HM Revenue and Customs (HMRC) have introduced Advance Assurance for companies that are looking to claim Research and Development (R&D) tax relief.
If your company carries out R&D for itself or other companies, it could qualify for Advance Assurance. This means that for the first 3 accounting periods of claiming for R&D tax relief, HMRC will allow the claim without further enquiries.
Applying for Advance Assurance is voluntary and you can do this at any time before the first claim for R&D tax relief. Your company can still apply for R&D tax relief without Advance Assurance.
Advantages of Advance Assurance
When you apply for Advance Assurance you’ll have an HMRC specialist to help you understand and comply with the R&D tax relief conditions.
Advance Assurance gives proof that your company will get R&D tax relief. This may help you get funding.
Who can apply for Advance Assurance
Your company can apply for Advance Assurance if it’s planning to carry out, or has previously carried out R&D. It has to meet certain conditions which are that:
• it hasn’t claimed R&D tax relief before
• its annual turnover is £2 million or less
• it has less than 50 employees
If your company is new, you can still apply, as long as you haven’t claimed R&D tax relief before. These conditions may also apply if your company is part of a group, but there are further criteria that need to be met to be certain (see below).
If you’re planning to carry out future R&D, HMRC will contact you after you’ve submitted your first claim. This is to check that your R&D matches the details you gave in the Advance Assurance application form.
Notice of HMRC’s decision
Once HMRC is satisfied that your company activities are within the rules of the scheme and you understand how the rules apply to your company, they’ll send you a letter telling you their decision. If your company is granted Advance Assurance for 3 accounting periods HMRC will send you an agreement letter. This letter will explain your company responsibilities.
Who can’t apply for Advance Assurance
If your company is part of a group and another company within that group has made a claim for R&D, HMRC won’t accept the application for Advance Assurance.
HMRC also won’t offer Advance Assurance if your company:
• entered into a Disclosable Tax Avoidance Scheme (DOTAS)
• is a corporate serious defaulter Rothmans can help complete and/or review your Advance Assurance application and therefore please contact us for further information.