Advanced Notification – to opt in or not to opt in, that is the question?
First, let’s recap on the rules.
If a client wants to make a claim for Research and Development (R&D) tax relief or expenditure credit for accounting periods beginning on or after 1 April 2023, we need to submit a claim notification form if:
- The client is claiming for the first time; or
- The last claim was made more than three years before the claim notification period notification deadline date for this period.
When assessing the above, it should be noted that a claim for R&D tax relief is not considered to have been made if:
- They claimed R&D tax relief for an accounting period beginning before 1 April 2023 by amending its tax return and the amendment was received on or after 1 April 2023; and/or
- HMRC rejected an R&D claim by removing it from the company tax return.
Time Limits
- The notification must be submitted within 6 months of the year-end in which you wish to make the claim.
- The notification is made online via a new “gForm”.
- If a claim notification form is not submitted, the R&D claim will not be valid.
So, clients who have a 31 December 2024 Y-E, for example, have until 30 June 2025 to pre-notify to HMRC that they wish to claim for this period.
However, if companies have made claims in the past, advisers may be under the impression that the company does not need to pre-notify.
Scenarios
Let’s consider the second rule for a company with a December Y-E who made their previous claim on 31 May 2022. To assess whether a notification is required, you have to look back 3 years prior to the end of the notification window. For a December 2024 Y-E, the final date of the claim notification window is 30 June 2025. The 31 May 2022 submission therefore is more than 3 years prior to the end of the notification window, being 30 June 2022.
This means the 2024 claim is caught by this tricky little rule and the claimant must make an advanced notification by 30 June 2025; otherwise, the 2024 claim is invalid.
Another tricky rule is where an existing claimant submits a previous claim by way of an amendment. This rule catches existing claimants that have submitted previous claims for an accounting period beginning before 1 April 2023, via an amendment after 1 April 2023.
Let’s consider another scenario. A company has a December Y-E. They are preparing to make claims for their Y-E December 2024 and need to check whether they first need to make an Advanced Notification.
Their previous claim for the year ended 31 December 2023 was submitted via an amendment in January 2025. As the claim was submitted via an amendment after 1 April 2023, the previous claim does not class as a claim within 3 years of the notification window and is caught by the rule.
This means the company must either:
- Submit an advance notification by 30 June 2025, or
- Submit the R&D claim via the company tax return to be received before 30 June 2025.
Our advice
Accountants must act now. December, in particular, is an extremely popular Y-E which means many claimant companies could be caught out. Given the complexity of the new rules, it is important that all R&D claimants are reviewed to ensure their ongoing claims will not be invalidated and caught by one of these rules.
We recommend undertaking client reviews to ensure your client portfolio doesn’t fall foul of the rules. It is imperative that companies with ongoing claims are assessed so that there are no surprises and the first the company hears is when the claim is rejected given their failure to make an Advanced Notification.
The Advanced Notification is not an onerous task. It is an administrative task which requires the inclusion of basic company details and an overview of R&D activities carried out in the period.
YesTax is happy to undertake complimentary reviews to ensure your clients don’t miss out.
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