Do I Need to Pre-notify HMRC That I Am Intending to Make an R&D Claim?

In this edition of our R&D Tax Talk, Raj Ghose, Manager, R&D Tax Analysis at Ryan, shares his insight into HMRC’s new requirement for R&D tax relief claims.

Do I Need to Pre-notify HMRC That I Am Intending to Make an R&D Claim?

HMRC now requires you to notify them of your intention to make an R&D claim for every tax return period starting on or after 1 April 2023 (unless exempt), within six months of the period end date. As this is a brand-new requirement, it is likely it will catch many companies and their accountants completely unaware, like the introduction of the additional information form (AIF) in August 2023.

However, unlike omission of the AIF, which can usually be rectified within standard deadlines, failure to complete a claim notification when required is potentially a real unexpected cliff edge – likely to result in permanent loss of opportunity to claim, because of the much tighter deadline.

Why Do I Need to Notify HMRC in Advance? 

Legislation has been passed that allows HMRC to remove R&D claims submitted without appropriate notification or exemption unless the claim itself is submitted within the claim notification deadline.

The two-year deadline for amending corporation tax returns remains for submitting the actual claim, so long as you have notified by the claim notification deadline or are exempt.

What Companies Must Give Advance Notification?

Any company that has not made a claim before will need to notify by the claim notification deadline. There are some exemptions that allow companies who have submitted eligible claims (based on the submission date of the R&D claim to HMRC), within three years of the claim notification period deadline, not to notify. However, this exemption does not include all claim submissions.

How Do I Know If I Am Exempt?

Any company that has made a R&D claim submission to HMRC in the three years before the claim notification deadline for the period being reviewed may consider the submission as part of the exemption if:  

  • The claim submission was made before 1 April 2023, or
  • For claim submissions made after 1 April 2023, it was
    • Made as part of the original tax return submission or
    • For a period starting on or after 1 April 2023

As the exemption rules are complicated, we recommend talking to an adviser as early as possible when considering undertaking an R&D project. If your company does not get timely advice on claiming R&D tax relief, it could miss the claim notification deadline and lose out.

How Do I Notify HMRC?

Where notification is required, this is done using the claim notification form (CNF). The CNF is an online form submitted within six months of your accounting period-end (for periods beginning on or after 1 April 2023) to notify HMRC in advance that you intend to make an R&D claim. It needs to be completed for each accounting period and applies only to the accounting period it is submitted for.

If the CNF is submitted within the deadline, this then allows you to submit your R&D claim within the normal statutory deadline for corporation tax return amendment. The CNF includes business information such as the Unique Taxpayer Reference and the main senior internal R&D contact in the company who is responsible for the claim, as well as a summary of the high-level planned R&D activities.

What If I Do Not Then Go on to Submit an R&D Claim?

HMRC states that you do not need to do anything further if you decide not to continue with your claim. Therefore, if you think you are completing R&D (in at least the normal business sense of the term) and are approaching the notification deadline, it may be worth first submitting a notification and then validating the claim later against the full requirements of the R&D tax legislation.

What If I am Unsure if a CNF Has Been Submitted, or Submitted Correctly?

Because it is vital that you provide advance notification for all relevant R&D claims (unless exempt), it is better to submit another CNF to ensure you have notified, if unsure (for example, if previously done by a third party who did not forward you the HMRC confirmation). There is no restriction to just submit one, and no requirement to amend it if the nature of the final R&D undertaken is different to that originally notified.

If you are considering working with an R&D tax relief specialist to help navigate the increasingly complex process through which R&D claims are now made, it is important to complete due diligence when researching potential advisers. For example, asking for qualifications/memberships to professional bodies and reading client reviews to try to ensure you work with an extended team that has been fully abreast of the new requirements long in advance of them fully coming into effect.  

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