Since the new rules have come into play, Companies claiming research and development (R&D) tax relief now need to submit details in advance making it harder to backdate claims.

In 2023 HMRC introduced a requirement which means that companies have to advise in advance if they are planning to make a claim for R&D tax relief.

The new advanced notification rule applies to claim periods beginning on or after 1 April 2023, meaning that accountants now need to be familiar with the timing of when to notify HMRC.

There are also some new complex rules around how and when a company might be exempt from notification and therefore it is so important to be talking to an accountant as soon as you can. Here at Kennedys Accounting we have specialists who can talk you through the requirements and how to proceed.

HMRC have given their rationale to changing this process ‘…..if they know where claims are going to come from, they can do more to work with companies before the claims are made….’ a concept they are calling ‘upstream compliance.’

However, the problem is that it makes it harder to claim R&D on back-dated claims for work completed previously without considering it to be R&D for tax purposes at the time.

It seems that when R&D enquiries are being made by HMRC they are expecting the claimants to demonstrate that their R&D projects were planned and documented and led by competent professionals who knew the work undertaken was an attempt to advance science or technology in their field of expertise.

Claim notification to HMRC therefore adds another level for HMRC to restrict R&D claims only to companies who are doing qualifying R&D.