R&D tax credit to be paid in full to SMEs, even with tax debt

HIGHGATE, U.K. - May 18, 2020 - PRLog -- • SMEs that have accessed the Time to Pay scheme and other tax deferral mechanisms during the COVID-19 crisis can still make use of their R&D tax credit payments in full, according to communications Fundsquire has had with HMRC.
• Usually, any tax debt that a company has accumulated would have been offset against any cash tax credit benefit, leading to a reduction or complete offset of the R&D tax credit benefit.

The payment of the full R&D tax credit benefit does not take effect automatically, companies need to communicate to HMRC that they are on a COVID-19 Time to Pay or tax deferral arrangement. As far as the communication we have had, we've only discussed small and medium enterprises;

From Fundsquire UK's Head of Origination & Lending, Alex Kaschuta:

"HMRC's position on the R&D tax credit is a breath of fresh air for some of the companies affected most by the Coronavirus pandemic, like technology startups that were just getting off the ground. By not offsetting tax debt from the R&D tax credit, these companies can now freely access what is often one of the most important sources of cash flow. We're excited to see that the UK government has kept its promise to fledgling tech startups and scale-ups by allowing them to use the investments they've already made to grow."

This new HMRC position allows companies not only to receive their full benefit but also to borrow against it. R&D Advance Funding leverages a company's future R&D tax credit receivables to be able to offer a loan in the present. Typically, a company with significant tax debt would not be eligible for R&D Advance Funding, as the debt would offset the size of the tax benefit received. With the new HMRC position regarding debt offset, getting their R&D tax credit early is now possible for thousands of companies across the UK.

From Fundsquire UK's Head of Origination & Lending, Alex Kaschuta:

"With demand going up for cash flow finance, it's great to see that HMRC's policy continues to protect and help small businesses. SME's can look forward to receiving their full R&D tax credit in the future, but they can also use it as an asset in the present to borrow against and help their businesses now."

Fundsquire is the UK's leading R&D tax credit finance company.
www.fundsquire.co.uk