If your business (or your client’s business) is claiming, or planning to claim R&D Expenditure Credit (RDEC) or the SME R&D tax credit, it’s crucial to understand the latest rules. Strict deadlines are now in place for notifying HMRC of the intent to make an R&D claim. Missing these deadlines could result in losing out on valuable R&D incentives.
While some companies are exempt from the notification requirement, the details can be tricky—so it’s essential to know where your company stands.
New Requirements for Prenotification for R&D claims
For periods of account beginning on or after 1st April 2023, prenotification to HMRC is required unless the company qualifies for an exemption.
Earlier periods of accounts starting before 1st April 2023 do not require notification but may be relevant for gaining exemption status.
The Notification Process
Notification must be submitted using the form provided by HMRC: Tell HMRC you’re planning to claim R&D tax relief.
Impact of the New Law
If prenotification is required and not made within six months of the period of account end-date, the company loses the ability to claim R&D relief for that period.
This effectively replaces the previous two-year window for filing or amending tax returns with a shorter six-month window to either do the prenotification, or file a tax return with the R&D claim, or confirm exemption.
Filing Within Six Months Avoids Notification
Filing the R&D claim in full within six months of the period of account end-date removes the need for prenotification.
However, this timeline conflicts with standard corporate tax filing deadlines (9 months for accounts, 12 months for tax returns).
Exemption Criteria
Exemption depends on having a qualifying prior R&D claim filed. The prior period to look at is the three years before the notification deadline (i.e. the three years ending 6 months after the period of account end-date).
For example, for a March 2025 year-end, notification is due by September 30, 2025. A prior R&D claim would need to have been filed between October 1, 2022, and September 30, 2025, to qualify for exemption.
This means that exact filing dates and whether the return was an original or amended submission now play a critical role in determining exemption eligibility.
Complexity of Exemptions
One tricky exemption rule exists whereby a claim filed for a period of account starting before 1st April 2023 but submitted after that date as an amended tax return, would not count for an exemption.
Practical Advice
Given the complexity and potential pitfalls, if there is any uncertainty about exemption status or claim eligibility, the safest approach is to notify HMRC within the six months following the relevant period of account end-date.
If you are in doubt about any of these rules get in touch.
Author: Linda Eziquiel, Regional Director, RandDTax
1 thought on “Don’t Miss Out on R&D Tax Credits by NOT Notifying!”
Excellent article! I will implement this RD tax credits knowledge in my own financial services UK business.