HOW ADVANCE ASSURANCE IS BENEFICIAL FOR YOUR R&D CLAIM?
WHAT IS ADVANCE ASSURANCE?
Advance assurance is a guarantee by the HMRC that any SME, following fulfilling all prerequisites, will be given tax relief for their first R&D claim. The application for the Advance Assurance needs to be involving the first three accounting periods. Should HMRC approve the advance assurance, then no further enquiries will be done into the R&D tax credit or R&D Tax Relied claim made by the company.
WHO CAN AND CANNOT APPLY FOR ADVANCE ASSURANCE?
For a company to be eligible to approach the HMRC for an Advance Assurance for its R&D tax Credits or R&D Tax Relief claim, it needs to have an annual profit approximating £2 million or less. Moreover, the company is required to be an SME, with the number of employees being less than 50. It is also important that the company applying for Advance Assurance should not have made any R&D tax relief claims before.
Companies that cannot apply for the Advance Assurance facility are the ones that are a part of a group that claimed any R&D tax relief or compensation through R&D tax credits prior to the application; is subject to the Disclosure of Tax Avoidance Schemes or has been involved in activities rendering it as a corporate defaulter.
HOW TO APPLY FOR ADVANCE ASSURANCE?
The company seeking an Advance Assurance for R&D tax relief claim can apply for it in the following ways:
- Firstly, it needs to provide the HMRC with all the necessary details such as account detail and registration information.
- The HMRC requires the completion of an application form that can be accessed through the company’s government gateway portal. The form is to be carefully read and filled by adding details pertinent to the nature of the R&D project and the R&D claim.
- The application form can be either submitted online or by post for consideration by the HMRC.
WHAT HAPPENS AFTER THE APPLICATION?
Following the submission of the application for an advance assurance for the R&D tax credit, the company seeking the assurance will be contacted by the HMRC. If the application is approved, a relevant statement will be issued by the HMRC, which can be shown to the investors by the company, and no further enquiries into the R&D project or the R&D claim will be made. In the matter of the application for advance assurance being unapproved, the HMRC will append a thorough explanation as to why the application was rejected and became unsuccessful. It is important to note that the HMRC will not respond to any incomplete application, therefore the company seeking Advance Assurance should take extra measures to ensure that the application is complete before its submission.