Advance assurance on R&D tax relief to boost SME usage

Small companies that have a turnover under £2m and employ less than 50 people can seek advance assurance on R&D tax relief from next month.

This will help them put more effective financial planning in place and give them more certainty, says HMRC.

Super deduction

SMEs can reduce profits liable to corporation tax by 230% of their qualifying R&D expenditure in a process known as 'super deduction'.

The government’s ‘Making R&D Easier: HMRC’s plan for small business R&D tax relief’ publication contains details about the new measure, which is being introduced in response to a consultation on R&D.

The ‘Advance Assurance’ process will be open to all companies whether they employ a tax adviser or not, and HMRC says applicants will have "assurance that HMRC will allow their first three years of R&D tax relief claims without further enquiry."

Direct contact

Stephen Relf, a tax writer at CCH, said that the new plan contains many positives, but added: "The focus is on HMRC dealing with claimants directly and improving its guidance for claimants, but this will not suit all businesses."

"Accountants have played a major part in the success of the R&D tax reliefs, and will continue to do so going forward," he added.

He went on to say that he would like to see HMRC work more with accountants to publicise R&D tax relief.

"HMRC need to realise that they won’t make R&D easier by excluding accountants," Relf concluded.