HRMC has announced the launch of the Advance Assurance scheme for small and micro businesses making R&D claims.
Advance Assurance is a voluntary scheme designed to allow companies employing less than 50 staff to provide HMRC with details of their R&D projects ahead of submitting formal R&D claims. HRMC will then review applications and advise companies whether or not the activity qualifies under the R&D legislation.
The aim is to provide companies with certainty when making R&D claims by allowing the claim without making further enquiries for the first three accounting periods of claiming for R&D tax relief, as long as the claims are made in line with the terms of the agreed Advance Assurance applications.
The scheme is open only to companies that that haven’t claimed R&D tax relief prior to making their application and whose annual turnover is £2 million or less, and that have fewer than 50 employees. Companies that are undertaking subsidised R&D, such as projects funded by Innovate UK grants, may also use the scheme for their Research & Development Expenditure Credit (RDEC) claims.
However, as the scheme is still in its infancy it may actually involve an applicant in more work than simply getting a MSC R&D to prepare a robust and well-structured claim. There could be a risk that HMRC could be over-restrictive in agreeing which R&D work qualifies for the reliefs as HMRC has no technologists who can help with confirming the qualifying R&D.
MSC R&D is advising clients wishing to apply for Advance Assurance that it undertakes the rigorous assessment process carried out by our own experienced technologists in order to obtain the most advantageous agreement available for relief, and to validate that all the costs claimed are qualifying R&D costs.