Finance (No. 2) Act 2023

Part 1 Claim notifications

Requirement to make claim notifications in relation to certain R&D claims

1 (1) Chapter 6A of Part 3 of CTA 2009 (trade profits: R&D expenditure credits) is amended as follows.

(2) In section 104A (R&D expenditure credits), after subsection (5) insert—

“(5A) This section is subject to section 104AA.”

(3) After that section insert—

“104AA Requirement to make a claim notification

(1) A company may not make a claim under section 104A(1) (an “RDEC claim”) after the end of the claim notification period unless—

(a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period,

(b) the company makes a claim notification in respect of the RDEC claim within the claim notification period, or

(c) the accounting period in respect of which the RDEC claim is made 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.

(2) For the purposes of subsection (1)(a) ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998).”

(4) In section 104Y (interpretation), in subsection (1)—

(a) before the entry for “large company” insert—

• ““claim notification” (see section 1142A),

• “claim notification period” (see section 1142A),”;

(b) after the entry for “research and development” insert—

• ““R&D claim” (see section 1142B),”.

2 (1) Part 13 of CTA 2009 (additional relief for expenditure on R&D) is amended as follows.

(2) In section 1044 (additional deduction in calculating profits of trade), in subsection (9), after “subject to” insert —

(a) section 1045A (requirement to make a claim notification);

(b).

(3) Before section 1046 (relief only available where company is going concern) but after the preceding italic heading insert—

“1045A Requirement to make a claim notification

(1) A company may not make a claim under section 1044(6) (an “additional deduction claim”) after the end of the claim notification period unless—

(a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period,

(b) the company makes a claim notification in respect of the additional deduction claim within the claim notification period, or

(c) the accounting period in respect of which the additional deduction claim is made 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.

(2) For the purposes of subsection (1)(a) ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998).”.

(4) In section 1054 (entitlement to and payment of tax credit), in subsection (5), after “subject to” insert —

(a) section 1054A (requirement to make a claim notification);

(b).

(5) After that section insert—

“1054A Requirement to make a claim notification

(1) A company may not make a claim under section 1054(2) (an “R&D tax credit claim”) after the end of the claim notification period unless—

(a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period,

(b) the company makes a claim notification in respect of the R&D tax credit claim within the claim notification period, or

(c) the accounting period in respect of which the R&D tax credit claim is made 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.

(2) For the purposes of subsection (1)(a) ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998).”

(6) After section 1142 (“qualifying body”) insert—

“1142A “Claim notification” and “claim notification period”

(1) For the purposes of this Part—

• “claim notification” means, in relation to an R&D claim, a notification made by the company to an officer of His Majesty’s Revenue and Customs in accordance with regulations under subsection (2);

• “claim notification period” means, in relation to an R&D claim, the period—

  (a)

  beginning with the first day of the period of account which is the same as the accounting period in respect of which the claim is made, or within which that accounting period falls, and

  (b)

  ending with the last day of the period of six months beginning with the first day after that period of account.

(2) The Commissioners for His Majesty’s Revenue and Customs may by regulations specify, in relation to a claim notification—

(a) information to be provided with the notification;

(b) the form and manner in which the notification is to be made.

1142B “R&D claim”

For the purposes of this Part an “R&D claim” means a claim under—

(a) section 104A (R&D expenditure credits),

(b) section 1044 (relief for SMEs: additional deduction), or

(c) section 1054 (entitlement to R&D tax credit).”