What is advance assurance for R&D tax relief?

Advance assurance is a voluntary scheme offered by HMRC to give SMEs claiming R&D tax relief assurance that their R&D claims will be processed without further enquiry from HMRC.

HMRC’s guidance states that where a company obtains advance assurance, it serves as a guarantee that claims will be accepted if they’re in line with what was discussed and agreed in their application.

HMRC’s advance assurance then applies to the company’s first three R&D tax relief claims.

It’s not in itself a claim for R&D tax relief and companies who’ve applied for advance assurance must still claim relief in the usual way, via their Company Tax return (and additional information form).

Who can apply for advance assurance?

Only SMEs with turnover under £2m and fewer than 50 employees can apply for advance assurance.

A company may be planning to carry out R&D or already have done so, but can only apply if it has not already made a claim for R&D tax relief. If a company is part of a group, to be eligible for advance assurance no linked companies can have made an SME R&D claim before.

The company must be applying for SME R&D tax relief (even if a business qualifies as an SME, it may need to claim under RDEC if, for example, it has received grant income).

Companies who’ve entered into a Disclosable Tax Avoidance Scheme (DOTAS) or who are a corporate serious defaulter cannot apply for advance assurance.

What information is required to apply for advance assurance?

Companies applying for advance assurance will need to have their company accounts, company registration documents from Companies House, company tax returns (not required for newly incorporated companies) and any HMRC correspondence relating to their claim available to complete the application.

The name of a main contact who knows about the company’s R&D will be required, along with some basic company information and more detailed information about R&D activities and costs related to them.

Advance assurance application

Eligible companies can apply for advance assurance using HMRC’s online form, which can be submitted via a Government Gateway account, or printed and posted to HMRC’s advance assurance team.

Following the submission of the advance assurance application form, HMRC will contact the company by email to arrange a phone call to discuss the R&D in more detail. Sometimes this will be a very quick process, but for other cases further discussion could be required. Once concluded, HMRC will issue the company a letter confirming whether or not the application for advance assurance has been successful. If unsuccessful, they will explain the reasons why. An advance assurance decision cannot be appealed, nor can the company resubmit its application for a second consideration. However, refusal of advance assurance doesn’t prevent an R&D tax relief from being made.