The R&D tax credit scheme has long been a valuable incentive for businesses investing in innovation. But with a significant wave of reforms over the past two years, staying compliant has become more complex than ever. Included these changes, is the introduction of HMRC’s pre-notification requirement, which applies to accounting periods beginning on or after 1 April 2023.

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What Is HMRC’s R&D Pre-Notification Requirement?

Under the current legislation, companies must formally notify HMRC of their intention to submit an R&D tax credit claim within six months of the end of the accounting period in which the R&D took place.

For example, companies with a 31 March 2024 year-end would have needed to submit their pre-notification by 30 September 2024 to remain eligible for a claim.

This requirement presents a challenge, particularly for businesses who may not be up to date with their R&D claims or who are still in the process of submitting earlier claims.

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Why does pre-notification matter?

If your company is required to pre-notify and fails to do so within the six-month window, HMRC will invalidate the R&D claim, treating it as an “error” on the return. This can result in the loss of the entire relief for that period, regardless of whether the work qualifies.

In other words, failing to meet this administrative step could completely negate the benefit of your R&D activities for that year.

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What businesses need to Pre-Notify HMRC?

Your company must submit a pre-notification if it falls into either of the following categories:

• You are claiming R&D tax credits for the first time
• You have not submitted a relevant claim in the three years prior to the end of the claim notification period

These rules are not as straightforward as they may seem. Assumptions about exemptions can be risky, and the criteria for who is required to notify can be easily misinterpreted without proper guidance.