How and when do I actually receive R&D tax relief money?

Where “payment” actually sits in the process

Payment is genuinely the last thing that happens, not a separate event that runs alongside everything else.

Under the merged scheme, the credit only reaches you as cash after it’s been run through the full seven-step redemption process — your own current-period tax liability, the notional tax deduction, the PAYE/NIC cap, any other period’s tax liability, group surrender, and any other debt you owe HMRC, all applied first. Payment is step seven: whatever’s left once everything else has had first call. See: What does it mean for an R&D tax credit to be “above the line” or “below the line”? For the full mechanism.

Under the SME scheme and ERIS, there’s no equivalent multi-step process — HMRC “must pay” the credit once you’ve made a valid claim for it — but that obligation is still subject to exactly the same restrictions described below, so “must pay” is not the same as “will pay immediately, no questions asked.”

How long it actually takes

HMRC’s own published customer service aim is to process 85% of claims within 40 days of receipt, and its most recent reported performance — 2023–24 — was ahead of that target, at 92% of claims processed within 40 days. That sounds like a firm, reassuring number, and for a genuinely straightforward, low-risk claim it often is. But it’s worth being precise about what “processed” actually means in HMRC’s own terms: paying the claim, writing to ask for further information, refusing the claim, or — for a claim identified as higher-risk — opening a targeted compliance check. Four of those five outcomes aren’t payment. A claim that gets a further-information request or is selected for a compliance check inside the 40-day window has still been “processed” on HMRC’s own measure, even though no money has moved and none will until that process concludes.

In practice, this means the 40-day figure is a reasonable expectation for when you’ll hear something, not a reliable expectation for when you’ll be paid, particularly for a claim with any features HMRC’s risk profiling is likely to flag — see What is a volume compliance check on my R&D claim? For how that risk profiling actually works in practice.

You have to be a going concern to be paid

This is a real, substantive condition, not a formality, and it catches companies that would otherwise have a perfectly good claim.

For the merged scheme, no amount is payable at step seven if the company isn’t a going concern at the time it makes the claim — the claim can still be made and can still work through the other six steps (discharging your own or another period’s tax liability, for instance), but the final cash payment simply doesn’t happen while the going concern condition isn’t met. If the company becomes a going concern again before the last date, it could still amend the claim; the entitlement to payment revives.

For the SME scheme and ERIS, the condition is stricter still — you can’t make the claim at all while not a going concern, and there’s a genuinely sharp consequence if your status changes after you’ve claimed: if the company ceases to be a going concern after making the claim, the claim is treated as if it had never been made in the first place — except to the extent any amount was already paid or applied before that happened. Anything not yet paid out simply falls away.

What “going concern” means for this purpose has a specific trap worth knowing about. It isn’t just “your latest accounts were prepared on a going concern basis” in the abstract — the condition is also not met if those accounts, while prepared on a going concern basis, do so on the footing that the company is relying on the R&D credit or relief itself to remain a going concern. In other words, an early-stage or loss-making company whose accounts effectively say “we’re a going concern because of the R&D tax credit we’re expecting” doesn’t satisfy the condition through that credit — it needs a going concern basis that doesn’t depend on the very payment being claimed. A company already in formal administration or liquidation is excluded outright, though there’s a specific carve-out where a company transfers its trade and the related R&D to another group member and its own accounts stop being prepared on a going concern basis purely as a result of that transfer — those accounts are still treated as meeting the condition.

This is worth flagging early with any client whose accounts might carry a going concern qualification, or who is contemplating restructuring, an intra-group transfer, or insolvency proceedings while a claim is in progress — see What are the going concern and other eligibility conditions for an R&D claim? This sits alongside the wider context.

When HMRC can simply not pay yet

Separately from the going concern condition, there are two specific circumstances where HMRC isn’t obliged to pay an amount you’d otherwise be entitled to, even though nothing about the claim itself is defective:

• Your tax return for the period is under enquiry. HMRC doesn’t have to pay while an enquiry into the relevant return is open — though an officer can choose to make a provisional payment of whatever amount they think appropriate, entirely at their own discretion, rather than the full amount or nothing.
• You have outstanding PAYE or NIC liabilities for the accounting period the claim relates to. If you haven’t paid over PAYE income tax or Class 1 National Insurance you were required to account for, for payment periods falling in that accounting period, HMRC doesn’t have to pay the claim.

Neither of these is the same thing as HMRC offsetting the credit against a debt you owe — that’s a different, more active mechanism, covered in Can HMRC use my R&D credit to pay off other tax debts?. This is simpler and blunter: HMRC just isn’t required to hand over money while either condition exists, whether or not the amount would eventually be used to settle something else.

The anti-avoidance override

Sitting behind all of the above, any transaction attributable to arrangements whose main purpose — or one of whose main purposes — is to get relief the company wouldn’t otherwise be entitled to, or a larger amount than it would otherwise be entitled to, is simply disregarded when working out what the company is entitled to under the R&D relief provisions at all. This is a broad, purpose-based test rather than a list of specific prohibited structures, and it was rewritten as part of the 1 April 2024 reforms — so anything relying on how the equivalent legacy provision was worded should be checked against the current version rather than assumed to be identical.