Advance Assurance for R&D Claims
Research and Development (R&D) relief is available to companies that incur expenses on a project which seeks an advance in science or technology.
This relief offers assistance to companies in the form of a reduced company tax bill or, for small to medium sized enterprises (SMEs), a cash sum in the case of a loss. The tax credit is currently offered at a rate of 230% of qualifying expenditure for SMEs, or 130% for large companies.
From November 2015, it will be possible for first time claimants to make a voluntary advanced assurance claim to HMRC to apply for clearance that their project will qualify for the R&D relief, provided that the company’s turnover is below £2m and with fewer than 50 employees. Upon acceptance from HMRC, the clearance will apply for three years provided that there are no material changes to the nature of the project.
The aim of the advance assurance scheme is to improve the R&D application process as companies will no longer be uncertain as to whether the R&D costs incurred will qualify for relief. SMEs will be able to discuss the project with an HMRC specialist unit and based on the information provided, HMRC will offer an opinion as to whether the project is eligible for the relief.
HMRC have also confirmed that they will offer additional guidance aimed at SMEs on applying for R&D.
It should be noted that HMRC is yet to release the formal application procedure and the requirements for obtaining R&D advance assurance.