Following consultation and an announcement in the Autumn 2025 Budget, HMRC have launched a voluntary pilot advance assurance scheme for Small and Medium-sized enterprises (SMEs) making Research and Development (R&D) claims, that will run to May 2027. The aim is to improve certainty within the R&D tax regime.
Who can use it?
This applies to all SMEs (i.e. businesses with fewer than 500 employees and either turnover less than €100 million or assets less than €86 million) carrying on R&D that have not yet made a claim for the relevant period.
What can you seek assurance on?
Up to a maximum of two of the following four areas:
- Whether a project meets the definition of R&D for tax purposes;
- Whether overseas R&D expenditure on Externally Provided Workers or contracted out R&D qualifies;
- Whether the company can claim R&D incentives where one company contracts R&D to another company; and/or
- Whether the company qualifies for exemption from the PAYE/NIC cap.
How can you apply?
The assurance application can be made by the company, agent or R&D adviser using an online form. Information needed includes the registration number, start date, contact details for the senior officer and project details (including overview, forecasted expenditure, project duration and types of records held).
What happens after application?
HMRC will respond within 40 days of the application and will issue their decision in a letter with reasons.
The claimant will still need to make an R&D claim in line with the usual rules, regardless of HMRC’s decision.
If HMRC reject the advance assurance application, there is no right of appeal and no ability to re-apply. If the company disagrees with HMRC’s decision, it is still possible to file an R&D claim with HMRC.
Opportunity for claimants to obtain additional certainty from HMRC on complex issues
This voluntary pilot advance assurance scheme presents an opportunity for SMEs to obtain extra certainty over complex aspects of their R&D claims; in particular, the new complex rules concerning ‘contracted out R&D’ and the restrictions on overseas R&D expenditure. It is to be welcomed and may be of interest to companies who are within an R&D supply chain, have overseas R&D expenditure or are readying for a transaction and want extra assurances with regards to R&D claims. The success of the pilot will require engagement from R&D claimants and advisers, timely and considered responses from HMRC and publication of all key learnings so the wider R&D tax community can benefit.
If you are an SME and interested in exploring making an advance assurance application then please reach out to the authors or your usual KPMG UK contact to explore further.
For further information please contact: