Pre-notification for R&D Tax Relief: What is it and who needs to notify?

What is pre-notification?

For accounting periods beginning on or after 1 April 2023, companies may need to submit a claim notification form to HMRC in advance of making a valid R&D claim. The pre-notification applies to all R&D schemes, including the enhanced R&D intensive support (ERIS), old SME scheme, RDEC and merged RDEC schemes.

Generally, companies will not need to pre-notify if they have made an R&D claim within the last three years of their notification period, although there are exceptions where HMRC have rejected historic claims or these have been made via amendment of the company’s tax return.

Many companies with a history of claiming R&D tax relief may not be affected, however it is important to be aware of the requirements in order to avoid unexpected complications with future claims.

Who needs to pre-notify?

Companies planning to claim R&D tax relief or expenditure credit for accounting periods beginning on or after 1 April 2023 must submit a claim notification form if they:

Are claiming for the first time, or
Have not claimed within the past three years before the last date of the claim notification period.

There are also important exceptions for companies which have previously claimed R&D tax relief. These include where HMRC has rejected previous R&D claims or R&D tax relief was claimed for an accounting period beginning before 1 April 2023 via amendment of the company tax return and received on or after 1 April 2023.

The above circumstances would require pre-notification or the R&D claims for periods beginning on or after 1 April 2023 to be filed by the end of the claim notification period.

How and when to pre-notify

If pre-notification is required, this must be submitted via HMRC’s online form within the company’s claim notification period, which:

Starts on the first day of the period of account (see definition below)
Ends six months after the end of the period of account

Failing to pre-notify within six months of the end of your accounting period will result in the R&D claim being invalid.

To complete the R&D claim notification form, you will need:

The company’s unique taxpayer reference (UTR)
Contact details for the main senior internal R&D contact, e.g. a company director
Contact details of all agents involved in the R&D claim
Accounting period start and end date
Period of account start and end date
Summary of the high-level planned R&D activities

Definitions

Accounting period is the time covered by your company tax return, which cannot be more than 12 months.

Period of account is the time covered by the company’s financial statements, which could be longer than 12 months.

Example

A company’s period of account and accounting period for the year ended 31 March 2024 (12 month period) would be from 1 April 2023 to 31 March 2024.

The first date of the claim notification period is 1 April 2023. The last date of the claim notification period is 30 September 2024, i.e. Six months after the period of account.

What does pre-notification mean for companies?

The introduction of pre-notification adds an additional compliance consideration to the R&D claim process and is particularly relevant to companies claiming for the first time or irregularly.

The requirements can be complicated where companies change their period of account, are affected by an exception or are not aware of the requirements in advance of making a claim.

We would therefore recommend consulting with your tax advisor in good time to ensure compliance with the requirements and to clarify any queries regarding the pre-notification process.

In summary, HMRC’s pre-notification requirements reflects the Government’s commitment to enhancing the schemes’ integrity and efficiency. Businesses should review their recent R&D claim history and submission methods to determine whether pre-notification applies. For those affected, adhering to the claim notification period is critical to avoid missing out on R&D tax relief benefits that can contribute to continued innovation and growth.

This post was written by Gemma Thake, Tax Partner at Price Bailey. If you have any questions on the above or would like assistance with pre notification, please contact Gemma using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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