Does HMRC offset my R&D tax credit against any outstanding taxes I owe?

Sometimes, an R&D tax credit claim may be offset against outstanding tax owed to HMRC. This means that where a company has unpaid tax obligations, HMRC may apply the value of the R&D tax relief to those amounts before any remaining balance is released to the company.

Where a company has tax still due, HMRC can apply legislation that allows them to deduct the amount owed before issuing any remaining R&D tax credit. This treatment can apply to claims submitted under the SME scheme, the RDEC scheme, and the new Merged R&D Scheme.

In practical terms, this means that any outstanding tax debts may be settled first. Once those liabilities have been addressed, the remaining balance of the R&D tax credit can then be paid to the company.

This approach is most commonly seen where a company has agreed a formal tax payment arrangement with HMRC, or where tax liabilities remain outstanding at the point the R&D credit is processed. In these cases, HMRC may prioritise the settlement of those liabilities before releasing any remaining funds to the claimant company.