Research and Development (R&D) tax relief can provide additional tax deductions and enhanced cash flow for companies who are eligible. HMRC has introduced ‘Advance Assurance’ to make it easier for small companies to check their entitlement.
If eligible to claim tax relief for research and development, a company can benefit from an additional corporation tax reduction of 26% of the expenditure incurred. Alternatively, it can surrender a loss for a cash repayment. This could give a repayment of up to 33.35% of the expenditure – and significantly improve cash flow for new companies.
To be eligible for R&D tax relief, a company must meet the qualifying conditions. The time and cost involved in reviewing whether these are met can be off-putting for small companies. HMRC has introduced Advance Assurance to make things easier. This new scheme gives potential claimants access to an HMRC specialist who can advise on whether the research and development activities meet the requirements.
To access Advance Assurance, the company must:
• not have claimed R&D tax relief before
• have an annual turnover of £2 million or less
• have less than 50 employees.
We can help with your application
Your RfM advisor can apply for Advance Assurance on your behalf. Any discussions about the business must be carried out with a main contact in the company (appointed by the company when applying). According to HMRC states, most applications can be dealt with over a short telephone call. Your advisor will be able to contribute to discussions as needed.
If HMRC finds that the company qualifies for tax relief for Research and Development, it will be able to claim for the next three accounting periods with no further queries.
You can still apply for Advance Assurance even if you’re planning to carry out R&D at a future date. HMRC will contact you after you submit your first claim to verify that the activity being carried out matches the details in the Advance Assurance application.