New R&D pre-notification requirements

What is pre-notification?

Pre-notification rules form part of HMRC’s ongoing efforts to minimise non-compliance within R&D claims.

Alongside the introduction of the Additional Information Form (a mandatory submission required for all R&D claims filed after 8^th August 2023), HMRC’s steps to minimising error and fraud now require claimants to proactively consider the pre-notification requirements if they intend to make an R&D claim.

Why is pre-notification important?

Applicable to companies with accounting periods beginning on or after 1 April 2023, R&D claimants will need to consider the pre-notification requirements, so as to ensure they are eligible to make a claim for R&D tax relief.

Typically, companies are able to submit R&D claims through an amended tax return in the two-year amendment window running from the end of the relevant accounting period, so the new rules will present the need for a change in processes for some claimants, so as to ensure the opportunity to make an R&D claim is not missed.

Pre-notification requirements – in detail

For accounting periods beginning on or after 1 April 2023, a mandatory pre-notification form needs to be completed by companies which are:

• claiming R&D tax relief for the first time, or
• have not made an R&D claim in the three years before the end of the claim notification period

There is also a transitional rule to be aware of. This states that for the purposes of determining whether a claim has been made within the three-year window ending with the end of the claim notification period, any R&D claims made for an accounting period beginning before 1 April 2023 are ignored if they are included in the company’s tax return only by virtue of an amendment made on or after 1 April 2023. Consequently, it should not be automatically assumed that no CNF is required, particularly if recent claims have been made by way of amended returns only.

Where applicable, the claim notification period runs from the start of the relevant accounting period until 6 months after the end of the accounting period. For extended periods of accounts (featuring two tax accounting periods), the claim notification period will run from the start date of the first 12-month period.

Provided the company has completed the claim notification form or is exempt because it has submitted an R&D claim in the last 3 years (subject to the above transitional rule), R&D claims can then be submitted within the two-year amendment window, as usual.

For companies with 31 March 2024 accounting dates (the first 12-month accounting period under the pre-notification rules), this period will run from 1 April 2023 (the first day of the accounting period) until 30 September 2024.

The importance of submitting your notification in your accounting window

Missing the pre-notification window for a given accounting period will prevent a company from making an R&D claim for that period. Any R&D claims submitted to HMRC without submitting a claim notification form will be treated as errors and will be subsequently removed from the corporation tax return, denying any R&D relief being claimed for the relevant period.

What information is required for the notification form?

To complete the digital claim notification form, the following information will be required:

• The company’s Unique Taxpayer Reference (UTR)
• The main senior internal R&D contact in the company who is responsible for the R&D claim, for example a company director
• The contact details of any agent involved in the R&D claim
• The accounting period start and end date
• A summary of the high-level planned activities to show that the project meets the standard definition of R&D

Who can complete the notification form?

A representative from a company or an agent acting on behalf of the company can complete the notification form.

The form can be accessed through HMRC’s website using a Government Gateway user ID. Agents are able to complete and submit the form for clients by using an Agent Services account.

Once a form has been submitted to HMRC, a company can then submit an R&D claim through their corporation tax return. Box 656 of the corporation tax return must additionally be checked, as to indicate that the claim notification form has been submitted.

The new rules present additional complexity for R&D claimants, so care must be taken to ensure the opportunity to make a claim is not lost.

If a company is unsure if it can make an R&D claim, it is still worthwhile submitting a claim notification form as the company will not be required by HMRC to submit a claim, for example if it later decides not to submit an R&D claim or it finds that the project does not qualify for R&D tax relief.

For advice about completing a pre-notification form or for support on making an R&D claim, please contact Rob Waterhouse.