R&D advance assurance tax relief
You will learn
- What advance assurance is
- How you can apply
- Why advance assurance is great for your business
You might be hesitant about applying for research and development (R&D) tax credits because you don’t want to be turned down and have wasted your time. This is where R&D advance assurance can help. It’s a pre-claim application that can support your research and development tax credit application. You can find out more about research and development tax reliefs here and can apply for advance assurance here.
Advantages of advance assurance
When applying for advance assurance of your research and development tax credits, you’ll have an HMRC specialist on hand to help you understand and comply with the R&D tax relief conditions. This can speed up the process and make sure that you are ticking all the right boxes.
If you are given advance assurance it means that you will be given R&D tax relief for up to three years without question. This will let you focus more on your business and stop you having to worry about getting the forms right each year.
In some cases, having advance assurance can also help you to get funding. It shows potential investors that you are creditable in your research and can encourage them to work with your business.
Who can apply?
You can apply for advance assurance if you are planning to carry out, or have previously undertaken, research and development in your sector.
To qualify, your business must:
- Have fewer than 50 employees
- Have an annual turnover under £2 million
- Not have claimed R&D tax relief before
If your business might be part of a bigger group of businesses you may still be able to claim the relief if you meet the criteria. If another business within your group has made a claim for the tax relief, yours won’t be able to qualify.
You won’t be granted advance assurance for R&D tax relief if your business is part of the Disclosable Tax Avoidance Scheme (DOTAS) or if it is a "serious defaulter" (businesses who have purposely avoided tax payments or caused serious problems for HMRC).
What do you need to be able to apply?
You’ll need to give some basic information about your business and the research and development activities you’re undertaking.
You’ll also need:
- Your business accounts
- Your business registration documents (from Companies House)
- HMRC correspondence
- Old tax returns (unless you’re a start-up)
- Details for your main contact that HMRC can talk with about your application
What happens after you apply?
After you have applied for your advance assurance, HMRC will assess your application. They’ll get in touch with you, usually through a phone call to their main contact in your business. If the case for your business is more complex, they might come and visit you personally.
It takes approximately three months for successful applications to be agreed upon and for your agreement letter to arrive. You can use this letter as the proof potential investors might want to see before agreeing to work with your business.
If your application hasn’t been successful you’ll receive a letter which will explain why you haven’t qualified for the relief.