You've submitted your R&D tax credit claim. Now comes the waiting game…
For many businesses, there is great uncertainty around timing can complicate cash flow planning. Whether you're expecting a Corporation Tax reduction or a direct cash payment, understanding HMRC's processing timeline helps you plan realistically.
HMRC's Target Processing Time for R&D Claims
HMRC aims to process R&D tax credit claims within 40 working days of submission. This represents an increase from their previous target of 28 days, reflecting the growing complexity and volume of claims they're managing.
Here's what that timeline means in practice:
- If your claim reduces your Corporation Tax liability: That benefit is effectively available immediately once your return is submitted and accepted (i.e., within those 40 days). You simply owe HMRC less tax.
- If you're claiming a payable credit (cash back): HMRC first needs to process your claim within those 40 days and then issue payment.
Unfortunately, the 40-day target is exactly that: a target, not a guarantee.
HMRC processed 92% of claims within 40 days in the 2023/24 year, above their aim to process 85% of claims within 40 days, but some companies will still inevitably miss out.
To reduce the risk of delays, it’s critical that you submit your claim before your deadline.
What Does "Receiving the Benefit" Actually Mean?
Not all R&D tax relief arrives as a cheque. Understanding how HMRC pays out your credit helps clarify when you'll actually benefit:
Corporation Tax reduction
Your R&D claim reduces your Corporation Tax bill. If you owe £50,000 and claim £30,000 in relief, you now owe £20,000. This benefit is immediate; you're simply paying less tax.
Payable credit (cash)
Loss-making SMEs can surrender losses for a payable credit. This is actual cash paid to your business, usually at 14.5% for PAYE and NIC capped claims or 10% for expenditure credit claims.
Offsetting other liabilities
HMRC may use your R&D credit to settle other tax liabilities (VAT, PAYE, or previous Corporation Tax bills) before issuing any cash payment.
Under the Merged Scheme, the process follows a hierarchy: your credit discharges your Corporation Tax liability first, then any remaining credit can be paid out.
Factors That Can Delay Payment
Even when HMRC processes your claim within 40 days, several factors can delay your benefit reaching your bank account.
Complex corporate structures, international operations, or highly technical R&D projects require more detailed review. HMRC may take longer to assess claims involving multiple subsidiaries, subcontractors, or many complicated projects.
HMRC experiences significant backlogs during busy accounting periods. Companies with December or March year-ends often submit claims simultaneously, creating bottlenecks. Filing earlier in your accounting period can sometimes avoid the rush.
HMRC may open a compliance check even after initially processing your claim. These checks can extend timelines by months, sometimes over a year for complex cases. They're not necessarily a sign of problems, but they do delay payment until resolved.
All companies must submit an Additional Information Form alongside their claim. Some require an Advance Notification Form if they've never claimed before or have recently changed advisers. Missing these requirements, even by oversight, can halt processing entirely until corrected.
What to Do If Your Payment Is Delayed
If weeks turn into months without receiving your benefit, don't panic, but do take action:
· Stay in regular contact with your adviser. Your tax consultant or claim agent should monitor your claim's progress and chase HMRC if necessary. They'll know whether delays are routine or require intervention.
· Prepare for potential compliance checks. Even if no check has been opened yet, maintain thorough documentation: project records, technical reports, cost breakdowns, and evidence of uncertainty. If HMRC does enquire, you'll respond quickly and confidently.
· Manage cash flow expectations. Don't build your business's cash flow forecast around a specific R&D payment date. While you can anticipate the benefit, planning critical expenditure around it creates unnecessary risk. Treat the payout as a bonus rather than guaranteed income on a fixed date.
Why Has HMRC Increased Processing Times?
HMRC's move from 28 to 40 working days isn't arbitrary. Several pressures have extended review timelines.
High-profile cases of R&D tax credit abuse have prompted HMRC to implement stricter compliance measures. More claims now undergo detailed review before payment is authorised.
Awareness of R&D tax relief has also grown dramatically. More businesses are claiming, which means HMRC's processing teams face higher workloads, especially during peak periods. As the scheme matures, businesses are submitting larger, more sophisticated claims. Software companies claiming for algorithmic development, manufacturers documenting incremental process improvements, and biotech firms explaining multi-year research programmes all require detailed technical assessment. This takes time.
Plan Ahead, But Don't Rely on Exact Timing
HMRC's 40-working-day target provides a useful benchmark, but real-world timing depends on your claim's complexity, submission timing, and whether HMRC raises queries. Some businesses receive payment within six weeks. Others wait months, particularly if compliance checks arise.
The R&D tax credit scheme remains one of the most generous reliefs available to innovative UK businesses. Patience, thorough documentation, and realistic cash flow planning ensure you actually receive that benefit, even if it takes longer than expected.
If you're unsure how long your claim might take or want to ensure you're maximising your relief while staying compliant, reach out to an R&D tax specialist. Or, if you're an SME looking for a transparent, guided approach, Tax Cloud can help you navigate the process with confidence.
