R&D tax claim notification - do I need to act now?

New advance notification rules have taken effect for companies claiming Research & Development (‘R&D’) tax relief.

Companies wishing to claim R&D tax relief for accounting periods beginning on or after 1 April 2023 have to submit an Advance Notification Form (ANF) if:

• claiming R&D tax relief for the first time, or
• the last claim was made more than 3 years ago.

What is the ANF?

Targeted at improving engagement and pro-activity by potential claimants of R&D Tax Relief, HMRC has updated its requirement that some companies must now submit an ANF before a claim is made. 

The ANF requires the claimant to provide HMRC with outline information and to notify their intention to make an R&D claim for the period.

Why is an ANF critical?

Where a company is required to file an ANF (see below for further details on when this is, or is not, required) and does not do so, the R&D Tax Relief claim for that period will be invalid and rejected by HMRC. Therefore, if the company has not filed an ANF at all and the notification window has closed, the company will lose the ability to claim R&D Tax Relief for that period altogether.  

As such, this is a critical call to action for all companies who might have an R&D claim to consider this now and (where appropriate) file an ANF.  

Moreover, this is now a key rolling tax deadline and companies need to be thinking about any potential R&D claims they may wish to make as their ANF deadline approaches.

When is an ANF required?

There are two key situations in which an ANF will be required by a company if they intend to make an R&D Tax Relief claim:

1. If the company has never submitted a claim for R&D Tax Relief before or;
2. If the company has not submitted an R&D Tax Relief claim within the last three years.

To determine if an ANF is required, the window is the three years ending on the ANF window closing date. 

If the company has previously submitted a claim via an original corporation tax return within this three-year window, the company will not be required to file an ANF for that period. 

It is important to note that when assessing filings made in the three-year window, not all submissions are counted. For example, if you claimed R&D tax relief for an accounting period beginning before 1 April 2023 by amending your tax return and the amendment was received on or after 1 April 2023, then this would not count as a claim made in the last three years.

Example

A company has an accounting period from 1 January 2024 to 31 December 2024

This means the company’s:

• first date of the claim notification period is 1 January 2024
• last date of the claim notification period is 30 June 2025 (this is 6 months after the end of the ‘period of account’)

If the company is claiming R&D tax relief for the first time, it must submit the claim notification form between 1 January 2024 and 30 June 2025.

If the company has claimed R&D tax relief previously and its last claim was before 30 June 2022 (this is more than 3 years before 30 June 2025) it must either:

• submit the claim notification form between 1 January 2024 and 30 June 2025
• send the claim on their Company Tax Return or as an amendment to the return so it’s received by 30 June 2025

So, what is involved in filing an ANF?

Either the company or its tax / R&D agent can file the ANF.

This is submitted online and provides HMRC with some initial information about the company and the claim, including;

• The company’s Taxpayer Reference Number;
• Details about the Senior R&D contact within the company;
• Agent details for any agent involved in the R&D claim;
• The accounting period that the potential claim relates to; and
• Details about the number of projects expected to be included in the claim and some initial information, to help demonstrate that they meet the standard definition of R&D. 

This will ultimately assist HMRC with assessing the risk of these potential future claims.

Does an ANF need to be filed every year?

An ANF will only be required where the company does not have any previous claims in the relevant three-year window that meets the ANF filing exemptions. 

Therefore, companies will need to assess on an annual basis whether they are required to file an ANF for the upcoming accounting period or not. 

Additional Information Form

As a reminder, the Additional Information Form (‘AIF’) is also a requirement for all R&D Tax Relief claims. 

The ANF does not replace the AIF requirement – the AIF is required for all claims submitted, whereas the ANF is only required in the circumstances laid out above. It is therefore important for companies to remember that in some cases, they will have both of these filing requirements to complete prior to filing an R&D Tax Relief claim. 

Summary

In summary, companies should take careful consideration as to whether they will be required to submit an ANF to be able to file a valid R&D Tax Relief claim. 

Contact us

If you have any questions regarding the ANF requirement or anything else related to accessing the benefits of R&D Tax Relief, please feel free to contact a member of our R&D Innovation Team.