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4 Ways COVID-19 may impact your R&D claim

Posted on June 23, 2021

As is this case in every industry across the globe, Covid-19 has generated mass disruption and unpredictability with every functional area within a business. Whether the department is logistics and supply chain down to finance and HR, every business has had to adapt their current policies to ensure a smooth and safe day-to-day operation. 

In the context of your R&D claim, this pandemic has raised concerns with various businesses who are considering a claim and even current ones with existing claims. 

We are here to tell you that there is very little to worry about. 

Conversely, there has never been a better time to apply for R&D Tax Credits. 

Why, you ask? 

With the Government reacting to the pandemic and releasing guidelines for businesses to stick with (for safety of their operations), it is very likely that companies have increased research and development activity. This is in every industry with companies researching for a vaccine and hiring volunteers for their clinical trials, and even companies like Care Homes which are investing in more PPE for the safety of their employees and wider stakeholders. 

Understandably, many businesses are experiencing financial difficulties, so taking part in an R&D Tax Credit claim can prove beneficial to the firms in these circumstances. 

However, with everything being said, there is still concern among businesses as to how COVID may impact their R&D Claim. 

The following is 4 ways in which your claim could be affected. 

  1. Potential Process Delays

The average R&D Tax Credit claim takes up to 28 days to be processed from start to finish and ultimately paid out to the business. Due to the overwhelming changes in financial situations for a lot of businesses and individuals, HMRC is dealing with a wider range of taxation issues and have been extending their R&D processing claims to up to 6 weeks with most businesses. 

  1. R&D Eligibility Criteria during COVID

A statutory requirement to be eligible for submitting a claim is that a business is a going concern. This basically means that a business is assumed to meet its financial obligations when they are due and functions without the threat of liquidation for the foreseeable future. Obviously due to the pandemic, businesses may be concerned because they are no longer a going concern. However, the rules for the going concern are based on a company’s last set of accounts submitted to Companies House and most of these would be submitted prior to the pandemic. Therefore, this means that there should be no impact on a business’s eligibility. 

  1. Operational Difficulties 

With every business reacting to the pandemic (and for life after), it’s been difficult to operate efficiently with staff being put on the Furlough scheme and at times being put into isolation as the result of a test coming back positive. This means that some eligible businesses may have not had the time to submit a claim. HMRC have stated that they will consider giving an extension to claims that have been submitted late, however the claim must meet the criteria set out in the HMRC Statement of Practice 5/01. The statement of practice includes a variety of featured eligibility points that can enable a claim to be processed through the system. 

  1. The Coronavirus Business Interruption Loan Scheme (CBILS) 

Finally, many businesses are confused about whether they are even able to claim back R&D Tax Credits when they’re receiving the CBILS simultaneously. 

Fortunately, businesses can claim both! 

There is one thing to note however, and that is because CBILS is a form of state aid, this could affect a company’s ability to claim R&D Tax Credit as an SME the same way other grants would. Meaning if a company utilizes their CBILS funding on an eligible R&D project, then they will need to claim under the Research & Development Expenditure Credit (RDEC) scheme for that specific project. This is a scheme aimed (more-so) at larger companies however, in circumstances such as the CBILS, SMEs will also be eligible to claim in this scheme. 

After reading these 4 factors, we hope to have cleared up any confusion you might have over potentially wanting to claim R&D Tax Credits during this pandemic. 

Here at Green Jellyfish we have a group of dedicated R&D Tax specialists who guide your claim to success with full transparency at every stage. 

If you are looking to make an R&D Tax Credit claim for your business (of any industry), the Green Jellyfish team are more than happy to help. 

Contact us at 033 000 20010