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If your company is claiming R&D tax relief under the SME scheme for the first time, you may benefit from applying for Advance Assurance.

Whilst Advance Assurance is not a prerequisite for an R&D tax relief claim, if the application is accepted by HMRC, it does guarantee that the claim will be accepted by HMRC – providing that the claim is in line with the details outlined in the application.

In today’s climate of increased scrutiny of R&D claims, this process can provide a degree of reassurance that tax relief will be available for the R&D projects you are undertaking.

If Advance Assurance is granted, the agreement will cover R&D claims for the first three accounting periods. It is important to note that the agreement does not constitute a claim for R&D relief – the R&D claim must still be made in the usual way, via the company tax return.

Who is eligible?

To be eligible for this service, your company must be an SME with a turnover of less than £2 million and fewer than 50 employees. If the company is part of a group, neither the company nor any linked companies will have made a claim for R&D tax relief before.

What does the application process involve?

The application is made by the company, or their agent, via the Government Gateway. Your company accounts will be required, together with company registration documents and any prior year tax returns.

Detailed information about the company’s R&D activities will also be provided at this stage, along with the name of a main contact for the application. This will be an individual with direct knowledge of the company’s R&D and who is in a position to discuss the application with HMRC.

Next steps

Following the application, HMRC will request a telephone call with the main contact to discuss the company’s R&D in more detail. This is normally a short telephone call, but it may involve a longer discussion or an in-person visit if this is deemed necessary. Claritas has experience of this process and will be present for any such calls or meetings with HMRC to provide support for our clients.

HMRC will then confirm in writing whether the application was successful. If the company is not granted Advance Assurance, this does not preclude you from making an R&D claim in the usual way.

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