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Research and Development (R&D) Tax Relief can provide additional tax deductions and enhanced cash flow for companies that develop new products, processes or services. Although widely available, R&D claims are often overlooked, and many companies that would be eligible to make a claim fail to do so.

To encourage more companies to claim R&D Tax Relief, HMRC recently introduced Advance Assurance. This is a new initiative which enables small companies to seek HMRC’s prior opinion on whether the R&D they are carrying out, or are planning to carry out, will qualify for R&D Tax Relief. With this added assurance from HMRC, combined with recent increases in the rates of relief available, there has never been a better time to make a claim.

The tax saving generated from a claim can be significant. For example, a company incurring £100k of costs on qualifying R&D activity could save up to £26k in corporation tax. Alternatively, if the company is loss making, it may be possible to surrender the loss for a cash repayment, of up to £33.3k for every £100k of expenditure. This could significantly improve cash flow for new companies and provide much needed investment for the business.

What is Advanced Assurance?

Advance Assurance is a voluntary scheme focused on first time claimant smaller companies.

In order to access Advance Assurance, the company must:

  • not have claimed R&D tax credits before;
  • have an annual turnover of £2 million or less, and;
  • have less than 50 employees.

Successful applicants will have assurance from HMRC that their first three years of R&D tax relief claims will be accepted.

If you’re planning to carry out R&D at a future date, Advance Assurance can still be applied for.

HMRC will contact you after you’ve submitted your first claim to check that the R&D undertaken matches the details supplied in the Advance Assurance application.

How we can help

We have extensive experience of dealing with R&D Tax Relief claims, and can apply for Advance Assurance on your behalf as a first step in preparing a successful claim.

If you would like to discuss your eligibility for claiming R&D tax relief and how you could obtain certainty through using the Advance Assurance scheme please get in touch with us.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

Our offices

Pegasus House, 463a Glossop Road, Sheffield, S10 2QD

5 Sidings Court, White Rose Way, Doncaster, DN4 5NU

Jubilee House, 32 Duncan Close, Moulton Park, Northampton, NN3 6WL

Sheffield

0114 266 7141

Doncaster

01302 367 262

Northampton

01604 645 600

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