 Emergency First Aid at Work Course - In Person
LBV Hub Webinar
22 Jan 2025 - 22 Jan 2025

Level 3 Emergency First Aid at Work Course - In Person

RKMS Group , Blackpool, FY42DP

09:30 - 17:00

January Freelancer Meet-Up and Coworking Day
Freelancer Meet-Up Jan general.png.png
LBV Hub Networking
23 Jan 2025 - 23 Jan 2025

January Freelancer Meet-Up and Coworking Day

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:00

The Marketing Meetup IRL: Lancashire
LBV Hub Event Image.png.png
LBV Hub Networking
30 Jan 2025 - 30 Jan 2025

The Marketing Meetup IRL: Lancashire

Strawberry Fields Digital Hub, Chorley, PR7 1PS

18:00 - 20:00

Police Apprenticeship event
Student Centre Autumn 2022.jpg.jpg
LBV Hub Social
12 Feb 2025 - 12 Jan 2025

Police Apprenticeship event

University of Central Lancashire, Foster Social Space , Preston , PR1 2HE

16:00 - 19:00

February Preston Tech Connection Meet-Up: Tech & Our Planet
PRESTON TECH CONNECTION jan.ai.png.png
LBV Hub Networking
12 Feb 2025 - 12 Feb 2025

February Preston Tech Connection Meet-Up: Tech & Our Planet

Society1 Coworking Space, Preston, PR1 3LT

18:00 - 19:30

The Business Network Central & East Lancashire
LBV Hub Networking
13 Feb 2025 - 13 Feb 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Sub36 Networking - Behind the beans
Sub36 Social1200Atkinsons New
Networking
14 Feb 2025

Sub36 Networking - Behind the beans

Atkinsons Speciality Coffee, Lancaster, LA1 1 EX

09:00 - 11:30

Red Rose Awards 2025
Red Rose Awards 2025
Awards
13 Mar 2025

Red Rose Awards 2025

Winter Gardens Blackpool

18:00 - 11:59

Lancashire Business Day 2025
241122lbvlancashiredaylhp0647web
Networking
27 Nov 2025

Lancashire Business Day 2025

12:00 - 17:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV120 Online Graphic 1
Subscribe now

Weekly news bulletin