In the past 2 weeks, we have unfortunately had to inform 2 companies that they are not eligible to file an R&D Tax Credit claim for their accounting period ending 31st March 2024. This is on the basis that they were considered first-time filers. They did not file the required notification with HMRC within 6 months of the end of their accounting period or in this case 30th September 2024.
R&D Tax Credit Notification
As a reminder, both first-time filers of an R&D Tax Credit claim and companies that have not filed an R&D Tax Credit claim in the past 3 years. (That is 3 years prior to the last day of the notification period) must file a notification with HMRC. This must be within 6 months of the end of the accounting period to which the R&D Tax Credit claim relates.
In one case, the company thought they had 2 years in which to file an R&D Tax Credit claim. While this is true, you must still file a notification if you are a first-time filer within 6 months of the end of the accounting period. You can not file an R&D Tax Credit claim for that accounting period if you do not file the notification. Also, keep in mind the tax period can not be longer than 12 months where the financial year is longer than 12 months.
Example HMRC provides:
A company’s:
- period of account — covers 1 January 2024 to 31 December 2024
- accounting period — also covers 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. They 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 their last claim was before 30 June 2022. (This is more than 3 years before 30 June 2025) they 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
In another case, the company had filed an R&D Tax Credit claim within the past 3-years dating back from the end of the notification period. The company therefore felt they were exempt. Unfortunately, in this case, the only R&D Tax Credit claim that was filed within the past 3-years was for an accounting period commencing before 1st April 2023 and was filed after 1st April 2023. This was way of an amendment to the original corporate tax return filing. In this specific case, the tax law states that this particular filing is ignored as an R&D Tax Credit claim, and not filed within the 3-year notification period.
Notification Requirements
We believe many companies are going to be caught up by the notification requirements. Accounting firms should therefore review all clients making an R&D Tax Credit claim well within 6 months of the end of the accounting period to determine if they need to file a notification.
The rules can be tricky so if you have any questions about the R&D Tax Credit Notification. Please do not hesitate to contact me.