Are you running the report from a report server or within BIDS/SSDT?

If from a report server I'd check the ExecutionLog3 view to see if the query execution is the issue or something else.

I'd also look at what Erland Sommerskag has in his post, Slow in the Application, Fast in SSMS, to verify you aren't seeing issues related to what he discusses there.

I'd also check the execution plan because I'm not sure what the COLLATE DATABASE_DEFAULT in going to do in regard to seeks or scans on an index. If it causes the column to be converted it cause an scan where you might want a seek.

I'd also consider changing the function to be more like Jeff Moden's DelimitedSplit function[/url] which will improve that performance if you have a longer list being presented by the report.

I'd also verify that you aren't seeing "bad" parameter sniffing, where the plan for the first set of parameters passed in, is not the best plan for the next set of parameters passed in. You can check out this article (pdf) by Grant Frichey.