HMRC launch support program for SMEs with R and D claims

Later this month HMRC will roll out a program called ‘Advance Assurance for R&D tax credit claims’. The aim of the program is to stimulate greater adoption of the scheme amongst SMEs by providing assurance to first-time claimants that, subject to fulfilling certain criteria, the first R&D claims submitted will be accepted.

The Research and Development (R&D) tax credit scheme is designed to support and encourage UK companies that invest in innovation. Currently, an SME can recoup up to 33.35% of the expenditure incurred on R&D activities, and the typical SME claimant receives over £50,000 annually.

Despite this, HMRC statistics show that the scheme still remains fairly unexploited by UK companies. Considering the generosity of the reliefs available and the wide range of industries that it caters for, it seems surprising that a relatively small number of companies apply for the relief they’re entitled to.

The Advance Assurance program is set to connect SMEs with HMRC Inspectors, who will support the submission of the first claim by providing know-how and advising on the best methodology for the preparation of the first claim. They will also advise on the implications of any grant funding. Following acceptance from HMRC the clearance will remain in place for three years, provided there are no material changes to the nature of the R&D project.

Initially rolled out to smaller SMEs – employing fewer than 50 staff with a turnover of less than £2M – the program will then be made available to larger SMEs during the course of 2016. An application form will be made available on the GOV.UK website for companies due to commence an R&D project, wishing to seek assurance that the activities they plan to undertake will qualify for R&D tax relief.

HMRC won’t automatically accept all of the claims submitted through the program, and the basis of the Advanced Assurance being given is that the SME follows the claim preparation process agreed with the HMRC Inspector. The program won’t give SMEs the freedom to submit unreasonable claims, and such claims will still be challenged by HMRC.

Jennifer Tragner, a director at R&D tax relief consultancy ForrestBrown commented: "From our experience it emerges that too many SMEs are unaware of the existence of the R&D schemes and so any initiative set to promote the uptake of the scheme among SMEs is well received. This is particularly true in the small SME space, where exploring claiming R&D tax credit might not be feasible due to the lack of resources or time constraints."

The Advanced Assurance program will be introduced in Autumn this year, but if you believe your business could qualify for R&D tax credits then the time to act is now. If you would like an impartial view of whether your activities could qualify for R&D tax relief, contact your local TaxAssist Accountant for a no obligation consultation.

Date published 4 Nov 2015 | Last updated 4 Nov 2015