If your business invests in innovation, research or development, there's welcome news from HMRC this spring. A new pilot scheme is being introduced that gives small and medium-sized businesses the chance to get advance confirmation on key elements of their R&D tax relief claim before they submit it.
🔬 What's the New Pilot?
The pilot aims to provide small and medium-sized enterprises with greater clarity and confidence when preparing R&D claims. The scheme will allow eligible SMEs to seek HMRC assurance in advance on one of four key areas: whether a project qualifies as R&D for tax purposes, whether overseas expenditure qualifies for relief, which party can claim relief for contracted-out expenditure, and whether the company qualifies for exemption from the PAYE/NICs cap.
In plain terms: if there's a specific area of your claim you're unsure about, you can ask HMRC to give you their view before you file, reducing the risk of a surprise rejection or compliance enquiry later.
👍 Who Can Apply?
Any SME planning to claim R&D relief will be able to apply to take part in the pilot and obtain pre-claim advance assurance on a voluntary basis. Eligibility will not be restricted to first-time claimants.
This is a meaningful improvement on the existing scheme, which has had very low uptake. The existing scheme shows under 1% uptake, with just 80 companies applying in 2023-24 despite around 11,500 SMEs being eligible.
✅ What Are the Benefits?
- Getting upfront confirmation from HMRC reduces the risk of post-submission queries or delays
- It helps businesses plan cashflow and resource allocation with more confidence
- It gives first-time claimants, and those doing different types of R&D activity, a clearer route to certainty
⚠️ One Important Caveat
If HMRC refuses advance assurance under the pilot, there will be no right of appeal at the pre-claim stage. That doesn't stop you going ahead and submitting the claim anyway (participation is voluntary) but it's worth thinking carefully about which aspect of your claim you choose to seek assurance on.
R&D tax relief can be genuinely valuable for businesses investing in innovation, and the compliance rules have tightened considerably in recent years. Whether you're a first-time claimant or you've claimed before and want greater certainty, now is a good time to review your position.
To find out whether your business could benefit from R&D tax relief, or to discuss how this pilot might apply to you, get in touch with your Client Manager.