R&D Claim Notification and the Additional Information Form

A company with a genuine, substantial, well-documented R&D claim can lose the whole thing because nobody filed a short online form within six months of the year end. There is no appeal against the substance, because on HMRC’s analysis there is no claim.

The Trap That Invalidates Good Claims

Most R&D disputes used to be about substance: was there a project seeking an advance in science or technology, and was there scientific or technological uncertainty? Those arguments still happen. But a growing proportion of claims now fail for a reason that has nothing to do with the research at all.

HMRC introduced two procedural requirements. Miss either and the claim is invalid, not reduced, not enquired into, but removed from the return. There is no reasonable excuse defence to a claim that was never validly made.

Claim Notification: Who Has to Notify

The requirement does not apply to every claimant. In broad terms a company must notify if it has not made an R&D claim in the relevant preceding period, subject to the statutory conditions. A company that has claimed consistently and recently generally need not.

The traps are:

• A gap in claiming. A company that claimed three years ago, did not claim in the intervening periods and now wishes to claim again may fall back into the notification requirement.
• A change of accounting date, which alters the periods and therefore the deadline.
• Amended returns. A claim first made by amendment does not escape the requirement.
• Group and corporate changes, where the claiming entity is not the one with the claim history.
• The six-month deadline is not the filing deadline. It runs from the end of the period of account, and it will usually fall long before the return is due. Advisers who wait until the accounts are ready have already missed it.

The Additional Information Form

The AIF must be submitted before or with the return. It requires, in outline:

• contact details for the company officer responsible for the claim, and for any agent involved;
• a breakdown of qualifying expenditure by category;
• a description of the projects, with the number described depending on how many there are, addressing the advance sought, the scientific or technological uncertainties, and how they were overcome; and
• the relevant accounting period details.

Two points cause most difficulty. First, the requirement to name the agent and the responsible officer, which was introduced deliberately to create accountability. Second, the project narratives, which are frequently written to a formula and do not engage with the statutory test.

The Substantive Test Has Not Changed

Where the procedure is right, the argument returns to substance, and the statutory question is unchanged. Relief requires a project seeking an advance in science or technology through the resolution of scientific or technological uncertainty, judged by reference to what a competent professional working in the field would know.

The claims HMRC successfully challenges tend to share features:

• Commercial novelty dressed as technological advance. A new product, a new market or a bespoke customer solution is not an advance in science or technology.
• Routine application of existing technology. Difficulty is not uncertainty. If a competent professional would know how to do it, the uncertainty test is not met even if the work was hard.
• No identified competent professional. The test is framed by reference to the knowledge of a competent professional in the field, and claims are weakened where nobody with those credentials is put forward.
• Narratives written by the adviser, not the technologist. Generic descriptions that could apply to any project attract enquiries and rarely survive them.
• Subcontracting, subsidy and connected party issues, which determine who may claim and at what rate, and are frequently analysed wrongly.

The Merged Scheme

The SME and RDEC schemes have been replaced by a merged scheme for accounting periods beginning on or after 1 April 2024, alongside enhanced support for R&D intensive loss-making SMEs. That changes the rates, the mechanics and the treatment of subcontracted and subsidised expenditure, but it does not change the claim notification or additional information requirements, which continue to apply. Our guide to the merged scheme and ERIS covers the transition.

If HMRC Opens an Enquiry

1. Check validity first. Was the claim notification required, and was it made in time? Was the AIF submitted before or with the return? If either failed, the substantive argument may be academic and the conversation is about mitigation instead.
2. Check the enquiry is in time and properly opened. HMRC has removed claims administratively where the AIF is missing; that is not the same as an enquiry, and the correct response differs.
3. Identify the competent professional and get them involved. HMRC caseworkers frequently correspond with the adviser who wrote the narrative. The person who can actually answer the technological questions is the one who should.
4. Answer the statutory test, not the narrative. What was the advance sought in the field as a whole, what was uncertain, and why could a competent professional not readily resolve it?
5. Deal with behaviour separately. An overstated claim prepared by a specialist firm on a contingent fee is not automatically a deliberate inaccuracy. Under HMRC v Tooth and Auxilium, deliberateness requires knowledge of the error and an intention that HMRC rely on it.
6. Consider the position of the adviser. Where a boutique firm prepared the claim, consider both a professional negligence claim and whether HMRC may look at the firm under its own powers: see our guide to HMRC action against advisers.
7. Address repayment and interest. Where a payable credit has been received and is being recovered, interest runs, and the cash flow consequences for a loss-making company can be severe.

Frequently Asked Questions