R&D Tax Relief Reform: Are You Ready for the New Rules Affecting Your Business?

With significant reforms in the R&D tax relief landscape, companies and their advisors must stay informed to avoid costly mistakes. The government aims to reduce errors and fraud through R&D claim notification as part of these reforms.

Understanding R&D Claim Notification

R&D claim notification is a new requirement introduced by HMRC to ensure companies intending to make an R&D tax relief reform claim officially notify HMRC. This preemptive step is critical for first-time claimants and those who haven’t submitted claims in over three years.

Shenal Wijetunge, Partner at Dow Schofield Watts Tax Advisory, notes:

“The government’s approach to R&D claims has shifted toward ensuring that only genuine, well-documented research is rewarded. The introduction of claim notifications means businesses need to be proactive in their communication with HMRC”.

Who Needs to Notify HMRC?

For accounting periods starting on or after April 1, 2023, companies must notify HMRC within six months of the end of their accounting period if they fall into one of these categories:

• First-Time Claimants: Businesses claiming R&D tax relief reform for the first time.
• Infrequent Claimants: Companies that haven’t made an R&D claim in the past three years.

You may be exempt from this notification if your business has claimed within the past three years. It’s crucial to calculate the notification period accurately—six months from the end of your accounting period.

Completing the Claim Notification Form

To complete the claim notification form, you’ll need:

• Your company’s Unique Taxpayer Reference (UTR)
• The name of the senior R&D contact within your company
• Contact details of any agents involved in preparing or advising on the R&D claim
• Dates of the accounting period and a high-level summary of planned R&D activities

Incomplete or incorrect submissions can lead to delays, so ensure you have all required information ready beforehand. Once submitted, HMRC will confirm receipt and provide a reference number for future use.

Deadlines and Consequences

Missing the R&D claim notification deadline can have severe consequences. If you fail to notify within six months of your accounting period, you will be ineligible to claim R&D tax relief reform for that period.

For example, if your accounting period begins on April 1, 2023, and ends on March 31, 2024, you must notify HMRC by September 30, 2024. Missing this deadline could result in your claim being denied, even if the R&D work qualifies for relief.

Shenal warns:

“Companies must pay close attention to the six-month notification window. If you miss it, there’s no second chance—you won’t be able to claim R&D tax relief reform for that period, no matter how valid your activities might have been”.

Why These Changes Matter

The changes in R&D claim notification requirements are part of a broader effort by HMRC to ensure the integrity of the R&D tax relief reform scheme. By tightening the rules, the government aims to deter fraudulent claims and reduce errors while continuing to encourage innovation.

In summary, if your company plans to claim R&D tax relief reform for accounting periods beginning on or after April 1, 2023, you may need to notify HMRC well in advance. Failure to do so could result in your claim being denied. Staying informed and preparing early can ensure your business reaps the benefits of this valuable relief without unnecessary setbacks.

As Shenal Wijetunge advises:

“The R&D tax relief reform scheme remains a fantastic opportunity for innovative companies. However, the onus is now on businesses to comply with the new requirements to secure their claims”.

Don’t let these changes catch you off guard. Ensure your R&D tax claims are compliant and successful by contacting Shenal and his team at DSW Tax Advisory.