The rules have changed: you now have to let HMRC know of your intention to make an R&D claim

Don’t miss your opportunity by missing an important deadline.

What is the Advance Notification requirement and why was it introduced?

Companies are required to inform HMRC, in advance, of their intention to make an R&D claim. They will need to do this, using HMRC’s digital service, within 6 months of the end of the accounting period to which the claim relates – referred to as the claim notification period. The Advance Notification requirement was introduced for accounting periods beginning on or after 1 April 2023, and whilst the requirement has been around for the past 17 months, broadly, many companies won’t have been affected by these new rules. The requirement was introduced in a bid to prevent last minute speculative R&D claims being made. Whilst the new rules are aimed at new claimants, or where the company has not made a claim in the three years preceding the end of the notification period, the intricacies of the legislation may, in some instances, catch out claimants that claim on a yearly basis. It is therefore essential that even if you make claims year-on-year, you check the rules around the advance notification requirement.

What are the rules?

If you’re planning to submit an R&D claim, for accounting periods beginning on or after 1 April 2023, you must submit a claim notification form if:
 

•       You’re claiming for the first time;

•       Your last claim was made more than 3 years before the last date of the claim notification period you may need to submit a claim notification form for 2 consecutive accounting periods if your previous claim was submitted in the last 6 months of the Company Tax Return amendment window. For example – for a 30 April 2024 Y-E who is a first-time claimant, you need to make an advance notification submission before 31 October 2024. If you then don’t submit the R&D claim (for the April 2024 period) until after 1 November 2025, then you must also make an advance notification submission for the year-ended 30 April 2025.

When is the deadline and what is required?
 
You have 6 months following the end of your accounting period to submit the Advance Notification form i.e. 30 April 2024 the deadline will be 31 October 2024. HMRC must be notified on a prescribed notification form and contain a summary of the high-level planned activities. As professional advisors specialising in the sector, we can act on a client’s behalf and submit the notification. Failure to either submit the Advance Notification Form or submit your R&D Claim (using HMRC’s Additional Information Form – AIF) within the claim notification period i.e. by 31 October 2024, will render the claim invalid. Any tax adjustment made in the CT600 in relation to the invalid R&D claim will be subsequently removed by HMRC. Anomalies to the rule Whilst many existing R&D claimant companies may believe they are exempt from the Advance Notification requirement due to making year-on-year R&D claims, there is an interesting aspect of the legislation, which hasn’t yet been updated on HMRC’s guidance and may catch you out! Put simply – if your last R&D claim was made for an accounting period that commenced before 1 April 2023 and was submitted by way of an amendment i.e. it didn’t form part of the original submission after 1 April 2023, then you may need to make an advance notification submission. For example, if you have a 30 June 2023 year-end, and your R&D claim was submitted by way of amendment in July 2024 – this would not ‘validate’ the 3 year requirement, and you would need to consider the R&D submissions made in the previous years. The rules are complex - it is therefore imperative you review this requirement and seek professional advice.

Get in touch with our Practice Portfolio team if you would like to discuss.