'When people talk about cash being king, it’s not king if it just sits there and never does anything’

So said Warren Buffett. There are millions of other quotes out there slating revenue, profitability or even new-fangled metrics to show your performance relative to peers. However, many companies are frustrated when awaiting a payment which is just around the corner. What they need is…cash.

You may already be aware that HMRC is not currently hitting its 28 day aim to pay out research and development (R&D) tax credits. But what is the actual truth on this statement?

Firstly, it is important to note that this this objective does not include the 10 days it can take for the money to arrive in your bank account so overall it should take around 35 days in total from submission of your claim (when you file what is called the CT600) to receiving your tax credits. Is this happening?

No - it’s not. As stated by HMRC, the current time taken to process claims under the SME scheme is 87 days, but this increases to 186 days for claims under the RDEC (Research and Development Expenditure Credit) scheme. This less financially favourable RDEC scheme generally applies to larger companies but SMEs, in certain circumstances, can be required to make claims under this scheme.

What is the reason for these lengthy delays? It is likely that it relates to a lack of available resources to process the claims in HMRC’s R&D team as opposed to specific Treasury policy. HMRC reduced the number of centres from 140 offices to 13 regional centres in 2017 with four specialist sites and a central London headquarters, including Leicester, Manchester and Portsmouth.

An R&D application may be dealt with in whichever centre is nearest to the postcode where that company has its registered office so delays may be geographically led. There are also certain pinch points during the year: December and March are normally very busy. Finally, the delay may be due to the sector the company is exposed to. Without having any detailed training in the software or information technology fields, the nominated tax inspector may access specialists from HMRC’s corporate IT directorate, CDIO, should that be deemed necessary. With the amounts of software related claims we are seeing, we expect this to cause further blockages within the process.

Will HMRC get back to its 28 day target? We think it is likely to improve through the quieter summer months but for now our view is that companies filing under the SME scheme can expect payment roughly three months after filing.