Advance Notification Form (ANF) for R&D claims

Virginia Mariscal Rios Corporate Tax Manager at Shaw Gibbs takes a closer look at the form used to notify and initiate R&D claims, while providing essential information.

With effect for accounting periods beginning on or after 1 April 2023, companies claiming Research and Development (R&D) tax relief for the first time, or those that have not made an R&D tax relief claim in the previous three years, will be required to notify HMRC of its intention to claim R&D tax relief or R&D expenditure credit (RDEC) by submitting an ANF. The ANF is expected to also apply to companies who make claims under the new merged R&D scheme which applies for all accounting periods starting on or after 1 April 2024.

The notification can be submitted by a representative of the company or an agent acting on behalf of the company (i.e. its corporation tax compliance agent or its specialist R&D tax adviser).

Deadline

The ANF must be submitted at some point between the first day of the accounting period and six months after the end of the relevant accounting period to which the R&D claim relates. For example, for a company making an R&D claim for the first time with a 12 month accounting period ended 31 March 2024, the claim notification window starts on the first day of the accounting period, in this instance 1 April 2023 and will end by 30 September 2024. After this date, if the ANF was required but not submitted to HMRC, the company cannot make a R&D tax relief or RDEC claim. If the company was to attempt to do so, HMRC will amend its tax return to remove the claim as this would be deemed invalid.

If the company has a long period of account, only a single notification will need to be submitted to HMRC.

Contents of the form

The form should contain the following information:

· the company’s Unique Taxpayer Reference (UTR);

· the main senior internal R&D contact in the company who is responsible for the R&D claim, for example a company director;

· the contact details of any agent involved in the R&D claim;

· the accounting period start and end date for which you’re claiming the tax relief or expenditure credit, this must match the one shown in your Company Tax Return;

· the period of account start and end date;

· a high-level summary of the planned R&D activities to show that the project meets the standard definition of R&D.

However, it is not necessary to submit any documentation at this stage.

HMRC guidance on how to submit the advanced notification and the form itself, is available here

The reasons why this has been introduced

The ANF has been introduced as a result of a consultation process that started in 2021 and is effectively a mechanism to give HMRC advanced warning that the company is planning on making an R&D tax relief claim.

The reason behind the new requirement appears to be two-fold:

1) HMRC are clamping down on R&D tax relief claims in general and have reported that they are currently opening enquiries into 20% of R&D tax relief claims. By making it a requirement to pre-notify HMRC of the company’s intention to make a claim, HMRC are effectively reducing the timeframe that a company can self-assess and make a claim. HMRC are of the belief that it will reduce the number of fraudulent or unscrupulous claims.

2) In years gone by HMRC’s R&D unit have struggled to administer R&D claims at times due to the number, often being received at specific times of the year. By introducing the ANF, HMRC will have an increased oversight as to the number of claims which they are likely to have to process using a combination of the new ANFs plus prior year R&D information.

Whilst we understand the reasons behind the new requirement, there is a concern that companies who are undertaking genuine qualifying R&D could now miss out on making claims as a result of the earlier claim deadline.

For more information or advice in complying with this new requirement or if you would like support on R&D tax relief in general please contact Virginia Mariscal Rios