Advance assurance is a voluntary scheme for SMEs submitting an R&D Tax Credits claim, allowing you to know upfront if your claim will be accepted.
Your business just needs to provide HMRC with details of your R&D projects so that they can assess if your work qualifies for relief.
HMRC currently offers two types of advance assurance:
- full claim advance assurance service (for first time SME claimants)
- a targeted advance assurance service pilot (open to all SMEs to check complex or high-risk parts of a projects)
In this article, we explain how the two advance assurance R&D services work and who should use each scheme.
What is the difference between HMRC’s two advance assurance services?
The difference between the two advance assurance schemes is essentially that the full claim service is only for eligible SMEs claiming for the first time, covering up to three accounting periods and offering assurance for entire claims. The full claim service therefore offers reassurance for you if your business has no experience claiming R&D Tax Credits.
For the targeted pilot service, your SME can have previously claimed R&D Tax Credits, but you might want extra clarity from HMRC on complex or high-risk areas of your claim.
The pilot runs until May 2027, offering more accessible and focused assurance. You can make up to two applications, with each application including one project and one area of your claim. The areas that HMRC will check as part of the pilot include:
- Does the project meet the definition of R&D for tax purposes?
- Does overseas expenditure qualify for relief?
- Which party can claim relief for contracted-out expenditure?
- Does the company qualify for exemption from the PAYE or NICs cap?
You can only apply for advance assurance through one of the services for the same project or claim period.
What details are needed for an advance assurance R&D Tax Credits claim?
To prepare for a full claim advance assurance R&D application, you will need to provide the following details:
- Basic company information
- Company registration documents
- Company accounts
- Company tax returns (unless you’re a new company)
- Contact details of someone with knowledge of the R&D work (e.g., research lead or director)
- Detailed description of R&D projects, including how they have attempted to overcome a scientific or technological uncertainty
- Breakdown of all R&D-related costs
- Any previous correspondence with HMRC related to an advance assurance application
The targeted advance assurance pilot asks for some more specific project information, including the types of records you keep. If you want to claim for overseas expenditure, you must also explain why you believe your project qualifies for the relief.
You or an authorised agent can submit your advance assurance application online or you can print the form and post it to HMRC, using the CT R&D (AA) application for advance assurance for full claims, or the advance assurance pilot application.
Who can apply for advance assurance?
SMEs conducting R&D can apply for full claim advance assurance if:
- It’s your first R&D relief claim
- Your turnover is below £2 million
- You have less than 50 employees
- You have R&D work planned or completed (but not claimed for)
- You’re part of a group where none of the companies have previously claimed R&D relief.
Any SME carrying out or planning to carry out R&D can apply to take part in the targeted pilot advance assurance scheme, even if you’re not a first-time claimant, as long as you’ve not already received assurance in two areas of your R&D claim.
What happens after you apply for advance assurance?
After you apply for the full claim advance assurance service, HMRC will email you to arrange a phone call to discuss your R&D project in more detail.
For the targeted pilot, unless there are any issues, HMRC aims to review applications within 40 calendar days and will be in touch if they have any questions.
After reviewing your application, HMRC will send you a letter confirming if you have been successful.
If you’ve made a full claim advance assurance application that has been approved, your business will then be given an ‘advance assurance agreement’ guaranteeing that your claim will be accepted (as long as the claim matches the original submission). Advance assurance agreements are available for a business’ first three accounting periods.
If you’ve applied through the targeted pilot service, you’ll simply get a letter confirming that the areas reviewed have been granted advance assurance. You may also be asked to give some feedback on the pilot.
If you haven’t been successful, HMRC will let you know why, but you can’t appeal the decision or submit another advance assurance application (although, you can still submit a claim for R&D Tax Credits).
Remember, even if you’ve been successful, you’ll still need to make a claim for R&D Tax Credits.
How Leyton can help
While HMRC will confirm if what you’ve submitted is eligible for an R&D Tax Credits claim, it’s still possible to miss out on valuable R&D relief. Or even worse, if an advance assurance claim is rejected, you won’t be able to appeal the decision or re-submit.
At Leyton UK, we’re here to help. We’ll assess every part of your work to identify eligible R&D Tax Credits expenses. We’ll make sure that your claim is robust, giving you peace of mind that you’ve maximised your claim.
We’ll do the hard work, preparing all the required information while making the process as hassle-free as possible. We can even complete the advance assurance application for you, as well as prepare your final claim submission.
Want to discuss how advance assurance can benefit your R&D planning? Book a call with one of our friendly experts today.
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