Changing your year end changes how many R&D claims you make and when they are due. A claim is made for an accounting period, and a set of accounts covering more than twelve months is split into two accounting periods for corporation tax: two company tax returns, two claims, two Additional Information Forms and two computations from one set of accounts. The claim notification deadline behaves differently. It is fixed by the period of account rather than the accounting period, so both periods share a single deadline six months after the accounts end — and shortening the accounts moves that deadline earlier, in some cases to a date that has already gone.
Why does a long set of accounts produce two R&D claims?
Because an accounting period cannot run for more than twelve months. It ends on whichever comes first: twelve months from its start, or the date the company makes its accounts up to — and that second date is what a change of year end moves. A set of accounts drawn up for eighteen months therefore contains an accounting period of twelve months and a second of six, and HMRC’s notice to file requires a separate return for each. Company law caps a lengthened set of accounts at eighteen months outside administration, so a long period of account ordinarily produces two accounting periods rather than three. Lengthening also has a cooling-off period: a company that has already extended cannot extend again within five years of the end of the extended period, unless it is aligning with a parent or subsidiary undertaking, or is in administration.
Entitlement to the merged-scheme credit and to ERIS is worked out separately for each. Qualifying expenditure belongs to the period it falls in for tax, so costs have to be cut at the twelve-month line rather than apportioned across the whole eighteen months. Where a project ran through year one and stopped in month fourteen, an even split understates the first claim and inflates the second. Staff time, subcontractor invoices, consumables and cloud costs each need splitting at that line.
The Additional Information Form follows the same rule: one form per accounting period, and HMRC’s guidance is explicit that each form carries only information applying to its own period. Where one accounting period carries both an ERIS claim and a merged-scheme claim on different parts of the spend — the two reliefs can share a period but never the same pound of expenditure — it is still one form, but the expenditure and project sections inside it are completed for each claim separately.
When is the notification deadline for a long or short period?
Six months from the end of the period of account — the period the accounts cover — whatever the accounting periods inside it look like. The window opens on the first day of the period of account and closes six months after it ends. Count the six months from the day after the accounts end, and take the last day: accounts to 30 September give 31 March, not 30 March. Our guide to claim notification sets out the rule and the deadline checker gives you the date; the accounts, not the tax computation, set it.
So a long period of account carries one deadline for both accounting periods, and one notification: a claim for either is protected where the company has already notified, or claimed, for the other. HMRC’s guidance says the same — the form only has to be submitted once. The three-year test that exempts established claimants runs to that same date: the question is whether the company has claimed in the three years ending with the notification deadline, as do I need to tell HMRC before I claim? explains.
Shortening a period of account moves the deadline earlier with it. A company with a 31 December 2026 year end has until 30 June 2027 to notify; shorten that year to 30 September 2026 and the deadline becomes 31 March 2027. Nothing about the R&D work has changed, but the date in everyone’s diary is now three months too late. Company law also lets a company change the date of a period that has already ended, while its filing deadline is still open — so a shortening decided months afterwards can create a notification deadline that has already passed. There is no late notification and no appeal, so this belongs in the decision, before the notice goes to Companies House.
What does a short period do to the intensity test and the PAYE cap?
The 30% R&D intensity condition that opens ERIS compares the period’s relevant R&D expenditure with its total relevant expenditure. There is no annualising or smoothing, and R&D spending is lumpier than overheads. A six-month stub in a quiet development spell puts light R&D against a normal run-rate of everything else, and the ratio can fall below 30% while the twelve-month picture sits well above it.
A stub that fails the test can still be carried by the grace period. It applies where the company obtained relief for its most recent prior accounting period of twelve months’ duration, having met the intensity condition in that period — ERIS, or SME scheme relief for an earlier period, tested on the threshold that then applied. Note where that points: to the last full year, not simply the period before, so a short period in between is stepped over rather than breaking the chain. What a short period cannot do is bank a grace year for the future: the period looked back to has to be twelve months long.
The PAYE cap on payable credits is £20,000 plus three times the company’s relevant PAYE and National Insurance. In a period shorter than twelve months the £20,000 is proportionately reduced, and the PAYE element shrinks by itself because fewer payroll months fall inside the period. A company with a small payroll and a lot of subcontracted work therefore loses headroom at both ends. The credit rate itself is not scaled — the proportionate reduction applies to the £20,000 alone.
What should be settled before the date changes?
Confirm whether the company is inside the notification requirement, then recompute the deadline from the new accounts. Model the intensity ratio for the stub period separately from the twelve-month one. Where a group is aligning year ends, connected companies’ expenditure enters each member’s ratio, so one alignment moves the answer for several companies at once; R&D tax relief in groups covers that. The window for amending a return moves with the period too; backdated R&D claims sets out that runway. R&D tax relief deadlines works a long period and a shortened one through every date they produce.
A change of accounting date is a commercial decision. But the deadlines it moves cannot be moved back.
Sources
- CTA 2009 s9 and s10 — an accounting period begins immediately after the previous one ends, and ends on the first occurrence of twelve months from its beginning, an accounting date of the company, the company starting or ceasing to trade, entering administration and the other listed events.
- Companies Act 2006 s392 — altering the accounting reference date: a notice may shorten or extend the current or the previous accounting reference period, may not be given for a previous period once the filing deadline has expired, may not extend a period beyond 18 months, and is ineffective if given less than five years after the end of an earlier accounting reference period that was extended, unless the new date coincides with that of a UK parent or subsidiary undertaking or the company is in administration; the eighteen-month ceiling is itself disapplied in administration.
- CTA 2010 s1119 — “period of account” means any period for which the person draws up accounts.
- FA 1998 Sch 18 para 5 — where more than one accounting period ends in the period specified in the notice to file, “a separate company tax return is required for each of them”.
- FA 1998 Sch 18 para 83B — a claim must be made by being included in the company tax return for the accounting period for which it is made.
- CTA 2009 s1042B and s1044 — entitlement to the expenditure credit, and to the ERIS additional deduction, arises for an accounting period, on expenditure allowable as a deduction in calculating the profits of the trade for that period.
- CTA 2009 s1142A — the claim notification period begins with the first day of the period of account which is the same as, or within which falls, the accounting period claimed for, and ends with the last day of the period of six months beginning with the first day after that period of account.
- CTA 2009 s1042C and s1045A — the three-year test measured to the last day of the claim notification period, and the exemption where the accounting period claimed for “falls within the same period of account as another accounting period in respect of which the company has made an R&D claim or a claim notification”.
- Tell HMRC that you’re planning to claim R&D tax relief — a period of account longer than twelve months includes two or more accounting periods, “the claim notification period is the same for all accounting periods”, and the form need only be submitted for one of them; with HMRC’s worked example of accounts running 1 January 2024 to 30 June 2025 and a deadline of 31 December 2025.
- Submit detailed information before you claim R&D tax relief — a form for each accounting period claimed; for a period longer than twelve months, one for the first twelve-month period and a further one for the short period; and each form “should only include information that applies to that accounting period”.
- FA 1998 Sch 18 para 83EA — a claim is invalid unless the required information has been provided no later than the date the claim is made or amended.
- CTA 2009 s1045ZA — the intensity condition is determined for an accounting period on that period’s relevant R&D expenditure as a proportion of its total relevant expenditure, aggregating connected companies, with no provision annualising a short period.
- CTA 2009 s1044(2A) — the grace route requires relief to have been obtained for “its most recent prior accounting period of 12 months’ duration”, the condition having been met in that period.
- CTA 2009 s1112B — the cap of £20,000 plus three times relevant PAYE and NIC liabilities for payment periods ending in the accounting period, with the £20,000 proportionately reduced where the period is less than twelve months.
- CIRD183000 — HMRC’s manual on pre-notification, including the same-period-of-account exemption and the definition of the claim notification period.
This page describes the rules as they stood at the review date above, as general information rather than advice on your circumstances. For how that distinction works, see our terms; for an answer on your own facts, talk to us.