R&D Clearances: Are Changes Coming for Advance Assurance?
For many UK companies, Research & Development (R&D) tax relief remains one of the most valuable incentives available. However, due to rising fraud and compliance risks, HMRC has tightened the rules significantly in recent years — and more changes may be on the way.
In March 2025, the government published a consultation proposing updates to how businesses can receive “advance assurance” that their R&D project will qualify for relief.
If you’re planning to make R&D claims now or in the next few years, here’s what you need to know — and why acting early could make all the difference.
✅ What Is R&D Advance Assurance?
Advance assurance is a process that allows eligible companies to seek pre-approval from HMRC that their planned R&D activity qualifies for tax relief — before they start the work or make a claim.
If approved, HMRC will generally accept R&D tax claims for the same project for up to three accounting periods, provided that:
- The activities remain consistent with what was agreed.
- The scope of the project doesn’t change substantially.
This gives companies certainty and peace of mind that their claims will not be challenged later.
📉 Why Is the System Being Reviewed?
HMRC is concerned about:
- Fraudulent claims
- Errors in eligibility assessments
- A growing number of non-compliant submissions
In 2023/24, only 801 companies used advance assurance — out of over 15,000 potential claimants. This low uptake suggests that the system isn’t working as intended or is too limited in scope.
🔄 What Changes Are Being Considered?
The consultation suggests expanding or altering the advance assurance process in three key areas:
1. Pre-Activity Stage
Advance clearance might be possible:
- When the R&D work has not yet started.
- Or when activity is in very early stages.
This would give companies early confidence about eligibility and reduce the risk of wasted spend on non-qualifying activity.
2. Mid-Project or Pre-Payment Stage
- Allowing clearances after work starts but before a claim is made.
- Or after a claim is made but before tax relief is paid (called pre-payment clearance).
This could help businesses get assurance mid-project, especially for multi-year work.
3. Voluntary or Mandatory Use
The government is also considering:
- Voluntary clearance options for all businesses (not just small ones).
- Or even mandatory clearance for certain types of claims or industries.
A minimum expenditure threshold could also be introduced to help focus HMRC’s resources.
🚨 Why This Matters to You
If you:
- Have never claimed R&D relief before,
- Are starting a new innovative project,
- Or are working with contracted R&D partners…
…then these rule changes could affect your ability to claim and increase your exposure to compliance checks or penalties.
🧠 Our Advice
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Plan ahead – If you’re planning to claim R&D relief in 2025/26, consider applying for advance assurance under the current system while it is still available.
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Keep good records – Document your projects in detail, especially where eligibility could be questioned.
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Don’t wait – If HMRC makes advance clearance mandatory or restricted, you could lose out on valuable tax savings if your project hasn’t been pre-assessed.
📣 Final Thoughts
The R&D tax relief landscape is evolving fast, and the government is clearly tightening oversight. For innovative UK businesses, this makes early engagement and clear documentation more important than ever.
At Merranti Accounting, we help clients:
- Prepare R&D claims that stand up to HMRC scrutiny
- Apply for advance assurance (where eligible)
- Identify qualifying projects and costs
- Avoid costly mistakes and penalties
📨 Find more insights like this in Merranti’s monthly newsletter – covering tax changes, business incentives, and compliance risks.
