The below has been updated for the changes made to the form.
The Spring Budget 2023 on Wednesday 15 March announced that the Claim Notification for Research and Development (R&D) Tax Relief Scheme will go live as of 1 August 2023.
With this proposal, HMRC are aiming to tightening up compliance measures, the outcome they are hoping for is fewer fraudulent claims. The below outlines everything you and your company needs to know regarding the Claim Notification.
Who this will impact
If you fit into either of the following groups, you will need to supply a Claim Notification:
- First time R&D claimants, or
- R&D claimants who have not made an R&D claim in any of the previous three calendar years.
- The last claim the Company submitted was an amendment to a tax return for a period beginning before 1 April 2023, but the amended return was submitted after this date.
Therefore, companies that have continuing R&D will not be affected, unless this has been done via your advisor completing an amended return. Whereas those not already claiming or have not claimed in any of the previous three calendar years, will need to action this as early as possible, following the end of the accounting period the company intends to claim for.
The time limits for submitting the pre-notification that will be in place are as follows:
- The earliest date is on the first day of the accounting period to which the claim relates – i.e. the first date of your accounting period.
- The latest date is six months after the end of the period of account that includes the relevant accounting period – i.e. 6 months after the end of your accounting period.
The Claim Notification is made for a period of account and will cover any accounting periods that fall within that period of account. This means that if a company’s accounting period changes, or they decide not to claim until a later account period, they may need to submit a new Claim Notification form. For example, a long period of account will only require one notification to be made, and this also does not mean that a company must submit a return. Rather, this is a process to ensure that a claim can be made if a company intends to.
What’s required?
As it currently stands, companies are required to provide details on the following:
- The Unique Tax Reference (UTR) number of the company;
- Contact details of main internal R&D contact at the company;
- Contact details of any agent involved in the R&D claim and agent reference number;
- Period of account start and end dates, which must correlate with your tax computations; and
- Start and end dates of the accounting period that you will be claiming R&D Tax relief.
Will this help to cut fraud on claimants that are not eligible?
This is yet to be determined – the fact that you will need to notify HMRC of any potential claims may deter fraudulent companies and agents from submitting R&D claims. Provided HMRC use the data collected, this could help them to pro-actively target fraudulent claims before they are even submitted.
As it currently stands, however, the level of information required is limited, so it is unclear how HMRC will utilise this data. There is also concern that the time limits may stop any new, genuine claimants from making an R&D claim, due to the forward planning required to ensure that they have notified HMRC that they are potentially eligible for relief. R&D Tax is a Corporation Tax deduction first and foremost. Per tax law, you have one year to prepare your tax return and a further year to amend it, should you wish. This notification requirement goes against this, and there will be genuine claims that miss out because of the new requirement.
With all this change and potentially even more to the R&D schemes, it is always a good idea to gain further advice and clarity on the situation.
Feel free to reach out to rdtax@ct.me to make this process as smooth as possible.
