R&D Tax Relief Claim Notifications- What Do You Need To Know?

For accounting periods commencing on or after 1 April 2023, there is a new notification obligation to be considered by all companies seeking to claim R&D tax reliefs.

The rules are intended to catch new R&D tax relief claimant companies. However, they are widely drawn so that both recent and historical claimants may have a notification obligation.

WHAT IS THE R&d TAX RELIEF CLAIM notification requirement?

The notification obligation must be considered by all companies, irrespective of the scheme under which the R&D tax relief will be claimed.

The notification rules are aimed at “new claimant” companies. However, where a company has made historical R&D claims but has not actually submitted a claim within the three years preceding the end of its’ “notification period”, it will also be treated as a “new claimant”.

When looking at whether an R&D claim has been made in the three-year window, focus is needed on the date on which the corporation tax returns were filed and on HMRC’s online records as this is what HMRC will use to review whether a notification is required.

The accounting periods to which the claims relate are not important for this purpose.

When establishing if claims have been submitted within the three-year window, there are additional rules which require certain R&D claim submissions to be ignored.

The rules state that R&D claims which:

• Are filed after 1 April 2023; and
• Relate to an accounting period commencing prior to 1 April 2023; and
• Are filed as an amendment to a prior corporation tax return filing

must be discounted as filings made within the 3-year period. This complexity can mean that a notification obligation exists, despite a company submitting an R&D claim within the 3 year-window.

It should be noted that if a company can file its’ R&D tax relief claim within six months of the end of its accounting period, a notification will not be required. However, great care must be taken to monitor the notification deadline as there may be unforeseen delays. We recommend considering a protective notification.

The notification requirement itself is not particularly onerous. HMRC are looking for a relatively high-level outline of the projects.

WHAT IS THE R&d TAX RELIEF CLAIM Notification Period

Notifications can be made at any point during a “notification period”.

A “notification period” commences from the start of a company’s accounting period and ends six months after the end of the accounting period. Where accounts are prepared for periods more than 12 months, the notification period still runs to six months after the end of that longer period and only a single notification is required.

For the most common year ends, being March and December, the first accounting periods which can be caught are as follows:

• Year ended 31 March 2024 – notify HMRC before 30 September 2024.
• Year ended 31 December 2024 – notify HMRC before 30 June 2025.

The practical effect of these rules is that if a notification is required but missed, the opportunity to claim R&D tax relief for that accounting period is permanently lost. There is no avenue for appeal. There is no longer a safety net of having two years from the end of a company’s accounting period in which to identify qualifying R&D activities.

Companies changing advisers or that are recently set up pose a significant risk because it is entirely possible for a notification period to expire during the period of onboarding with a new tax adviser.

What is the Statutory deadline to file an R&D tax relief claim?

The statutory deadline by which an R&D claim must be filed has not changed and remains two years after the end of the accounting period. Thus, once the notification has been made the usual statutory filing deadline applies.

Please note that if the claim is not actually filed until six months after the end of the following accounting period, there may be a need to file a notification for that second accounting period also.

Additional Information Form

The “notification requirement” is entirely separate to the new Additional Information Form filing obligation (“AIF”). The AIF introduced mandatory supporting information requirements for any R&D relief claim submission and applies to all claims filed after 8 August 2023.

If you have any queries please do not hesitate to get in contact with Ross Parsler, a member of our Innovation Taxes team, or your usual AAB contact.