To help tackle abuse and non-compliance of the R&D tax relief scheme, HMRC has added a few more steps to the claim process: claim notification and additional information forms. These concern all claim types: SME, RDEC and hybrid.
Both forms went live for accounting periods starting on or after 1 April 2023, but the additional information form won’t be formally accepted until 1 August 2023 – forms submitted before then can be done on a voluntary basis. There are a number of conditions to consider before each form is submitted, so for further information, it is wise to check HMRC’s guidance.
Businesses making their first R&D claim or who have not claimed in the past 3 calendar years will need to submit a Claim Notification for accounting periods starting on or after 1st of April, 2023. The business will have six months from the end of the accounting period they wish to claim tax relief for to submit a Claim Notification. Meaning, companies will need to plan ahead if they want to be eligible to make a claim which could potentially hinder companies new to the scheme.
The form will require basic information about the business, such as accounting periods you’re planning to claim tax relief for, the company’s UTR number and an overview of the R&D projects. Keep in mind that the character limit for details of R&D projects is only 10,000 characters – between 1,500 and 2,500 words, however, as it is only a notification form and not the claim itself, the above word limit should be sufficient.
The form also asks to include details of a senior internal R&D contact in the company who will be responsible for the claim, contact details of any agent involved in the claim and a summary of planned activities and how these meet the standard definition of R&D. Evidence and further detail of these aren’t required at this stage, but will be needed on the additional information form.
Both of these forms are in addition to the usual technical and financial narratives claimants submit to HMRC for R&D tax credit relief, and their completion and submission take place early on, pushing companies to be mindful of the R&D tax relief process relative to their qualifying efforts both earlier and holistically. Without the claim notification form, the claim will not be valid.
Addressing errors and fraud within the R&D tax relief scheme influenced a large majority of the above changes. With the introduction of the pre-notification period, businesses will require to be a lot more mindful of how they conduct their R&D activities. However, the six-month grace period from the end of the accountancy period should be helpful to minimise how many businesses miss the notification period.
If you have questions about the R&D tax relief changes that have come into effect from April 2023, please reach out to us and we will try to help.