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Do your clients need to give advance notification on R&D tax claims?

Author: Tom Mason

If you have clients which are submitting R&D tax claims for the first time or after a period of not doing so, then they might need to give HM Revenue & Customs (HMRC) advance notice.

This is something you’ll need to discuss with clients well in advance of the Company Tax Return deadline for the year in which they wish to claim R&D tax relief.

Advance notification is a new measure put in place by the Government to reduce the opportunity to submit last-minute, incomplete claims.

It also emphasises R&D tax relief as part of a long-term strategy and encourages businesses to think carefully about when and whether to claim for R&D they carry out.

Should your clients submit a notification?

Advance notification is only required if your client is:

  • Claiming for the first time for accounting periods beginning on or after 1 April 2023
  • Claiming for the first time in more than three years since the last date of the claim notification period.

Clients will also need to submit a claim notification for two consecutive accounting periods if their previous claim was submitted in the last six months of the Company Tax Return amendment window.

When to submit?

When your clients will need to submit their advance notification depends on the length of their accounting period.

The form must be submitted between the first day of the accounting period in which R&D costs are incurred, and six months after the end of the accounting period.

Can you notify on their behalf?

You can act as a representative of your business clients and notify HMRC of an intent to claim on their behalf – but you’ll need all of the following information to do so:

  • Their Unique Taxpayer Reference (UTR)
  • The accounting period start and end date for the period for which they’re claiming relief
  • Start and end dates for the period of account
  • A senior internal R&D contact who is responsible for the claim
  • A summary of the high-level details of the project – although this does not need to include evidence.

Does advance notification affect your clients’ claims?

A common concern that we encounter is whether advance notification forms are assessed in the same way as R&D tax claims, particularly whether they are subject to the same level of scrutiny and investigations.

The advance notification form is not subjectively assessed for eligibility in the same way that claims themselves are.

Instead, they are objectively assessed for inclusion of the correct information. Your client will then be given a reference number which will be tied to any claims they decide to pursue.

Ultimately, the only element of the advance notification form which will affect your clients’ eligibility to claim R&D tax relief is whether or not it is submitted on time and with the correct information.

For advice on your clients’ R&D tax claims and support with advance notification, please contact a member of our advisory team today.