R&D Advanced Assurance Explained

Research and Development (R&D) Advanced Assurance is a service that provides companies with confirmation that their activities qualify as R&D for tax purposes. It is a valuable tool; if advance assurance is granted to a company, then HMRC will not enquire into R&D tax claims made by the company in the first three accounting periods, provided the claims are in line with what was agreed with HMRC. 

Who can apply for Advance Assurance?

An SME can apply for Advance Assurance if it meets the following conditions:

1. It has not claimed R&D tax relief in the past

2. The company has fewer than 50 employees

3. The company has an annual turnover of £2m or less. 

Even if the above conditions are met, the following companies cannot apply for R&D Advanced Assurance:

  • Those who have entered into a Disclosure of Tax Avoidance Scheme (DOTAS)
  • Those who are part of a group, and another group member has previously made an R&D tax credit claim
  • Those who are corporate serious defaulters. 

Application Process

The application process for R&D Advanced Assurance involves several steps:

  • Preparation: Companies must prepare a detailed explanation of their R&D projects, outlining the nature of the technological challenges and the innovative approaches taken to address them. Additional information must also be enclosed, including company accounts, registration documents and a nominee who can discuss the company's R&D with HMRC.
  • Submission: The completed application, along with supporting documents, must be submitted to HMRC for review. This can be done online via the HMRC website.
  • Review: HMRC will review the application and will email you to arrange a telephone call where the R&D projects will be discussed in more detail. Complex cases my require a HMRC visit. 
  • Approval: The company will receive an R&D Advanced Assurance letter from HMRC, either approving or rejecting the claim. If you are rejected, you cannot appeal, but it does not prevent you from making an R&D claim on your tax return. Regardless of whether HMRC approve, you must tell HMRC you want to claim R&D tax relief before you claim on your company tax return. 

Benefits of R&D Advanced Assurance

The R&D Advanced Assurance scheme offers several advantages to SMEs:

  • Certainty: Companies can receive a guarantee from HMRC that their R&D tax relief claims will be accepted for three accounting periods, providing financial stability and confidence.
  • Simplified Process: The assurance scheme simplifies the claim process, reducing administrative burdens and ensuring that companies can focus on their core activities.
  • Encouragement: By providing upfront assurance, the scheme encourages SMEs to invest in R&D activities, driving innovation and technological progress.
  • Financial Support: Accepted R&D claims result in significant financial support, either through reduced Corporation Tax liabilities or cash refunds, enhancing the company's ability to fund further innovation.

R&D Advanced Assurance Consultation

In March 2025, HMRC opened a consultation to understand whether an advance clearance system would deliver government policy objectives. 

The consultation seeks views from stakeholders on the following:

  • Whether mandatory advanced assurance should be introduced
  • Who should be eligible for the voluntary advanced assurance scheme
  • Whether there should be a minimum spend for making an R&D tax credit claim
  • At which point should assurance be considered in the R&D claim process

Businesses that either claim or intend to claim R&D tax credits are invited to respond to the consultation. 

The consultation will close on 26 May 2025.

Summary

R&D Advanced Assurance plays a pivotal role in promoting innovation among SMEs in the UK. By providing certainty and simplifying the claim process, the scheme encourages companies to invest in research and development activities that drive technological progress and economic growth. SMEs engaging in qualifying R&D projects should consider applying for R&D Advanced Assurance to benefit from the financial incentives and support offered by HMRC. This proactive measure not only fosters innovation but also strengthens the competitive edge of businesses in an ever-evolving technological landscape.

If you want to learn more please get in touch or read more about how we can help with R&D tax credits.