FEBRUARY 2016 - Advance assurance policy for R&D claims
Last November HMRC introduced Advance Assurance for companies that claim Research and Development (R&D) tax relief. Advance Assurance means that, for the first three accounting periods of claiming for R&D tax relief, HMRC will allow the claim without further enquiries.
This will allow SMEs to focus on R&D projects without the uncertainty as to whether or not their R&D expenditure will qualify. Advance assurance therefore offers SMEs an opportunity to expand their R&D operations without the risk of failing to qualify every year.
Advance assurance is available for companies that: have not previously claimed R&D tax relief; have an annual turnover of £2m or less; and have fewer than 50 employees.
However, advance assurance will not be available to group companies if another group has made a claim for R&D. Furthermore, HMRC has stated that it will not offer advance assurance if a company has entered into a disclosable tax avoidance scheme or is a corporate serious defaulter.
Applying for Advance Assurance is voluntary and can be done at any time before the first claim for R&D tax relief.
To apply for Advance Assurance you will need to provide some basic information about your company and detailed information about your company’s R&D activities.
While HMRC anticipates that accountants can submit an advance assurance on behalf of a company, it may contact the company directly by phone to discuss the application. Therefore, company directors might wish to involve their accountant in any meetings and conversations with HMRC about their application.