If your business is engaged in innovative activities, you may be eligible to claim R&D tax relief. Please see our further factsheet on who can claim. If you believe your work qualifies, there are two main routes you can take:
- Engage a Specialist R&D Advisor: A specialist should have the technical expertise to explain to HMRC why your activities meet the criteria for R&D relief. This is particularly useful for complex or high-value claims.
- Apply for Advance Assurance from HMRC: If HMRC grants Advance Assurance, we can assist with preparing the tax calculation for your claim.
Please note that our expertise lies in the tax calculation side of the process, not in preparing the technical justification for R&D eligibility. Therefore, we require Advance Assurance before we can support your claim. We will not prepare or submit a claim without Advance Assurance.
Our fees are typically lower than those of specialist R&D advisors, making Advance Assurance a cost-effective option especially for smaller claims.
What is Advance Assurance?
Advance Assurance provides a guarantee from HMRC that your R&D claims will be accepted, provided they:
- Align with the activities discussed and agreed upon during the application process
- Are submitted within three years of receiving the assurance
Applying for Advance Assurance
To apply for Advance Assurance, you will need to complete a form which involves answering the questions outlined below.
Once HMRC have reviewed your application they will contact you, to talk about your R&D in more detail. This is usually a short phone call but sometimes a visit if the case is more complex. They will then send a letter to confirm if the application was successful.
What questions will I be asked?
The following questions must be answered when submitting the Advance Assurance form (no more than 2500 characters)
1. What is the proposed R&D activity the company plans to undertake?
Provide a short paragraph that concentrates on the R&D activity. It is important to convey the scientific or technological nature of what the company is doing or plans to do, not its commercial context.
This should be a specific project for example, something you have specifically set out to achieve, not something you’ve come across during normal day-to-day activity that you want to claim for retrospectively as a project.
2. What is the scientific or technological advance being sought?
Provide a detailed explanation of the information given in the question ‘What is the proposed R&D activity the company plans to undertake?’. State what the advance is and why it is an advance (in the eyes of a competent industry professional).
3. What are the scientific or technological uncertainties involved in the project(s)?
Provide evidence showing the project’s aim to address a scientific or technological uncertainty. This includes:
- Where it is uncertain whether something is scientifically possible or technologically feasible
- Situations where a competent professional working in the field is uncertain, on the basis of current knowledge, how to achieve in practice the scientific or technological advance that is being sought
- Situations where something has been established as scientifically possible, but there is an uncertainty about how to turn that theoretical knowledge into a cost-effective, reliable and reproducible process, product or service.
4. How does the project plan to deal with these uncertainties?
Provide evidence that the company has a plan to deal with the uncertainty. Include:
- How the company has made a distinction between the wider commercial project and the R&D project
- What the uncertainties were, when they started and ended
- A description of the methods used to overcome the uncertainties, the investigations and analysis undertaken.
5. Why is the knowledge being sought not readily deducible by a competent professional?
Provide the reason why the answer to the problem is not known using the current state of knowledge.
Note: scientific and technological activity that involves a review of the field by a qualified professional, or which involves applying known techniques to find the answer to a problem, is not R&D. Nor does R&D occur where the knowledge is new to the company but not new to the wider world.
6. Provide a breakdown of the expected R&D costs
There are certain costs that qualify for R&D tax relief.
Gov.uk provide guidance on which costs qualify for R&D relief – https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief#which-costs-qualify-for-rd-relief
R&D Claim Notification Form
The Claim Notification Form is a mandatory pre-claim step for companies intending to claim R&D tax relief. This must be submitted within 6 months of the end of the accounting period (unless the last claim was less than 3 years ago). Failing to submit the form within this window will make your R&D claim invalid. Please note that Advance Assurance is in addition to the Claim Notification Form.
If you would like to discuss this in more detail relating to your business, please feel free to book a free online meeting.