One Less Thing to Worry About: Advance Assurance For R&D Tax Relief

The idea itself is pretty solid, on the face of it. The government has finally noticed what we at RIFT have been saying for ages – that far too few businesses with big ideas are getting the R&D Tax Credits they’re entitled to. With that in mind, they’re trying to remove at least one of the obstacles keeping those businesses out: the worry about whether or not they’ll be rejected, having put the time in to make a claim.

Here’s how it will work: if you’re a smaller business looking to make your first R&D Tax Relief claim, you’ll be able to send some details about your business and projects to HMRC and they’ll let you know if you qualify. If you do qualify, as long as you stick to the plan you outlined, they’ll automatically approve your claims for the first three accounting periods, without asking any further questions. Honestly, it sounds pretty good, in principle.

Of course, you still have to fit the profile they’re targeting with the scheme. To qualify for Advance Assurance, your business can’t:

  • Have claimed R&D Tax Relief before.
  • Have an annual turnover of more than £2 million.
  • Have 50 or more employees.

There are a few other technical restrictions as well, but basically they’ve got their sights set firmly on newer and smaller businesses, or those who are flexing their R&D muscles for the first time. For the time being, at least, though, it seems you’ll hit a few inevitable teething problems when you apply for Advance Assurance. For instance, you can only reply by post so far, as they don’t have an online version of the form yet. RIFT work closely with HMRC, though, and we’ll be giving them lots of feedback on how they can improve the initial proposal to make it more supportive of small businesses.

Once you’ve had your application accepted, you ought to get an answer within about three months. It’s worth noting that a rejection at this point won’t mean you can’t claim R&D Tax Credits at all for your projects. You can still make a claim through the normal channels. Also, those size restrictions listed above only apply at the point when you make your application. If your fledgling hits its growth spurt while you’re still in the scheme, the change in your size won’t affect your Advance Assurance.

Overall, it’s good to see the government making steps in the right direction, and anything that encourages businesses to consider R&D Tax Relief is good news in our books.