How long does it take to receive the R&D tax relief?

HMRC used to aim to pay funds for research and development tax credit applications within 28 days after they’ve been submitted. However, this was moved to 40 days in June 2022 due to a surge in HMRC identifying fraudulent claims. Given the uptick in errors and fraud in recent years, HMRC has bolstered its task force and is rolling out additional checks. In light of this, the 40-day suggestion emerges as a more pragmatic timeframe. 

HMRC’s stated processing time is communicated publicly in the R&D tax credit guidelines. There they commit to 85% of claims being paid out within 40 days. That leaves scope for some claims to be delayed for follow up questions or formal enquiries.

Historically there has been a significant difference between the turnaround times of RDEC and SME scheme claims, with RDEC claims typically taking twice as long to process.

Payout times do vary wildly depending on the internal resource allocations at HMRC, as well as the volume of claims, which has sometimes taken HMRC by surprise. We have seen SME claims taking up to 4 months and RDEC claims up to 6 months. For the most up-to-date data on processing times, consult our payout timings page.

If you receive follow-up queries or a formal enquiry from HMRC, then that will delay the process further. A formal enquiry can be a lengthy process typically taking 3-6 months depending on the nature of the questions from HMRC. The amount of time it takes to process the enquiry also depends on how quickly you can compile the evidence required to back up your position. We have heard of enquiries taking over a year to complete. HMRC have a brief outline of what happens during an enquiry here.

If you would rather avoid the uncertainty of when your claim will be received back, then R&D Advance Funding allows you to receive 80% of your R&D tax relief up to 9 months before submitting your claim.

Compiling the claim can take anywhere from a day to several months depending on the claim process. Traditional advisors will employ expensive writers to draft your technical narratives while requiring significant input from your team over email, calls or in face-to-face meetings. This claim process can take many months depending on the workload and priority for the claim advisor.

With EmpowerRD we’ve baked all the necessary advice into our intelligent online platform. This allows your team to directly communicate their R&D projects to HMRC while being prompted with all the necessary insights needed to ensure that the narrative is written in a way that HMRC can easily understand and evaluate.

In addition, we have an integration with Xero which pulls your R&D expenditure data into your claim submission, allowing you to easily select the qualifying costs for your R&D work. You can see the full list of qualifying expenditure here. We also automatically import any previous claim reports you may have from other advisors so that you have a historical basis to build your current claim from.

These measures not only reduce the time taken to compile a claim (it can be done in less than a day rather than the 2-4 months typical with a traditional advisor), but our methodology is also shown to reduce the amount of time your team spends on your claim versus the traditional 3rd party writer method. We recommend having a look over our Case Studies to get a sense of the typical time saving that claimants experience with us.

If you have more questions about the R&D tax credit scheme, why not consult our introduction to R&D tax credits or perhaps have a go at working out how much R&D tax credit you can claim.