Consultation outcome

Research and development tax relief advance clearances — Summary of responses

Updated 26 November 2025

1. Introduction

The government recognises the important role that research and development (R&D) plays in driving innovation and economic growth, as well as the benefits it can bring for society.

At Autumn Budget 2024, the government made a number of commitments on R&D tax reliefs as part of the Corporate Tax Roadmap in order to provide stability and certainty to support investment decisions.

The government is committed to maintaining the generosity of the rates in both the merged R&D Expenditure Credit (RDEC) scheme and the Enhanced R&D Intensive Support (ERIS) for Small and Medium-sized Enterprises (SMEs). This, combined with the commitment to cap the headline rate of Corporation Tax, means that companies doing qualifying R&D will continue to receive between £15 and £27 for every £100 spent on R&D.

However, in recent years the level of non-compliance in the schemes has been unacceptable and HMRC is taking proportionate steps to reduce the levels of error and fraud. HMRC’s Annual Report and Accounts 2024 to 2025, published in July 2025, set out the latest error and fraud estimates. The report showed a £578 million reduction in the level of non-compliance in 2022 to 2023, following the changes implemented by HMRC, compared to the 2021 to 2022 estimate.

The government also recognises the concerns raised by stakeholders about HMRC’s increased scrutiny of R&D claims, and more widely on administration of the reliefs. Whilst it is right that HMRC takes action to address error and fraud, the government is committed to improving administration to ensure the reliefs continue to support our most innovative businesses.

At Spring Statement 2025, the government published a consultation exploring options for widening the use of advance clearances in the reliefs to help further reduce error and fraud, while also improving the customer experience and providing certainty to businesses.

In summary, the consultation included 30 questions seeking views across the following areas:

• the current advance assurance system, its effectiveness and areas for improvement
• design and delivery of a future clearance system, including whether the system should be voluntary or mandatory, who should be eligible, how it could be delivered and when in the claims process a clearance might be issued

This document sets out a high-level summary of respondents’ answers to those questions. It should be read in conjunction with the consultation document itself.

2. Key themes

The consultation ran from 26 March to 26 May 2025. It received 110 written responses from businesses (large and small), professional body members, professional bodies, tax practitioners and academics (respondents are listed in the Annex). The government also held several roundtables with tax professionals and business representative organisations.

Improving the current Advance Assurance Scheme

The current advance assurance scheme has seen low and declining take up. The consultation responses suggested that this could be due to:

• restrictive eligibility criteria – with only first-time SME claimants eligible for the scheme
• administrative burdens – including long processing times, inconsistent feedback, and unclear guidance
• lack of awareness and trust – especially among agents and first-time claimants, with some viewing the scheme as an early opportunity for HMRC to reject claims

Many respondents supported reforming the current Advance Assurance scheme, citing its potential to provide early certainty, reduce compliance burdens, and improve decision-making. Respondents called for a more flexible and accessible scheme, with clearer guidance and improved communication.

Voluntary vs Mandatory Assurance

Many respondents favoured a voluntary assurance model, highlighting its flexibility and suitability for businesses with varying needs. Voluntary assurance allows companies to seek certainty where needed, without imposing additional requirements on those confident in their claims. It was seen as particularly helpful for SMEs, who may lack the resources to manage complex compliance processes.

Mandatory assurance received more cautious support, with respondents favouring a targeted, risk-based approach. Suggestions included mandatory advance assurance for first-time claimants or sectors with high levels of non-compliance. However, concerns were raised about increased costs, administrative complexity, and the potential to deter legitimate claims. Respondents stressed the importance of transparency, clear criteria, and procedural safeguards, such as guidance and appeal routes, if mandatory advance assurance is to be introduced.

Preferred Assurance timing and focus

Respondents expressed strong support for pre-claim assurance (Option B), which was seen as the most practical stage to offer certainty, as businesses typically have a clearer understanding of their R&D activities at that point. Pre-activity assurance (Option A) was viewed as more relevant for large or complex projects, but less suitable for SMEs due to evolving project scopes and resource constraints. Post-claim assurance (Option C) was considered less useful overall and attracted limited support. There was also support for issue-specific assurance, particularly around eligibility, overseas R&D, and contracted-out R&D.

Minimum Expenditure Threshold

Stakeholders expressed mixed views on reintroducing a Minimum Expenditure Threshold (MET) for R&D tax relief claims. Supporters argued that a threshold could help HMRC focus resources on higher-value claims, reduce administrative burdens, and deter fraud, particularly given that a significant proportion of non-compliant claims include total qualifying expenditure of less than £50,000. Suggested thresholds typically ranged from £10,000 to £25,000. However, many respondents, particularly those representing small and early-stage businesses, cautioned that impactful R&D is not always linked to high expenditure. They warned that a MET could exclude innovative firms from accessing support and risk discouraging legitimate claims. Concerns were also raised that a threshold might prompt businesses to inflate costs artificially.

Improving HMRC capability and communication

Many respondents highlighted the need for HMRC to strengthen its capability and engagement with claimants. A recurring concern was the lack of sector-specific expertise among caseworkers, particularly in assessing the scientific and technical aspects of R&D claims. Respondents called for better training and access to specialist knowledge to improve consistency and confidence in decision-making.

There were also calls for clearer and more consistent guidance, including examples tailored to different industries. In addition, respondents recommended improvements to communication channels, such as dedicated helplines, webchat services, and digital tools that allow businesses to track the progress of their claims more easily.

3. Next steps

HMRC will take forward measures to improve the customer experience and provide certainty for businesses, whilst continuing to manage the levels of error and fraud.

In Spring 2026 HMRC will launch a limited pilot of a new targeted advance assurance service. The pilot responds to stakeholder feedback calling for more accessible and focused assurance, particularly on complex or high-risk aspects of claims.

While the pilot runs, the existing advance assurance offer will continue.

Any SME planning to claim R&D relief will be able to apply to take part in the pilot, and it will not be restricted to first-time claimants. Applicants will be able to seek assurance on one of 4 issues during the pilot:

1. Whether the project meets the definition of R&D for tax purposes.
2. Whether overseas expenditure qualifies for relief.
3. Which party is able to claim relief for contracted-out expenditure.
4. Whether the company qualifies for exemption from the PAYE/NICs cap.

This pilot responds to feedback that the current advance assurance service is too narrow and inflexible. The pilot will help HMRC test demand, which aspects of the claim businesses most value assurance on, and the resource required to deliver a targeted advance assurance service. HMRC will set out further detail in due course.

To help address concerns about HMRC’s ability to understand complex or emerging R&D claims, HMRC has already established the Research and Development Expert Advisory Panel. The panel comprises 6 independent experts in fields such as AI, life sciences, and advanced manufacturing. While it does not assess individual claims, the panel advises on guidance and provides insight into cutting edge R&D across specific sectors. This will enhance HMRC’s understanding of innovation and development in specific sectors supporting better engagement with innovative businesses.

4. Further detail

Current Advance Assurance Scheme

Question 9: Were you aware of the advance assurance scheme before this consultation?

Question 10: Have you or your clients used the current advance assurance scheme?

Question 11: If you or your clients have used the current advance assurance scheme, please tell us if and how this met your needs.

Question 12: If you or your clients have used the current advance assurance scheme, please tell us about what worked less well in the process.

Question 13: For those who are aware of the current advance assurances, but chose not to use them, what were the reasons for this?

Question 16: Do you have any views on the current criteria for eligibility for advance assurances?

While most respondents were aware of the existing Advance Assurance scheme, only a small proportion had used it. Those who had engaged with the service cited benefits such as early certainty and reduced risk of enquiry. However, many felt eligibility criteria for the scheme were too restrictive (only available to first-time SME claimants). Respondents also described the process as inflexible, with long turnaround times.

Concerns were raised about inconsistent decision-making and vague feedback. Some agents reported that clients viewed the scheme as an invitation for scrutiny rather than a source of reassurance. Many respondents called for a reformed service that is more flexible and accessible to a wider range of businesses, including those with previous claims.

Preferred Assurance Timing and Focus

Question 14: Is the current focus in advance assurances on treatment of a whole claim right or should it focus on a particular issue or number of issues in a claim?

• focus on the whole claim
• focus on one particular issue in the claim
• focus on more than one particular issue in the claim
• other (please specify)

Question 15: Which issues in R&D claims are of the most concern?

Question 25: Do you see value in pre-activity advance assurance?

Question 26: If so, what sorts of issue might be raised with HMRC?

Question 27: What sort of information might companies be able to provide to HMRC at this stage?

Question 28: Which of the options A to C do you think would be most useful? (please rate all options: not useful, somewhat useful, useful)

Question 29: Please give reasons.

The majority of respondents supported a pre-claim assurance model (Option B), which was seen as the most practical and beneficial approach, offering certainty at a point when project details are clearer but before a claim is submitted. This was viewed as particularly helpful in reducing error and fraud while supporting confident investment decisions.

Pre-activity assurance (Option A) received mixed views. Larger businesses and those undertaking complex or high-value projects saw value in early engagement, particularly for planning and budgeting. However, many SMEs felt it would be of limited use due to the evolving nature of R&D projects and the administrative burden involved. Concerns were also raised about HMRC’s capacity to deliver timely and meaningful support at this stage.

Post-claim assurance (Option C) was seen as the least useful option with limited support beyond niche or exceptional cases.

There was also support for issue-specific assurance, rather than requiring a whole-claim approach.

Respondents emphasised that any assurance process should be flexible, proportionate, and supported by clear guidance. Many also highlighted the importance of HMRC having sufficient technical expertise to understand claims effectively at different stages.

Voluntary vs Mandatory Assurance

Question 17: Can you foresee circumstances in which paid-for voluntary assurances might be attractive?

Question 18: Do you agree that a voluntary service could be focused on growing and high-potential companies as well as sectors set out in the government’s Industrial Strategy?

Question 19: If not, at which companies should a voluntary service be focused?

Question 22: Do you agree that the assurances should be mandatory for some?

Question 23: If so, what factors should be considered in determining who must seek assurance?

Respondents generally favoured a voluntary or risk-based approach to assurance, highlighting its flexibility and suitability for businesses with different levels of experience and complexity in their claims. Voluntary assurance was seen as a way to support businesses that seek additional certainty without imposing unnecessary requirements on those confident in their eligibility. It was particularly welcomed by SMEs, which may lack the resources to manage additional compliance steps.

Where mandatory assurance was supported, it was typically in the context of a targeted, risk-based model. Respondents suggested it could be appropriate for first-time claimants or sectors with historically high levels of non-compliance. However, concerns were raised about the potential for increased costs, administrative complexity, and the risk of discouraging legitimate claims. To mitigate these risks, respondents emphasised the importance of transparency in how mandatory assurance would be applied, clear criteria for identifying high-risk cases, and procedural safeguards such as guidance and appeal routes.

There was also strong opposition to introducing paid-for assurance services. Many respondents felt that charging for assurance could disadvantage smaller businesses and reduce access to support. However, a minority saw potential value in optional paid services for complex or high-value claims, provided they offered clear benefits such as faster processing or binding outcomes.

Eligibility and targeting

Question 18: Do you agree that a voluntary service could be focused on growing and high-potential companies as well as sectors set out in the government’s Industrial Strategy?

Question 19: If not, at which companies should a voluntary service be focused?

Most respondents did not support limiting a voluntary assurance service to specific sectors or to companies identified as high-growth or high-potential. They emphasised that innovation can occur across all industries and business sizes, and that narrowly defined eligibility criteria could exclude legitimate claimants. While some acknowledged that prioritising strategic sectors might align with wider government objectives, there were concerns about how such categories would be defined and whether they would be applied consistently.

Instead, respondents favoured a broadly accessible assurance service, open to all businesses eligible for R&D relief. Some suggested that certain groups could benefit from prioritised support, such as first-time claimants, SMEs with limited experience, or companies submitting complex or high-value claims. These groups were seen as more likely to need additional guidance and reassurance. Overall, respondents stressed that any targeting should be based on clear and objective criteria, such as the complexity of the claim or the claimant’s experience, rather than sector or perceived growth status.

Minimum Expenditure Threshold

Question 20: Do you agree there is a minimum expenditure below which significant R&D does not take place?

Question 21: If yes, please give that level (in thousands).

Stakeholders expressed mixed views on reintroducing a MET. Some respondents saw potential benefits, particularly in helping HMRC focus resources on higher-value claims and reducing the risk of error and fraud. HMRC data indicating higher levels of non-compliance among claims including total qualifying expenditure of less than £50,000 was cited as a rationale for introducing a threshold. Supporters argued that a MET could streamline compliance activity and improve the overall integrity of the R&D tax relief system.

However, a significant number of respondents raised concerns about the broader impact of a MET. Many small and early-stage businesses conduct substantial R&D on minimal budgets, often relying on unpaid labour. A threshold could exclude these firms from accessing critical support, potentially stifling innovation. Respondents also raised concerns that a MET could incentivise artificial inflation of costs to meet the threshold, adding complexity to HMRC’s compliance efforts.

Suggested thresholds varied, with figures ranging from £10,000 to £100,000, though most clustered between £10,000 and £25,000. Some called for a for a more flexible approach, such as indexing the MET to inflation or adopting a tiered system based on project characteristics rather than a fixed expenditure level or exempting R&D-intensive SMEs.

Role of agents

Question 24: How can HMRC best recognise the role of agents in designing a clearance service?

Respondents widely acknowledged the central role agents play in the R&D tax relief system and emphasised the importance of recognising this in the design of any future clearance service. Many businesses rely on agents to interpret guidance, prepare submissions, and manage correspondence with HMRC. As such, respondents recommended that agents be allowed to submit and manage clearance applications on behalf of clients, with appropriate authority and visibility built into the system from the outset.

Many respondents highlighted the need for stronger oversight of agents involved in R&D tax relief claims. The absence of formal qualification or regulatory requirements was seen as contributing to error and fraud. To address this, respondents proposed measures such as agent accreditation, affiliation with a recognised regulatory/professional body, and the enforcement of a code of conduct. Some suggested publishing a list of approved agents to support assurance processes, alongside a register of agents with a history of fostering non-compliance.

Some respondents recommended involving agents in designing the assurance process, and went on to suggest it include features like online portals, agent-led submissions, and feedback forums. However, other respondents raised concerns about agent involvement. They cautioned that agents may design processes that serve their own business models.

Other suggestions

Question 30: Please give any other suggestions you have for useful changes to R&D relief administration, particularly those that would address error and fraud.

Respondents proposed a range of additional measures to improve administration and reduce error and fraud, including:

• clearer guidance and sector-specific examples
• better training for HMRC staff and use of external experts
• improved communication channels (such as helplines, webchat)
• a digital claims tracker or portal
• more thorough checks on first-time claims
• use of AI and data analytics to support risk profiling

5. Annex A: List of stakeholders consulted

The government is grateful for the contributions of those who responded to the consultation, who have been listed below. This list does not include those respondents that asked for their response to be kept confidential or responses from individuals.

Abell Limited

ABGI-UK Limited

Accountech Solutions Limited

AECOM Limited

Aiglon Consulting

Alvarez & Marsal Tax LLP

AMR GP Limited

ANCY

Arctech Innovation

Ardmac

Association of Innovation, Research and Technology Organisations (AIRTO)

Avalon Tax Ltd

Ayming UK

Azets Holdings Limited

Ballards LLP

BDO LLP

Bennett Brooks & Co Limited

Bentley Motors Limited

BiologIC Technologies Limited

Bonham and Brook Ltd

Brian Mason Technology Limited

Bright R&D Limited

British Private Equity and Venture Capital Association

Bumblebee IT Solutions Ltd

Buzzacott LLP

CA Models Limited

Cambridge Consultants Limited

Cast Metals Federation

Chartered Institute of Taxation

Confederation of British Industry (CBI)

Cooper Parry Advisory Limited

Copper Tax Limited

Creativity 5.0 Environments and Publishing Limited

Crowe U.K. LLP

CurveBlock Ltd

Darvick Ltd

Deloitte LLP

EKO 4 Global Services

ela8 limited

EmpowerRD Ltd

Fiander Tovell

ForrestBrown Limited

Forvis Mazars

Frugalpac Limited

Grant Thornton UK Grant Thornton UK Advisory & Tax LLP

Grantica Advisory Ltd (and its sister company Grantica Ltd)

GSK

Haltermann Carless UK Ltd

Hazlewoods LLP

HUBER & SUHNER Polatis Limited

Hypha Discovery Limited

Innov8 R&D

Insurtech UK

Invenics Innovation Services Ltd (trading as ResearchQX)

James Cowper Kreston

Johnson Matthey Plc

Leyton UK Ltd

Light Coatings Ltd

MHA Advisory Limited

Michael Price Associates Ltd

Momentum Tax Group

Moore Kingston Smith LLP

Mpac Lambert Limited

MSC R&D Tax Services Limited

Novel App Limited

Owlstone Medical Limited

PA Consulting Group

PKF Francis Clark

PrecisionLife Ltd

PriceWaterhouseCoopers

QinetiQ

Queen’s Lane Consultants

Randall & Payne LLP

RAO CONTROLS LTD

Raspberry Pi Plc

RCK Partners Limited

RELX Plc

Research & Development Tax Solutions Limited t/a Ryan

Richard Riley and Associates Ltd

Richardsons

RSM UK Tax

S&W Partners LLP

Shorts Chartered Accountants

Sophos Limited

Sparkbox Limited

STADA UK (Thornton & Ross, Britannia Pharmaceutical, Nature’s Aid)

Sumer NI

techUK

The Association of Taxation Technicians (ATT)

The R&D Community Ltd

The UK Bioindustry Association (BIA)

Umazi Ltd

Vacuum Systems Ltd

Wandsworth Investments Limited (trading as Wandsworth Consulting)

Wilson Partners Limited

Wobbegong Technology Ltd (trading as WhisperClaims)