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Following consulation HMRC have now published a two year administrative framework, 'Making R&D easier', with a stated aim of making Research and Development (R & D) relief as accessible as possible for all small businesses carrying out R&D investment.

The framework is set out in the same four areas as the original consultation:

Awareness

HMRC undertake to increase communication about R&D policy and developments using email and twitter, and will make greater use of its own data and that of other government organisations to identify and contact organisations which have carried out R&D but not made any claims.

A new Advance Assurance service was launched in November 2015 which is aimed at providing smaller companies with greater certainty in making a claim.  As part of publicising this new service HMRC will also look to raise awareness of R&D tax relief in general.

Design

HMRC do not propose to make any changes to the definition of R&D for tax purposes; in patricular no steps will be taken to align the tax and accounting definition.

HMRC will review the treatment of subcontractors and improve existing guidance in this area.

HMRC will also provide a wider range of examples to assist in understanding what is meant by an advance in science and technology.

Understanding

The new Advance Assurance service will allow HMRC to make sure that first time claimants have a better understanding of how the R&D tax relief rules affect their business.

HMRC plan to produce templates and products to help business record qualifying activities and expenditure.

HMRC are developing new guidance which will focus on smaller companies and is working with stakeholders to make sure that the guidance concentrates on aspects that they find difficult to understand.  Guidance relating to software R&D will also be improved.

HMRC will issue improved guidance on the interaction of R&D tax relief and grant schemes in a state aid context.

Administration: Advance Assurance

This service launched in November 2015 and focuses on first time claimant smaller companies.  It is voluntary and non statutory and available for companies who have already undertaked R&D or who are planning to do so.

It is intended to be accessible to companies who do not have a tax adviser and will enable companies to receive assurance from HMRC that their first three years of R&D tax claims will be allowed without any further HMRC enquiry.

See R&D Advance Assurance