The complexity of the UK R&D tax relief scheme has been a source of confusion and befuddlement for many claimants. HMRC’s decision to introduce pre-notification requirements has only muddied the water further. Not least, it would seem, for the UK tax authority, itself.

HMRC has recently acknowledged that its guidance regarding claim notifications available from 8 September 2024 until 17 October 2024 as well as information delivered at an R&D tax forum session during that September was incorrect.

The pre-notification is required for all claims related to accounting periods beginning on or after April 1, 2023. At the time the requirement was introduced, there was a lack of clarity for companies with year ends still within the 2-year amendment window.

HMRC falsely reassured claimants, with accounting periods prior to 1 April 2023, but who amended their claim after that date, would not need to comply with the pre-notification requirement. In fact, this was not true. The legislation states that any such amendments of a submitted claim will not count for pre-notification purposes.

As an act of good will to rectify the error, an amnesty for pre-notification submission will be applied to claims that meet two conditions. These are:

• The amendment in the corporation tax return was for a valid claim related to an accounting period beginning before 1 April 2023 and was submitted between 1 April 2023 and 30 November 2024, and
• It concerns the accounting period with a claim notification period ending between 8 September 2024 and 30 November 2024.

If both conditions are met, then pre-notification will not be required.  In all likelihood, though, very few claims will be affected by the mishap.

It is, nonetheless, welcome that HMRC has not only provided greater clarity on the topic but will permit dispensations for affected claimants.

Apart from aiding the tax authority in managing its processing of claims, pre-notification should help identify and prevent fraudulent claims earlier on in the claim journey.  Furthermore, it supports greater compliance by increasing awareness of the requirements at the outset of R&D projects and encourages more timely submissions and better record-keeping for claimants.

Ultimately, the measures do go some way to ensuring that only genuinely innovative R&D benefits from the relief. And that can only be a good thing.

If you are unsure about any aspect of pre-notification, we can help:

✅  We will walk you through the requirements, explaining its impact on you, your projects and claims.

If you have any questions relating to R&D tax relief or wish to discuss the implications of recent changes to the R&D tax relief scheme on your claims, please get in touch with ABGi. A team member will get back to you to discuss your unique needs and explain how we can assist.