April 10, 2025
HMRC Opens Consultation on Proposed Changes to Advance Assurance for R&D Tax Credits
HMRC
Updates
HMRC has announced a new consultation focused on the future of the Advance Assurance (AA) process for R&D tax credit claims. The aim is to explore how the system can be restructured to help tackle fraud and error, give businesses more certainty earlier in the process, make the process more accessible and enhance the overall experience for those claiming R&D tax relief.
The consultation is open to feedback from a broad range of stakeholders, including businesses of all sizes, industry and representative bodies, and R&D tax agents. This signals a continued push by the government to improve the trust, clarity, and accessibility of R&D tax relief, which has already seen considerable legislative reform in recent years.
Advance Assurance is currently a voluntary process, primarily aimed at SMEs, that allows businesses to receive confirmation from HMRC that their activities qualify for R&D tax relief before making a claim.
The consultation is now looking at how this assurance process could be expanded and improved, to offer more companies early-stage clarity on their eligibility. A stronger and more transparent Advance Assurance system could help reduce enquiries and reclaims, improve compliance, and encourage greater confidence in claiming relief.
As part of the consultation, HMRC is also revisiting the idea of a minimum expenditure threshold for R&D tax claims, an approach that could limit the ability of some businesses to claim relief unless they exceed a certain level of R&D spend.
This proposal is likely to generate debate, particularly in relation to start-ups and early-stage companies, many of which operate with minimal headcount or director salaries, yet are often innovation-heavy and would otherwise qualify under schemes like ERIS.
The consultation is now live and accepting responses until 11:59pm on 26 May 2025. Stakeholders are encouraged to provide input to help shape a more effective and fair system.
“The current Advance Assurance scheme has long been considered by some to be ineffective in providing real clarity for businesses. The prospect of an overhaul is a step in the right direction, particularly if it leads to a more streamlined and accessible process. Greater certainty up front can only help businesses, especially SMEs, engage more confidently with R&D tax reliefs and avoid issues further down the line.”
“However, the suggestion of reintroducing a minimum expenditure threshold is concerning. While we understand the objective is to combat fraud and error, this move could unintentionally penalise genuine businesses, particularly start-ups, or those where founders aren’t drawing a salary. These companies are often highly innovative and reliant on schemes like ERIS. It’s vital that the consultation process leads to a system that balances integrity with fairness, so that legitimate businesses aren’t left behind.”
