Definition
Advance Assurance is a voluntary scheme operated by HMRC that gives eligible first-time small company claimants written confirmation that their research and development activities qualify for R&D tax relief. Once granted, HMRC will not enquire into the R&D element of the claim for the next three accounting periods, provided the underlying activity and cost profile remains materially the same as that agreed in the assurance application.
How HMRC defines it
HMRC documents the scheme at CIRD83200 and in the online guidance page Apply for Advance Assurance for a claim for R&D tax relief. The service is only available to companies with turnover under £2 million and fewer than 50 employees that have not previously claimed R&D relief. The application is made on a dedicated form and is usually decided within a few weeks of submission. HMRC may request a telephone discussion with the competent professional responsible for the R&D.
Practical example
A two-year-old AI start-up with 12 staff and £500,000 turnover applies for Advance Assurance before filing its first claim. HMRC confirms the projects qualify. The company and its specialist adviser proceed to file claims for the current and next two accounting periods without fear of an enquiry on the qualifying R&D element, provided the work stays within the scope described.