R&D Pre-Notification Requirements: A Hidden Risk for Companies With Previously Rejected Claims

For many companies, the closure of a historic R&D tax relief compliance check may feel like the end of a chapter. But in 2025 and beyond, the implications of that outcome may still echo into future claims in a subtle yet consequential way: by triggering the requirement to submit an R&D Pre-Notification Form.

For accounting periods beginning on or after 1 April 2023, HMRC introduced mandatory pre-notification requirements for first-time or “infrequent” R&D claimants, aimed at improving compliance oversight and reducing spurious claims. However, what many companies fail to recognise is that a previously rejected claim can render them subject to this pre-notification requirement, even if they had previously claimed R&D tax relief before.

Understanding the Pre-Notification Rule

The rule is seemingly straightforward on the surface; a company must submit a pre-notification if:

  • It has not made an R&D claim in any of the preceding three accounting periods (which is subject to it's own additional separate rules and caveats), or

  • It is making a claim for the first time.

However, the fine print matters: a claim that has been rejected during a compliance check does not count as a valid claim for the purposes of this exemption. This distinction is not always obvious to claimants.

The ISBC Legacy and the MREP Approach

This becomes particularly relevant in the context of HMRC’s Individuals & Small Business Compliance (ISBC) directorate and its approach during the Mandatory Random Enquiry Programme (MREP) period. Between 2022 and early 2024, ISBC adopted a high-volume, low-engagement compliance strategy characterised by the use of templated enquiry letters and formal rejection notices. These were often issued on the basis of perceived technical or financial shortcomings, with minimal scope for dialogue, clarification, or resolution.

As a result, many companies faced sudden and unexpected rejections of their R&D claims, frequently with little opportunity to present further evidence or respond to HMRC’s concerns. In several cases, businesses were required to repay tax credits or repayments already received, sometimes alongside penalties. Some businesses opted to effectively concede on their claims from the outset of the enquiry, either due to internal resourcing constraints or after weighing the time and resource cost of a protracted enquiry against the potential benefit of defending the claim.

Critically, however, claims that are withdrawn or ultimately rejected do not count as successfully submitted and accepted for the purposes of HMRC’s pre-notification rules. This distinction could leave affected companies unexpectedly subject to pre-notification requirements, despite having previously submitted claims under the old regime.

Practical Impact for Future Claims

If your most recent R&D claim (or claims within the last three years) was rejected in full, you are technically viewed as a new claimant by HMRC under the pre-notification rules. Failure to submit the required form within six months of the accounting period's end means you will not be allowed to submit a claim at all for that year.

This has major implications:

  • Companies could lose eligibility entirely if unaware of the need to pre-notify.

  • Firms that assumed continuity based on prior claim history may inadvertently fall foul of compliance.

  • The impact is most acute for loss-making SMEs who rely on the payable credit as a vital source of funding.

What Companies Should Do

  1. Review Prior Compliance Outcomes Carefully: If your most recent claim was subject to a compliance check and ultimately rejected or withdrawn, assume pre-notification is required unless clearly stated otherwise.

  2. Submit Cautiously: There is no downside to submitting a pre-notification form even if you are uncertain whether it is required. The form itself is relatively light-touch but must be submitted within the six-month window post-period end.

  3. Seek Specialist Advice: A growing number of cases highlight how critical it is to understand the evolving procedural rules alongside technical eligibility.

Final Thoughts

In an era of heightened scrutiny and procedural rigidity, companies can no longer afford to approach R&D tax relief as a routine formality. The consequences of prior compliance outcomes are no longer confined to the past. They influence what you can claim in the future.

If your last R&D claim was rejected, now is the time to reassess your compliance strategy. Pre-notification may be your only ticket to keeping your next claim alive.

At Westlock Partners, we work closely with clients navigating complex compliance histories to ensure future claims remain compliant, timely, and fully defensible.