Advance Assurance for R&D Tax Relief – A Quick Guide:

Advance Assurance is a voluntary scheme offered by HMRC to help SMEs gain certainty about their eligibility for R&D Tax Relief before making a claim. It allows companies to submit details of their R&D projects for review which, if approved, will guarantee that claims for the first three accounting periods after approval will be accepted by HMRC, provided they align with the agreed application.

‍

The Advance Assurance scheme is voluntary, limited to the claimant’s first three accounting periods after approval, and is a pre-approval mechanism. Companies must still submit R&D Tax Relief claims in the usual manner after the Advance Assurance process.

‍

Who Can Apply?

Advance Assurance is available to companies that:

• Have a turnover under £2m and fewer than 50 employees.
• Are claiming R&D Tax Relief for the first time.
• Are planning or have already carried out R&D but haven’t claimed yet.
• Are part of a group where no linked companies have previously claimed.

‍

Large companies, or companies involved in disclosable tax avoidance schemes (DOTAS) or corporate serious defaulters are not permitted to apply.

‍

Application Process

To apply, companies need:

• Company details: Basic information, accounts, and registration documents.
• R&D details: A description of the projects, including scientific uncertainties and costs.
• Main contact: A person with direct knowledge of the R&D activities.

‍

Applications are submitted online via HMRC’s Government Gateway. After submission, HMRC arranges a call to discuss the R&D projects. A decision is then communicated via letter.

‍

What’s Next for Advance Assurance?

The use of Advance Assurance has sharply declined, casting doubt on its future. In 2018-19, 205 applications were made, with a 67% acceptance rate. By 2023-24, this dropped to just 86 applications, with only 29% accepted. This decline suggests the scheme may no longer meet the needs of businesses or HMRC, likely due to its limited scope, the administrative burden of applying, and the increased complexity of the R&D Tax Relief process.

‍

A consultation in Spring 2025 is expected to review the Advance Assurance process, offering an opportunity to address these issues. Potential outcomes include expanding eligibility to more companies(e.g., those with higher turnover or those that have made previous claims),simplifying the application process to reduce administrative hurdles, or providing improved guidance to help businesses better understand the scheme. However, if the scheme is deemed no longer fit for purpose, it could be replaced entirely. The consultation represents a critical moment for Advance Assurance. Whether through reform or replacement, the goal will be to ensure the scheme continues to support innovation while aligning with the evolving needs of businesses and HMRC.

‍

This review comes amid significant changes to the wider R&D tax relief landscape, including the introduction of the merged RDEC scheme, Enhanced R&D Intensive Support (ERIS), and stricter compliance measures to combat fraud and error. These changes have increased the complexity of claiming R&D tax relief, making expert advice more essential than ever for businesses navigating the system. 

‍

Need guidance on your R&D Tax Relief claim? Don’t hesitate to contact Asquith Bradley.