What happens if SME status changes during a year?

If the transition is organic, the status of the SME remains unchanged until the second year when it is achieved. 

For instance, if an SME organically becomes a large company in year one and this status continues into year two, the company can make an SME claim in year one, but in year two they would need to claim under RDEC. 

If the transition is the immediate result of a takeover or the sale of a group company however, the change is immediate. 

An SME being taken over by a large company should consider shortening its accounting period to end just before the takeover. This allows them to benefit from making an SME R&D claim for the period before the takeover.