As proposed at Budget 2025, HMRC have introduced a targeted advance assurance service for Research and Development (R&D) tax relief claims. The service, which is a pilot, aims to provide Small and Medium-sized Enterprises (SMEs) with clarity on complex or high-risk areas before a claim is made.
HMRC are now offering two types of advance assurance for Research and Development (R&D) claims. The new targeted advance assurance service will run alongside the existing full claim advance assurance service.
- The existing full claim service has not been popular and is limited in scope. It is only available to Small and Medium-sized Enterprises (SMEs) that are first-time claimants.
- The pilot, which is open to any eligible SME, will help HMRC to test demand and determine which aspects of the claim businesses most value assurance on.
- The pilot will run until May 2027.
- Companies will need to choose which advance assurance service they want to use, as it is not possible to apply under both for the same period or project.
What does the new service offer assurance on?
Companies can seek assurance on:
- Whether the project meets the definition of R&D for tax purposes.
- Whether overseas expenditure qualifies for relief.
- Whether the company can claim R&D relief where work is contracted by one company to another.
- Whether the company qualifies for exemption from the PAYE and National Insurance contributions cap.
Which companies are eligible?
A company can apply to use the targeted advance assurance pilot if it:
- Is an SME.
- Is carrying out, or planning to carry out, R&D in the accounting period for which assurance is being requested.
- Has not yet claimed R&D for that period.
- Has not exceeded the limits of the service.
The service is limited to providing advance assurance on a maximum of two areas of the R&D work or project for the same period.
- An application can only include one project and one area of R&D relief. Companies seeking assurance on a second project or area will need to submit a separate application.
Companies, or any connected person, that have entered into a Disclosable Tax Avoidance Scheme (DOTAS), been categorised as a Corporate Serious Defaulter, or have an open enquiry into their Corporation Tax return, will also not be able to apply.
How do companies apply?
Applications need to be made online by the company's agent, R&D adviser or an officer within the company.
- Agents and advisers will need to have the appropriate authorisation in place.
Is advance assurance the same as making a claim?
Requesting advance assurance does not mean that the company has made a claim.
- If granted advance assurance, a company will still need to make an R&D tax relief claim in the usual way.
A company is free to make a claim if HMRC do not grant advance assurance, but HMRC strongly advise checking the conditions on claiming in the area that has been declined.
Useful guides on this topic
R&D: Advance Assurance
What are Research and Development (R&D) targeted and full claim 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: SME Tax Credit scheme
What Research & Development (R&D) schemes are available for small and medium-sized companies undertaking R&D? How to make an R&D claim? What are the qualifying costs and how much can be claimed?
External link
HMRC: Apply for targeted advance assurance on up to two areas of your R&D tax relief claim