Advanced notification of R&D tax relief claims—a clarification

HMRC recently published an updated version of their draft guidance covering the changes that came into force on the 1st April 2023. Most of the updates to this guidance were made as a result of a previous consultation, making the guidance clearer and easier to use.

However, one section had R&D tax advisors scratching their heads—HMRC had inserted a clause into a section describing which companies need to supply a claim notification that made no sense to anyone!

Current wording of the guidance

Customers need to supply a Claim Notification if:

• You’re claiming for the first time
• You’ve claimed for the previous accounting period, but you did not submit that claim until after the last date of the claim notification period (the claim notification period ends 6 months after the end of the period of account)
• Your last claim was made more than 3 years before the last date of the claim notification period

The first and last clauses were as expected, but the second clause is new and seems to suggest that any company that submitted a previous claim outside of the six month window for notification would have to submit a claim notification, contradicting the final clause and meaning that almost all claimants would have to notify HMRC.

Given that this seems to go against HMRC’s expressed intentions, we sought clarification from the RDCF, and were glad that we did!

RDCF clarification

First of all, HMRC stated that any company that has claimed within the three years prior to the end of the notification period for the claim in question does not have to notify HMRC, regardless of the submission date of their previous claim.

Secondly, HMRC clarified that the second clause only applies where a company is claiming for the first time or hasn’t claimed in more than three years, and is claiming for two successive claim periods. In these circumstances, if the claimant company submits the first claim to HMRC during the notification window for the second of these successive claims, the company does not have to notify HMRC of their intention to claim for the second year.

We’re pointed out to HMRC that the wording of this section needs work, and they’ve committed to updating it before it is fully published.