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Prenotification still an important consideration under Merged R&D Scheme

3rd May 2024
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What do claimants and R&D advisors need to know about prenotification under the Merged R&D Scheme?

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If you work in R&D tax relief, you might be familiar with the numerous compliance measures that HMRC has implemented over the past couple of years. One of the major changes in 2023 was the requirement to notify HMRC in advance of a claim. 

HMRC introduced prenotification so that they could get a better idea of where claims were coming from, engage with weak sectors, and prevent ineligible claims being made in the first place. That goal continues alongside other measures, so this is one requirement that hasn’t changed with the introduction of the new Merged R&D Scheme.

Unfortunately, the way it’s laid out in the legislation is difficult to understand in theory and to apply in practice. This is why we’ve created a Prenotification Calculator to save you a lot of time and frustration trying to apply it to your claims.

Of course, you might want to understand the ins-and-outs of how to actually work it out. Especially if your clients start asking questions, a clear explanation comes off better than a stilted recital of HMRC’s legislation. Our free course - An Advisor’s Essential Guide to the Merged Scheme – walks you through prenotification in more detail and demonstrates straightforward methods of working out whether you need to prenotify HMRC about a particular claim.

A quick guide to prenotification of R&D tax relief

The course uses videos and quizzes to thoroughly explain prenotification, but here’s a quick overview of the essential points to consider:

  • First and foremost, you don’t need to notify HMRC before any R&D is attempted, only that your client is intending to make an R&D tax relief claim. 
  • Prenotification is only required for claims with accounting periods beginning on or after 1 April 2023.
  • If the company has submitted a claim within three years of the end of the claim notification window, they don’t need to prenotify. However, there are some exceptions to this, which we cover in our free course on the Merged Scheme.

Ultimately, prenotification is a small part of HMRC’s reworked approach to compliance, and you’ll need to make sure you’re up to date with the other changes so that your work goes smoothly. Our previous article in this series has more details: Has HMRC’s approach to compliance changed under the Merged R&D Scheme?