Originally proposed in last autumn’s Budget, HM Revenue & Customs (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 businesses with clarity on complex or high-risk areas before they make a claim.
HMRC are now offering two types of advance assurance for R&D claims. The new service will run alongside the existing full claim advance assurance service.
Full claim advance assurance has not been popular and only applies to companies claiming R&D tax relief for the first time. However, targeted advance assurance is open to any eligible small or medium-sized enterprise (SME).
The pilot for this service will run until May 2027 and will help HMRC to test demand and decide which parts of the service are most useful to businesses.
Companies will now need to choose which advance assurance service they want to use. It is not possible to apply for both targeted and full claim advance assurance for the same period or project.
Under targeted advance assurance, companies can seek assurance on:
- Whether a project meets the definition of R&D for tax purposes.
- Whether overseas expenditure qualifies for relief.
- Whether R&D relief can be claimed where work is contracted by one company to another.
- Whether the exemption from the PAYE and National Insurance contributions cap applies.
Targeted advance assurance is, however, limited to providing 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. For companies seeking assurance on a second project or area, a second application must be submitted.
Requesting advance assurance is not the same as making a claim. A company will still need to make a claim in the usual way.
If you think the targeted advance assurance could be useful to you, or you would like help on any aspect of your R&D tax relief claim, please do get in touch. We would be happy to help you!