Background
R&D tax relief did not make Mr. Healey’s speech at the dispatch box, however there were some minor tweaks to the administration of the schemes noted within the budget document itself.
The Claim Notification Form (CNF) was introduced in 2023 as part of a wider package of measures designed to combat error and fraud within the UK’s R&D tax relief regime. The purpose of the CNF was to provide HMRC with advance notice of incoming claims.
Since its introduction, however, claimant companies and advisers have questioned whether the requirement delivered meaningful compliance benefits relative to the additional administrative burden it created. More pointedly, some potential claimants who were not aware of this measure, misunderstood the exempting criteria or who otherwise missed the deadline were prevented from making valid claims.
What’s changed?
The Government has announced that, from 1 April 2027, businesses will no longer be required to submit an R&D Claim Notification Form before making an R&D tax relief claim.
The decision reflects the Government’s view that the wider reforms introduced in 2023 have successfully improved claim quality and reduced error and fraud. As a result, the CNF can now be removed while retaining other safeguards designed to identify and challenge incorrect claims.
The change represents a welcome simplification of the claims process and a shift towards compliance measures that focus on the quality and substance of claims rather than procedural requirements.
Impact on businesses and key takeaways
For many businesses, the removal of the CNF will simplify the claims process and reduce the risk of procedural errors preventing access to relief.
The change is likely to be particularly beneficial for first-time claimants, fast-growing technology, HealthTech and Life Sciences businesses, companies with limited in-house tax resource and businesses that prefer to prepare their claims post the completion of their annual compliance processes.
However, businesses should not view this as a relaxation of HMRC’s approach to compliance. Claimants will still be expected to maintain robust technical and financial evidence to support their claims.
Importantly, the existing rules remain in force until 1 April 2027. The current wording of exactly how the notification requirement will be removed is ambiguous pending policy detail. Businesses and advisers should continue to assess whether a Claim Notification Form is required and ensure that any applicable notification deadlines are met.
Our perspective
The removal of the Claim Notification Form is a sensible and pragmatic reform.
Whilst introduced with the legitimate objective of tackling abuse, the requirement often acted as an administrative hurdle for genuine claimants rather than a meaningful compliance safeguard in its own right. Whilst the CNF itself was relatively light touch, it was yet another compliance process in an environment of increasing complexity and administrative burden associated with business taxation, with excessive consequences for not complying.
The strongest protections against error and fraud are those that assess the substance of a claim: the technological challenges addressed, the supporting evidence available and the qualifying expenditure incurred. By contrast, notifying HMRC of an intention to claim provides little insight into whether a claim itself is valid.
For many businesses, the CNF was ultimately perceived as a procedural trap. Companies undertaking legitimate R&D could find themselves unable to claim relief because a deadline had been missed, rather than because the underlying activities failed to meet the legislative requirements.
The Government’s decision suggests a recognition that effective compliance measures should focus on claim quality, not administrative process.
Speak to HaysMac
Our R&D tax specialists can review your position, help you meet any outstanding deadlines and ensure your claim is supported by robust technical and financial evidence. Contact Jack Williams at JWilliams@haysmac.com
