In the past few months, the landscape of R&D tax relief claims in the UK has undergone significant changes, in an attempt to tackle abuse and improve compliance.
One of the changes was the introduction of a pre-notification requirement, which means companies must now notify HMRC of their intentions to claim R&D tax relief prior to making the submission.
Visiativ, a professional services and consulting business, offers some valuable advice.
What exactly is pre-notification for R&D claims?
Essentially, it’s a heads-up to HMRC that you intend to submit a claim. If your accounting period starts on or after 1 April 2023 and you haven’t claimed R&D relief in the last three years, you need to let them know within six months of your year-end.
The notification can be submitted by either a representative of the company or an agent acting on behalf of the company. Pre-notification will only apply to new claims or companies that have not yet made an R&D tax relief claim during the three previous years.
What are the risks if you don’t comply?
If the ‘Advance Notification Form’ is not completed, this renders the R&D claim invalid, and if shown in the corporate tax return, it will be removed by HMRC as an “error”. This amendment cannot be rejected, and a new claim relating to the same expenditure as the original claim, cannot be made. For example:
- Company X contacted Visiativ in November 2024, wanting to claim R&D tax relief for year-ends 31st March 2023 and 31st March 2024. The estimated claim benefit was £30,000 for Year 1 and £25,000 for Year 2.
- The year ending 31st March 2023 is not affected because the Pre-notification rules only apply to accounting periods starting on or after 1 April 2023.
- However, the year ending 31st March 2024 is affected because, under the R&D pre-notification guidelines, Company X should have sent pre-notification to HMRC by 30th September 2024 (i.e. 6 months after the end of the accounting period). This resulted in a loss of benefit of £25,000 for Company X.
What’s the bottom line for companies planning their next R&D claim?
The key is awareness and timing. You need to know whether you fall into the category that requires pre-notification — don’t assume you’re in the clear just because you’ve claimed before or you think the new rules don’t apply to you. Working with reputable R&D tax advisors who stay on top of the latest HMRC guidance can be a lifesaver. They’ll run checks for you and guide you through each step of the process, so you don’t fall into these pitfalls.
Contact: Jean McCarthy