If You Haven’t Claimed R&D Tax Relief Yet This is a Key Date for Your Diary
From 1st April 2023, companies will need to inform HMRC in advance if they plan to make an R&D claim. They will need to do this using a digital service within 6 months of the end of the period to which the claim relates.
Thankfully, there is a key exemption to the pre-notification requirement. Companies that have claimed in one of the preceding three accounting periods will not need to pre-notify. This is welcome news for all companies which have claimed R&D tax relief in a recent accounting period.
Despite this, the impact of the new changes cannot be overstated for companies which have not previously made a claim for R&D tax relief (or have not claimed in the last 3 years). Under current rules, a company is often able to make a claim for the previous two accounting periods by taking advantage of the statutory right to amend a tax return up to 12 months after the filing deadline. For example, at the time of writing*, a company with a 31st of December year-end:
- Could feasibly make a claim for the 31st of December 2020 period, as well as the more recent 31st of December 2021 period.
- The deadline for a 31st of December 2020 claim would be the 31st of December 2022 (i.e. 12 months after the statutory filing deadline of 31st of December 2021).
Under the new rules, and assuming the company had not made a claim in any of the preceding 3 accounting periods, the company would not be able to make a claim for 31st of December 2020 as it would not have pre-notified HMRC of its intention to claim. In addition, a claim for the 31st of December 2021 period would also be denied as the pre-notification rules dictate that notification must take place within 6 months of the end of the accounting period in question. This would therefore mean the deadline for notifying HMRC of a claim for 2021 would be the 30th of June 2022 – a date which has now passed. This is despite the fact that the statutory deadline for filing a return for the 31st of December 2021 has not passed.
What do the new R&D tax relief rules mean for potential claimants?
The pre-notification rules mean that companies who intend to make claims for a prior accounting period must take action before the 1st of April 2023. After this date, previous accounting periods will fall out of the window for making a claim. Therefore, it’s imperative that companies who are planning to make a claim take immediate action. At Raffingers, we can advise on the various timing issues which will be presented as a result of the forthcoming changes.
The message is clear. If you’re thinking of making a claim and haven’t made a claim in the last 3 years, act now. Contact us by clicking here.
*time of writing is November 2022