HMRC has launched a consultation that may reshape the way companies engage with R&D tax relief in the early stages of their claims. Entitled “R&D Tax Relief: Advance Clearances”, the consultation explores how a more formal advance assurance process could be offered to a wider range of claimants, particularly those beyond the current start-up threshold.
Full details are here.
At its core, the proposal aims to bring greater certainty to companies embarking on R&D activity. The government acknowledges that many businesses are hesitant to commit to investment in innovation due to doubts about whether their projects will qualify for relief. This initiative seeks to address that concern head-on by expanding the use of binding pre-claim clearances—giving companies more confidence before they even submit a claim.
The existing Advance Assurance scheme is only available to first-time SME claimants with turnover under £2 million and fewer than 50 employees. It has been relatively underused and has never been extended to RDEC claimants. The new consultation seeks views on replacing or complementing that scheme with something more comprehensive and effective.
There are two key ideas being considered:
- An optional, binding advance clearance process
This would be available to any company, whether under the SME scheme or RDEC, and would involve HMRC reviewing the R&D activity and expenditure in advance. If HMRC agrees the work is eligible, the clearance would be binding—providing the claim is made in line with what was agreed. - A non-binding pre-claim engagement
This would formalise the current discretionary advice some companies receive through informal channels. While not guaranteed, it would still offer structured feedback ahead of submission.
For established companies undertaking technically robust R&D, the proposal for binding clearances is promising. It would allow businesses to de-risk their claims and plan with greater certainty. It could also reduce the chance of lengthy HMRC enquiries down the line.
However, the process may also bring added complexity. There is the potential for delays, administrative burden, and uncertainty during the clearance review period itself. In particular, it is unclear how long HMRC would take to provide feedback, or how nuanced the binding clearance would be in complex, multi-phase projects.
It is also not clear how this will align with HMRC’s current risk-based enquiry approach. If a project receives binding approval in advance, will HMRC still retain the right to review the rest of the claim in depth? Will the clearance process give claimants a false sense of security? These are the questions businesses will want answered.
The consultation runs until 28 May 2025 and invites input from businesses, advisers, and industry bodies. If implemented carefully, the advance clearance model could bring much-needed clarity to the claims process. But it must not come at the expense of timeliness or flexibility.
At RandDTax, we support initiatives that bring more certainty and consistency to R&D tax relief, but the practical delivery of this scheme will be critical. We will be submitting our views to the consultation in due course and will keep our clients updated on how these changes evolve.
If your company is considering an R&D claim and would benefit from experienced guidance on compliance, documentation, or assurance, please contact us for expert advice.
Christopher Toms MA MAAT
Compliance Director
RandDTax