Advanced Notification form Goes Live
There has been a raft of R&D tax relief changes over the last twelve months and one such change is the requirement to give HMRC advanced notification of an R&D claim.
Please note that the Advanced Notification form became live yesterday on Tuesday, 8 August 2023.
For accounting periods beginning on/after 1 April 2023, R&D claimants are now expected to submit an Advanced Notification form within 6 months of the year-end if:
- They’re claiming for the first time.
- Have claimed for the previous tax year, but did not submit that claim until after the last date of the claim notification period (the claim notification period ends 6 months after the end of the period of account).
- The last claim was made more than 3 years before the last date of the claim notification period.
Where a company has failed to submit an advanced notification form, the right to claim R&D relief for that period will be removed. In such instances. Companies will have 90 days to appeal by sending written representations to HMRC for consideration.
The information required to complete the form is straightforward and includes: the company’s UTR, main officer at the company responsible for the R&D claim, agent details, accounting period, high-level overview of the project(s).
Next Steps
It is important that all companies that meet the Advanced Notification requirement must notify HMRC within 6 months of the accounting year-end. This is for accounting periods beginning on/after 1 April 2023.
Changes from 1 April 2023
Whilst HMRC have introduced two additional categories of qualifying expenditure (data licences and cloud computing costs) where the costs of these items directly contribute to the resolution of the uncertainty, the main changes concern the rates of relief and the introduction of the Advanced Notification form.
Rates of Relief
The R&D rates were reduced in the Autumn statement as follows:
- SME rate reduced from 130% to 86%
- SME payable tax credit reduced from 14.5% to 10%
- Introduction of R&D Intensive SME’s (specifically loss-making SMEs) – where a company’s R&D expenditure exceeds 40% of its total expenditure
- RDEC (large company) rate to increase from 13% to 20%
In practice, for SMEs this is a significant reduction – previously the effective tax relief on qualifying expenditure was between 24.7p and 33.35p – this now ranges between 16.34p and 22.79p.
For claimants under the RDEC scheme, the effective rate has increased from 10.53p to 15p. This is no coincidence as HMRC gradually moves towards a single scheme based on the RDEC principles.
Changes from 8 August 2023 (previously 1 August)
The Advanced Notification form will become live from 8 August 2023.