Research & Development Tax Credit (RDTC) payments - further update on delays

HMRC have provided us with some further information around the pause in some Research & Development Tax Credit (RDTC) payments that occurred in April this year, and the continuing delays in their usual processing times. HMRC have asked to share with you the message below:

As you may be aware, we recently had to pause some R&D payments and extend our standard processing times. We are now in a position to explain why we needed to do this: 

• Since April we have faced an increase of fraud within the RDTC relief. While some of this fraud is opportunistic, some is linked to organised criminal gangs. As you would expect, HMRC responded quickly by pausing all payments and by strengthening our systems accordingly.   
• Our aim is to protect the R&D scheme from such attacks while minimising any delays or enquiries for legitimate claimants. However, in this instance, the nature of the attacks (alongside the fiscal risk to the Exchequer) meant we had to respond quickly and robustly by pausing all R&D payments on the 28^th April 2022.   
• Our operational response culminated with further risk assurance checks to react to the increased number of fraudulent claims. Since April 1^st we have received over 8000 RDTC claims, which all need to go through our further scrutiny processes.   
• We do recognise that these additional checks may cause delays to legitimate businesses and appreciate their patience as we work through these exceptional circumstances. We want to reassure legitimate claimants that we are working hard to expediate claims as soon as we can. 
• While we are pleased that we could restart paying RDTC claims from the 10^th May 2022, the nature of the additional operational checks
  (required to protect the R&D relief) means that it is not currently
  feasible to offer a 28 day payment turnaround for claims and we think the standard service level will need to be 40 days. We are working to recover from the recent pause in payments and expect to be processing 80% of claims within 40 days, by the end of August 2022. 
• While we cannot go into the detail of our ongoing investigations and compliance activity, we do want to explain to tax agents that we have a duty to challenge irregular claims, requesting more information
  if we believe it is appropriate. We have already issued over 1000 letters to claimants which have been identified as high risk, challenging irregular claims. 
• As soon as we have further news on our progress, we will
  let you know. With this in mind, we ask R&D claimants to bear with us and kindly ask them not to contact the R&D helpline/mailbox to chase their claims. We also ask you not to contact any HMRC official about a
  claim. Instead, agents should check the company’s online account to check the status of their claim.  
• We hope that our recent activity reassures agents that we are committed to tackling abuse of the R&D relief scheme, ahead of the R&D reforms announced previously at Autumn Budget 2021. 
• If you become aware of any fraudulent R&D claims, please do make us aware through our usual reporting systems, see below: 

Report tax fraud or avoidance to HMRC  

HMRC: disclosure service 

Admit tax fraud to HMRC using the Contractual Disclosure Facility