A company that has not made an R&D claim in the three years ending with its notification deadline, which includes any first-time claimant, must either notify HMRC by that deadline or make the claim itself by then. The deadline is the last day of the six months beginning with the day after the period of account ends. A claim made after it without a notification is not valid. There is no appeal, no discretion and no retrospective fix, however much qualifying R&D took place and even if the tax return amendment deadline is still open.
This requirement applies to accounting periods beginning on or after 1 April 2023, and it is now the single most common way we see genuine claims lost.
Who has to notify HMRC?
Companies that have not made a relevant R&D claim in the three years ending with the notification deadline — measured to the deadline itself, not from today, so a past claim ages out of the test sooner than you might expect. There is also a wrinkle that catches people out: claims made by amendment on or after 1 April 2023 for earlier periods do not count as prior claims for this test, so a company that has claimed before can still find itself caught. HMRC’s guidance tells first-time claimants to submit the notification form; the legislation also lets a claim made by the deadline stand without one, but notifying is the safe course. The full rules are on our claim notification page, and our claim notification checker applies them to your year end in under a minute.
Why are start-ups losing the most?
Because the deadline runs out while founders are, quite reasonably, building. In the early life of a company the attention goes to the product and the technical problems, and R&D tax relief gets considered after the first big development milestone, often when a fundraise prompts a look at ERIS and the cash it returns to loss-making companies.
That early phase is usually where the technical uncertainty was greatest and the qualifying spend was highest. Arrive at an adviser after the notification window has closed on it, and the claimable work shrinks to current and future development, which by then is often iterative rather than fundamental. The claim survives; most of its value does not. For a pre-revenue biotech burning investor cash on its core science, that difference can be a material slice of runway.
What are we seeing in practice?
Matthew Jones: “We have spoken to companies seeking R&D tax credit advice, only to have to inform them that substantial historic R&D costs could not be claimed because notification was not submitted on time. Once the deadline passes, there is no route to appeal and no retrospective fix.
In many of these cases, businesses were working with accountants who do not offer specialist R&D tax credit services and, as a result, would not typically be equipped to advise on this highly specific legislative requirement.
At LimestoneGrey, we support companies from the outset, helping them meet notification obligations and track qualifying activities and expenditure, and providing ongoing guidance throughout the development lifecycle.”
What that involves each quarter is set out on tracking R&D through the year; it is part of our standard engagement, at no extra fee.
What should you do now?
Three actions, in order. Check your position today with the claim notification checker: the answer depends only on your period of account and claim history. If the window is open, notify; it costs nothing and commits you to nothing. And if you are unsure whether your work qualifies at all, resolve that question early too, starting with what counts as qualifying R&D.
The one thing not to do is wait. Every week we speak to a company that assumed the two-year amendment window meant there was time. For first-time claimants, there is a much shorter clock running inside it.
If your year end was less than six months ago and you have never claimed, contact us this week, not this quarter.
Sources
- Tell HMRC you want to claim Research and Development (R&D) tax relief (claim notification) — the six-month notification window and the three-year look-back test.
- CTA 2009 s1042C, s1045A and s1054A — the bar on a claim made after the end of the claim notification period without a notification or a claim in the three years ending with its last day.
- SI 2023/813 (claim notification & AIF regulations) — the statutory content requirements for the claim notification.
This article describes the rules as they stood at the review date above. The rules change: for the current position, start with our guides or talk to us.
