R&D tax relief advance clearances

Claims for Research and Development (R&D) tax relief can be highly beneficial for businesses, but making a valid claim can be complicated.

To help address this, HMRC has for many years offered an “advance assurance” mechanism to give businesses more certainty over their claims. However, uptake of the existing advance assurance scheme is incredibly low - only around 80 applications were made in 2023/2024. The current process can be difficult to use and does not offer full certainty to businesses.

Recognising this, the UK Government launched a consultation to explore implementing an improved clearance system and determine whether a system of clearances could effectively reduce error and fraud in R&D tax reliefs and provide businesses with greater certainty.

Scope of the Advanced Assurances consultation

The consultation ran from 26 March to 26 May 2025. The Government was interested in understanding the effectiveness of different clearance system designs. This involved evaluating various approaches to see which, or a combination of them, could best achieve the consultation's objectives.

A summary of responses to the consultation was issued on Budget Day (26 November 2025). The key themes were as follows:

Voluntary or mandatory assurances?

Mandatory assurance received cautious support, but many respondents favoured a voluntary assurance model, highlighting its flexibility and suitability for businesses with varying needs. It was felt that voluntary assurance would allow companies to seek certainty where needed, without imposing additional requirements on those confident in their claims. It was seen as particularly helpful for SMEs, who may lack the resources to manage complex compliance processes.

Stages of Assurance

The consultation explored pre-activity, pre-claim and pre-payment assurance stages. Respondents expressed strong support for pre-claim assurance, which was seen as the most practical stage to offer certainty, as businesses typically have a clearer understanding of their R&D activities at that point. Pre-activity assurance was viewed as more relevant for large or complex projects, but less suitable for SMEs due to evolving project scopes and resource constraints. Post-claim assurance attracted limited support. There was also support for issue-specific assurance, particularly around eligibility, overseas R&D, and contracted-out R&D.

 

Improving Deliverability

Another potential move to improve deliverability was the proposal to introduce a de-minimis threshold for R&D claims. Respondents expressed mixed views. Supporters argued that a threshold could help HMRC focus resources on higher-value claims, reduce administrative burdens, and deter fraud, particularly given that a significant proportion of non-compliant claims include total qualifying expenditure of less than £50,000. Suggested thresholds ranged from £10,000 to £25,000.

However, many respondents, particularly those representing small and early-stage businesses, cautioned that impactful R&D is not always linked to high expenditure. They warned that a de-minimis threshold could exclude innovative firms from accessing support and risk discouraging legitimate claims. Concerns were also raised that a threshold might prompt businesses to inflate costs artificially.

Improving HMRC capability and communication

Many consultation respondents highlighted the need for HMRC to strengthen its engagement with claimants. A recurring concern was the lack of sector-specific expertise among caseworkers, particularly in assessing the scientific and technical aspects of R&D claims. Respondents called for better training and access to specialist knowledge to improve consistency and confidence in decision-making.

There were also calls for clearer and more consistent guidance, including examples tailored to different industries. Respondents also recommended improvements to communication channels, such as dedicated helplines, webchat services and digital tools that allow businesses to track the progress of their claims more easily.

Piloting a Targeted Advance Assurance Service

In the 2025 Budget, it was announced that in Spring 2026 HMRC will launch a limited pilot of a new ‘targeted advance assurance service’. While the pilot runs, the existing advance assurance offer will continue.

Any SME planning to claim R&D relief will be able to apply to take part in the pilot and obtain pre-claim advance assurance on a voluntary basis . Eligibility will not be restricted to first-time claimants. Applicants will be able to seek assurance on one of four issues during the pilot:

Whether the project meets the definition of R&D for tax purposes.

Whether overseas expenditure qualifies for relief.

Which party can claim relief for contracted-out expenditure.

Whether the company qualifies for exemption from the PAYE/NICs cap.

The pilot responds to feedback that the current advance assurance service is too narrow and inflexible. It will help HMRC test demand, identify which aspects of the claim businesses most value assurance on, and the resource required to deliver a targeted advance assurance service. HMRC will set out further detail in due course.

To help address concerns about HMRC’s ability to understand complex or emerging R&D claims, HMRC has already established the Research and Development Expert Advisory Panel. The panel comprises six independent experts in fields such as AI, life sciences, and advanced manufacturing. It does not assess individual claims, but the panel advises on guidance and provides insight into cutting edge R&D across specific sectors. This is intended to enhance HMRC’s understanding of innovation and development in specific sectors supporting better engagement with innovative businesses.

BDO’s view

Many of the aspects of the pilot align to BDO’s formal response to the consultation . We can see that voluntary assurance for new, evolving technical points like overseas expenditure and contracted out R&D could be valuable in certain circumstances. We also welcome a focused pilot in the context of limited resources and experience within HMRC.

However, we do feel that restricting the pilot to SME companies is a wasted opportunity. All sectors and sizes of UK industry suffer from unclear tax legislation and guidance, and this pilot could easily have catered for some large companies too. Part of the aim of the merged scheme was to remove distinctions between smaller and larger companies, and this move will just exacerbate the differences.

HMRC has commented many times on their desire to reduce error and fraud. Their records show that most error and fraud occurs with smaller claims and it is surprising that they are not yet seeking additional opportunities to manage this risk.

You can read the consultation questions and our full response here.

Prior to the introduction of the new R&D advance assurance service, we will update this page if more news on the project becomes available. In the meantime, if you have any concerns over the eligibility of your R&D claim, please contact james.rolfe@bdo.co.uk or romane.reeves@bdo.co.uk.