Research and Development tax relief: Advance Assurance
Information about Advance Assurance for small companies and how to apply.
HM Revenue and Customs (HMRC) introduced Advance Assurance for companies that claim Research and Development (R&D) tax relief in November 2015.
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.
There is a pre-recorded webinar giving an overview on 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.
If you are given Advance Assurance, you can spend time concentrating on your business, rather than focussing on your R&D tax claims.
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
Use information from your accounts to see if your company meets these conditions at the date of application.
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 see who can’t apply for Advance Assurance to be certain.
If you’re planning to carry out future R&D, HMRC may 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.
Agents can apply for Advance Assurance on your behalf.
When HMRC contacts you to discuss your application, they’ll need to talk to a company director or an employee (for example, research manager), however your agent will be able to contribute.
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 won’t offer Advance Assurance if your company:
- entered into a Disclosable Tax Avoidance Scheme (DOTAS)
- is a corporate serious defaulter
Information needed to apply
To apply for Advance Assurance you’ll need:
- your company accounts
- your company registration documents (from Companies House)
- HMRC correspondence
- previous company tax returns (not needed for new companies)
- the name of a main contact - someone with a direct knowledge of your company R&D (for example, research manager or company director) and who may need to discuss the application with HMRC
You’ll need to give some basic information about your company and detailed information about your company’s R&D activities.
Apply for Advance Assurance
If your company qualifies for Advance Assurance and you want to apply, fill in form CT R&D (AA).
What happens next
When HMRC receives the form they’ll contact you to talk about your company’s activities in more detail.
Most applications are dealt with by a short telephone call. More complex cases could take longer and HMRC may need to visit your company.
Dealing with HMRC
You’ll need to appoint a main contact. This must be someone with a direct knowledge of your company’s R&D (research manager or company director), and who may need to discuss the application with HMRC.
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.
If your company is not given Advance Assurance you will receive a letter giving you the reasons why.
Changes to an existing Advance Assurance agreement
You can’t make changes to an existing agreement but you can make some changes to the company R&D activities. These will be explained in the document you receive with your agreement letter.