R&D tax credit delays threat to SMEs cashflow
An R&D tax specialist is warning that cashflow issues caused by lengthy processing delays might prove terminal for dozens of SMEs with genuine tax credit claims.
Mark Pryce, a corporate tax partner and R&D specialist with Azets in Scotland, has welcomed the news that HMRC is taking punitive action to pursue fraudulent claims, resulting in recent arrests. However he stresses that legitimate claims must continue to be processed swiftly.
He said: “Such serious and targeted action is long overdue and we are appalled that any individual, company or so-called adviser would seek to abuse a system designed to provoke innovation and accelerate growth.
“Unfortunately, too many genuine businesses will be adversely affected by delays in cash payments because of the actions of rogues. It will cause severe working capital problems for many of our most promising businesses, jeopardising their trading position.”
Mr Pryce expressed hope that now HMRC has brought action against tax credit claims identified as fraudulent, it can return to swifter response times in support of businesses which desperately need the funding.
He said: “There is some concern that the relief scheme may be curtailed as part of the Autumn Statement on 17 November, which would heighten the risk of innovative businesses running out of cash quickly. We are urging the Government to extend the scheme instead in order to invest in growth, particularly in key areas such as renewables and energy.
“HMRC has promised to step up its monitoring of claims for R&D tax relief fraud, but I hope we do not see a reduction in R&D tax relief in the Chancellor’s Autumn Budget. This is a vital source of funding for sound businesses who invest all their capital in innovation.”