R&D consultation on advance clearance procedure

The consultation notes that the Advance assurance procedure for R&D tax relief has been entirely optional until now. Its use, or lack of use, is often mentioned during an enquiry into a claim.

HMRC is exploring options to "reduce error and fraud, to provide certainty to businesses and improve the customer experience". It asks if a system of advanced clearances would deliver these objectives and how such a system might best operate.

Looking at the current system, the consultation provides a flow diagram showing how basic automated risk profiling checks are applied to each claim to determine if it is immediately passed to the payments team or selected for 'compliance intervention'.

• Increased compliance activity has meant more enquiries, with 17% being subject to checks in 2023-24 (up from 10% in 2022-23) involving more than 500 HMRC staff members.
• The advance assurance scheme has seen low and declining take-up with only 80 applications received in 2023-24 of approximately 11,500 companies that were eligible to apply.
• Although the introduction of the Additional Information Form and the requirement for Notification, was aimed at improving compliance, there is still significant concern, despite HMRC framing this as 'uncertainty for claimants'.

The consultation looks at:

• The current uptake of the procedure and asks why an advance assurance was not sought despite knowing the option existed.
• Who should be entitled to use a new clearance procedure, who might be obliged to use it, where in the claims process a scheme could fit and the role of agents.
• Whether clearances should be voluntary or mandatory.
  • The Government recognises the need to target intervention carefully. Increased advance assurance should ensure reduced post-claim compliance issues but a voluntary service is unlikely to be available for all, whilst a mandatory service would only be applicable to some. 

From an international perspective, other countries with R&D tax relief regimes have forms of pre-approval. One of the arguments for increasing the reach of the advance clearance procedure is to give companies certainty before significant investment is made. The government has identified three possible stages where a form of assurance may be useful:

1. Pre-activity (when research is at an early stage or has not begun; would be less formal and less able to provide certainty as a project may not be fully developed).
2. Pre-claim (activity is well underway but a claim has not yet been made; similar to the current system).
3. Pre-payment (a claim has been made but HMRC payment has not been made - this would allow companies to request any checks usually made post-payment should take place before payment instead).

The consultation asks for views on the preferred option.

The consultation will run from 26 March 2025 to 26 May 2025 and invites views from all sizes of business. Responses must be made using the form included within the consultation document.

Useful guides on this topic

R&D: Advance Assurance
What is Research and Development (R&D) Advance Assurance? How can I apply? What are the conditions? What are the benefits?

Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?

R&D: Additional Information Form (AIF)
What is an Additional Information Form (AIF)? When is a company required to submit an AIF? What information should be included in an AIF? How do I submit an AIF?

R&D: Claim Notification
What is a claim notification? When does a company need to submit a claim notification? What is the deadline? What happens if a company fails to submit a claim notification? What information should be included on a claim notification?

External link

HMRC open consultation: R&D tax relief advance clearances

1. Are you responding to this survey as a company/agent/professional body/academic/other?
2. If responding as a company what is the size of your company?
3. Have you claimed R&D tax reliefs previously?
4. Please choose which sector your main business activities are in (from the following list).
5. Where does your business operate?
6. Please provide your company's or organisation's name unless you are responding on your own behalf.
7. Please provide the best email address we can use to contact you.
8. To help us monitor the demographic of respondents, please provide the postcode for your company or organisation.
9. Were you aware of the advance assurance scheme before this consultation?
10. Have you or your clients used the current advance assurance scheme?
11. If you or your clients have used the current advance assurance scheme, please tell us if and how this met your needs.
12. If you or your clients have used the current advance assurance scheme, please tell us about what worked less well in the process.
13. For those who are aware of the current advance assurances, but chose not to use them, what were the reasons for this?
14. Is the current focus in advance assurances on treatment for a whole claim right or should it focus on a particular issue or number of issues in a claim?
15. Which issues in R&D claims are of the most concern?
16. Do you have any views on the current criteria for eligibility for advance assurances?
17. Can you foresee circumstances in which paid-for voluntary assurances might be attractive?
18. Do you agree that a voluntary service could be focused on growing and high-potential companies as well as sectors set out in the government's Industrial Strategy?
19. If not, at which companies should a voluntary service be focused?
20. Do you agree there is a minimum expenditure below which significant R&D does not take place?
21. If yes, please give that level (in thousands)
22. Do you agree that the assurances should be mandatory for some?
23. If so, what factors should be considered in determining who must seek assurance?
24. How can HMRC best recognise the role of agents in designing a clearance service?
25. Do you see value in pre-activity advance assurance?
26. If so, what sorts of issues might be raised with HMRC?
27. What sort of information might companies be able to provide to HMRC at this stage?
28. Which of the options A to C do you think would be most useful? (please rate all options: not useful, somewhat useful, useful).
29. Please give reasons.
30. Please give any other suggestions you have for useful changes to R&D relief administration, particularly those that would address error and fraud.