UK and International Tax news

HMRC To Issue Advance Assurance On R&D Tax Relief

Thursday 31st December 2015

HMRC has recently issued guidance on a new system of Advance Assurance for companies that wish to claim tax relief for research and development expenditure.

Where a company carries out R&D for itself or other companies, it could qualify for Advance Assurance in which case for the first three accounting periods of claiming for R&D tax relief, HMRC will accept the claim without further enquiries.

Applying for Advance Assurance will be voluntary and may be done at any time before the first claim for R&D tax relief. A company may still apply for R&D tax relief without applying for Advance Assurance beforehand.

A company may apply for Advance Assurance if it is planning to carry out, or has previously carried out R&D and meets the following conditions:

  • it has not claimed R&D tax relief before
  • it has annual turnover of £2 million or less
  • it has less than 50 employees

If a company is part of a group and another company within that group has made a claim for R&D, HMRC will not accept the application for Advance Assurance.

HMRC will not offer Advance Assurance if a company has entered into a Disclosable Tax Avoidance Scheme (DOTAS) or is is a corporate serious defaulter.

To apply for Advance Assurance, a company will need to complete and submit form CT R&D (AA), provide information about its R&D activities, copies of accounts and previous tax returns, company registration documents (from Companies House), copies of HMRC correspondence, and the name of a main contact being someone with a direct knowledge of the company’s R&D (i.e. research manager or company director) and who may be required to discuss the application with HMRC.

HMRC may grant Advance Assurance for three accounting periods to a company in which case it will issue an agreement letter explaining the company’s responsibilities.

Where Advance Assurance is not given, HMRC will write and explain their reasons why.

 If you would like more information on the Advance Assurance, please contact Keith Rushen on 0207 486 2378.

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