Businesses should not lose R&D tax relief over administrative oversight

The Government announced at this week’s Budget that the R&D claim notification form will be removed from 1 April 2027. Currently, certain companies, including those which have not previously claimed R&D tax relief, must notify HMRC in advance that they intend to make a claim. The notification must generally be made within six months of the end of the accounting period to which the claim relates.

The ATT welcomes the ending of this pre-notification requirement, as it has created an unnecessary hurdle for businesses undertaking genuine R&D, with companies potentially losing tax relief to which they would otherwise be entitled simply because the notification was not made on time.

Jon Stride, chair of the ATT’s Technical Steering Group, said:

“We are pleased that the Government has decided to remove the R&D claim notification form.

“Businesses carrying out genuine qualifying research and development should not lose the opportunity to claim tax relief simply because they have missed an additional administrative deadline.

“The notification requirement is relatively new and can be particularly problematic for businesses making an R&D claim for the first time. These are precisely the businesses which may be less familiar with the detailed requirements of the R&D regime and therefore less likely to realise that they have to notify HMRC before making their claim.

“Removing this requirement is a welcome simplification which should reduce the risk of businesses undertaking genuine R&D missing out on relief because of an administrative oversight.”

The ATT says it supports measures designed to prevent error and fraud in R&D tax relief, but believes compliance measures need to be proportionate and targeted at identifying claims which are incorrect rather than creating unnecessary barriers for legitimate claimants.