Many SMEs look for help when considering whether to make an R&D Tax Credits claim, often because they are unsure if their research and development projects qualify for relief.
For companies that have reservations about applying for R&D relief (especially those worried about making errors while claiming), HMRC offers an advance assurance service. The scheme provides a welcome confidence booster for SMEs, letting them know that HMRC are happy to accept their claim without further inquiries.
As well as giving certainty, HMRC believes that using advance assurance offers several benefits, helping to reduce error and fraud while also improving the overall customer experience. Because of these perceived benefits, the government announced in their Corporate Tax Roadmap that they’re planning to widen the use of the scheme, with a consultation planned for spring 2025.
The scheme has actually been available since 2015, however, there has been some hesitancy over take-up. When HMRC last evaluated the scheme in an R&D relief-focused research report, only 13% of claimants said that they knew that advance assurance existed, and only 7% of these had applied for it.
In this article, we explain how the advance assurance scheme works and why businesses might consider using it for their R&D Tax Credits claims.
How does advance assurance work?
Advance assurance is a voluntary scheme for SMEs submitting their first R&D relief claim, allowing them to know upfront if their claim will be accepted.
A business simply needs to provide HMRC with details of its R&D projects so that they can assess if the work qualifies for relief. If the application is approved, the business will then be given an ‘advance assurance agreement’ guaranteeing that the 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.
What details are needed for an advance assurance claim?
To prepare for an advance assurance application for an R&D Tax Credits claim, companies will generally need to provide the following details:
- Basic company information
- Company registration documents
- Company accounts
- 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
Who can apply for advance assurance?
SMEs conducting R&D can apply for advance assurance if:
- It’s their first R&D relief claim
- Turnover is below £2 million
- They have less than 50 employees
- R&D work is planned
- R&D work has been completed, but not claimed for
- They’re part of a group where none of the companies have previously claimed R&D relief.
Large companies, those who have entered into a Disclosable Tax Avoidance Scheme (DOTAS), and corporate serious defaulters aren’t eligible for advance assurance.
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 advanced assurance paperwork 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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