It was an introductory webinar so we didn’t expect to learn much! But we wanted to see if we could pick up any latest insights for our clients.
Key takeaways from the webinar were as follows:
How long does it take to process an R&D tax credit claim?
The HMRC R&D tax team is continuing to approach the processing of R&D tax credit claims in strict date order. They are aiming for 4-6 weeks processing turnaround time. At the time of the webinar (15 March 2019), HMRC has processed SME claims submitted up to 5 February 2019. RDEC claims were up to 10
Defining an advancement in science or technology and the role of competent professionals
The HMRC team spoke about the importance of the competent professional within a claimant company. Specifically, in terms of conveying the technical advance that they are seeking within a project(s). They emphasised the broad spectrum of companies that apply for this relief. So it is impossible for them to be experts in all fields. On this basis, they rely on clear, layman descriptions of the underlying technical work and advancements sought. One of the Inspectors explained it along the following lines:
We try to encourage competent professionals to imagine that they are explaining the project to a friend down the pub. And that they focus on what makes their project stand out from what’s currently available in the marketplace. All explained in language that anyone can understand.
Which company can claim the R&D tax credit where work is subcontracted?
This is a common issue – and potentially very tricky. We often come across cases where companies acting as subcontractor have carried out elements of potentially qualifying R&D work. The question then becomes: “Who can claim this element of the work as their R&D tax claim?”
You can’t have two SME companies (contractor and subcontractor) claiming the R&D tax relief on the same work and costs.
HMRC summarised how to approach this in a chat-box response in the webinar. It is the company that is directly involved in the “nuts and bolts” of the R&D. Plus that is the competent professional. This is the company that should be the claimant.
R&D Tax Claim filing changes from 1 April 2019
HMRC encouraged R&D tax agents to ensure that they have HMRC agent filing credentials. This is to reflect the new, more stringent filing requirements that come into force from 1 April 2019. These new rules require that companies file full CT600s and supporting tax computations for all R&D tax claims. There will be a light touch until 30 June 2019.
RD Tax Credits Webinar Wrap-up
Overall, it was a useful webinar. As it is always helpful to hear HMRC explain their thought process and practices around certain areas. Plus this is part of a series of webinars across all taxes aimed at agents.
Interestingly, a poll of the participant advisors revealed that approx 50% had yet to file an R&D tax credit claim. That was one of the biggest insights and goes to show that many companies may still be missing out!
For those that might be interested, you can watch a recording of the HMRC webinar here.