Whilst Covid-19 grants and loans are vital for some businesses, do make sure a loan now does not mean you are prevented from making an SME R&D claim later on.
In summary
- Deferred liabilities during the Covid period such as VAT and ITSA payments on account will not impact repayments of RDEC or tax credit.
- Comparably, tax deferred under time to pay (TTP) arrangements would be offset against repayable RDEC or tax credits, reducing the repayment received.
- There are a number of loans available under the Covid-19 support measures, but if the loan relates specifically to R&D expenditure, an SME R&D claim could be prevented (under the notified state aid rules). Take care to ensure that a loan now does not prevent a valuable R&D claim later.
- R&D claims continue to be processed within the 28 day target which is good news.
The detail
Further details / useful links, kindly shared by HMRC’s central policy team on 28th May are set out below:
R&D Payments
Deferred liabilities
Where Ministers have agreed that tax can be deferred for a specific regime to support businesses in the COVID-19 period, i.e. the ITSA payment on account and VAT quarterly payment deferrals, RDEC or payable tax credit will not be set against any of those amounts before the revise due date.
Time to pay arrangement (TTP)s
Where tax has been deferred as part of a Time to Pay (TTP) arrangement, HMRC will follow existing policy and set any R&D tax credit off against any TTP liability, not just the amount owing at the point in time the credit is paid. This would include informal deferrals offered in advance of TTP arrangements being put in place.
Covid-19 Support Measures
Notified state aid schemes (preventing a claim for SME relief):
Bounce Back Loans (BBL). Information here – https://www.gov.uk/government/news/new-bounce-back-loans-to-launch-today
Coronavirus Business Interruption Loan Scheme (CBILS). Information here – https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme
Coronavirus Large Business Interruption Loan Scheme (CLBILS). Information here – https://www.gov.uk/guidance/apply-for-the-coronavirus-large-business-interruption-loan-scheme
Convertible commercial loans (not state aid):
Future Fund. Information here- https://www.gov.uk/government/news/future-fund-launches-today
May be notified state aid (preventing a claim for SME relief):
Innovate UK; Continuity Grants and Loans; Fast start grants. Information here-
Some of these support measures are still under development, but the notified state aid rules may apply to all of those which are provided through the Temporary Framework (https://ec.europa.eu/competition/state_aid/what_is_new/covid_19.html) or through the Grant Block Exemption Regulations (https://www.gov.uk/government/publications/state-aid-general-block-exemption-regulation
