R&D tax credits – advanced assurance, will it now be recommended practice?

This advanced assurance hasn’t been widely used historically, we explain why it may become standard practice

You may be more familiar with the EIS/SEIS advance assurance process, but there is in fact a similar process for R&D tax relief which allows a company, if they meet criteria for SME, to obtain a guarantee that their claim for tax relief under the R&D tax credits scheme will be accepted if it is in line with the application.

This advanced assurance hasn’t been widely used historically, usually because businesses will set out to undertake a project without necessarily realising at the start that they will be eligible for R&D or even considering R&D tax credits until much later down the line, or it may be that it is raised at the end of their financial year on reflection.

However, with HMRC clamping down on R&D tax credits claims and opening more enquiries into the claims it may now be far more beneficial to undertake to obtain advanced assurance ahead of making the claim, rather than delay the cash repayment when the claim is ultimately processed.

Advance assurance is voluntary, and it is only available for companies making their first R&D tax credits claim and cover the first 3 accounting periods. Obtaining advance assurance also does not reduce the work required or change the claim itself in anyway, but it does give the company some comfort up front that the claim will be accepted and prevents delays from enquiries after the fact.

Who is eligible to apply for advance assurance:

• If you are a Small or Medium-sized Enterprise (SME); and
• Your company has a turnover below £2 million and less than 50 employees,
• You’re planning to carry out R&D,
• You’ve already carried out R&D and have not claimed SME R&D tax relief,
• You are part of a group, and none of the companies linked to you have previously claimed SME R&D tax relief.

Our team of specialists can assist you if you are considering an applying for R&D tax credits advance assurance and would like some help with the application process, or if you have any questions on the tax credits schemes and how they work.

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