For UK companies engaged in innovative activities, Research and Development (R&D) Tax Relief continues to offer a valuable opportunity to reduce Corporation Tax liability or receive a payable credit. However, recent changes introduced by HMRC have made the process more stringent, particularly concerning the new requirment that some companies must do a claim notification or lose the right to make a claim. Understanding this rule is paramount to ensuring your claim is valid and you don't miss out.
This article focuses on the R&D claim notification requirements in the UK, outlining who needs to notify HMRC, when, and what information is required.
R&D claim notification is a mandatory online form that companies must submit to inform HMRC of their intention to claim R&D tax relief. It's a key part of HMRC's efforts to combat fraud and error within the R&D schemes, by ensuring that only genuine R&D claims are made.
While sometimes referred to as "pre-notification," HMRC prefers "notification" to clarify that it's required before submitting the full claim, but not necessarily before the R&D work itself commences.
When Do You Need to Notify HMRC?
A claim notification must be submitted within the notification period.
Claim Notification Period: This period begins on the first day of your company's "period of account" and ends six months after the end of that period of account.
Notification Deadline: The deadline for submitting the R&D claim notification is therefore six months from the end of your company’s period of account.
Who Needs to Notify HMRC?
The claim notification requirement applies to company accounting periods commencing on or after 1 April 2023. You will need to submit a claim notification form if:
You are making an R&D tax relief claim for the first time. This applies to all new claimants, regardless of company size, sector, or claim value.
You have not made an R&D claim in the last three years counting back from the end of the current year claim notification period (see more below).
You don’t submit your R&D claim before the end of the notification period.
Important Exemptions and Exceptions:
There are nuances to the three-year exemption:
Disregarded Previous Claims: If your last R&D claim was for an accounting period beginning before 1 April 2023, AND it was submitted via an amended tax return on or after 1 April 2023, this claim will not count towards the three-year exemption.
Rejected Claims: If a previous R&D tax relief claim was rejected by HMRC, it does not count towards the three-year exemption, and you will need to notify any new claim.
Group Companies: The notification requirement applies on a company-by-company basis. If you are part of a group, and a new subsidiary undertakes R&D, that specific company will need to notify, even if other group companies have a history of claiming R&D relief.
Accounting Period vs. Period of Account:
An accounting period is the period covered by your Company Tax Return (CT600) and cannot exceed 12 months.
A period of account is the period for which your company prepares its financial accounts and while usually this is 12 months - can sometimes be longer than 12 months.
In most cases, your accounting period and period of account will align and be a 12 month period.
Example: If your company's accounting period runs from 1 April 2024 to 31 March 2025, the claim notification window is from 1 April 2024 to 30 September 2025 (six months after the 31 March 2025 year-end).
Consequences of Missing the Deadline:
Failing to submit a required claim notification form by the deadline will lead to your R&D tax relief claim being invalid for that accounting period. HMRC will simply reject the claim, even if your R&D activities fully qualify.
The notification is made through a standalone online HMRC form. While it's a relatively straightforward form, it vital to ensure accuracy when completing it. You will need to provide:
Company Identification Details:
Company's Unique Taxpayer Reference (UTR)
Company number
VAT registration number (if applicable)
PAYE reference (if applicable)
Standard Industrial Classification (SIC) code
Contact Information:
Name and contact details of a responsible individual from your company (e.g., R&D or finance director) who approves the submission.
Contact details of any agent or adviser assisting with the R&D claim.
Accounting Period Dates:
Start and end dates of the accounting period for which you intend to claim R&D relief. This must match your Company Tax Return.
Start and end dates of the period of account (if different).
High-Level Summary of R&D Activities:
A brief, high-level summary of the planned R&D projects or activities. This is significantly less detailed than what will be required for the full R&D Additional Information Form. You do not need to include technical reports or detailed costings at this stage.
No Obligation to Claim: Submitting a claim notification does not obligate you to proceed with a full R&D claim. If you're unsure whether your activities will qualify, it's generally safer to submit the notification to protect your ability to claim later.
Separate from Additional Information Form (AIF): The claim notification is distinct from the Additional Information Form (AIF), which is also mandatory for all R&D claims submitted from 1 August 2023. The AIF requires much more detailed information about your R&D projects and expenditures and must be submitted before or on the same day as your Company Tax Return containing the R&D claim.
Confirmation: After submitting the notification, HMRC will send a confirmation email with a unique reference number. Keep this safe, as you will need it when you submit your full R&D claim and for any correspondence with HMRC. You will also need to mark box 656 on your Company Tax Return to indicate that you've submitted the notification.
Staying Compliant and Maximising Your Claim
The introduction of these claim notification rules is a clear signal from HMRC that they are increasing scrutiny on R&D tax relief claims. While it adds an extra layer of administration for new and infrequent claimants, it's a critical step that cannot be overlooked.
By understanding and adhering to the R&D claim notification rule, UK companies can safeguard their access to the valuable government RDEC incentive and secure additional funds to drive their innovation.