HMRC Launches New Advance Assurance for R&D Claims: A Guide for SMEs

HMRC has expanded its advance assurance support for Research and Development (R&D) tax relief claims, and if your small or medium-sized company is carrying out genuine innovative work, this could be useful. The updated assurance routes give eligible SMEs a way to ask HMRC for a view before submitting a claim, which can reduce uncertainty in an area where compliance checks have become much more common.

There are now two important routes to understand. The first is full claim advance assurance for eligible SMEs making their first R&D claim. The second is targeted advance assurance, introduced in May 2026, which allows SMEs to ask HMRC for assurance on up to two specific complex or high-risk areas of a claim.

This guide walks you through what the assurance routes are, who qualifies, how to apply, what HMRC is looking for, and how to make sure your claim is properly prepared. Whether you are a tech start-up, a manufacturer investing in new processes, or a professional services firm developing proprietary tools, R&D tax relief may support your company, but only where the work genuinely meets HMRC’s conditions.

What Is HMRC’s Advance Assurance for R&D Claims?

Advance assurance is a voluntary HMRC process that allows eligible SMEs to ask for clarity before making an R&D tax relief claim. It does not replace the claim itself. You still need to submit the correct forms and make the claim through your Company Tax Return.

Full claim advance assurance is aimed at smaller SMEs making their first R&D claim. If HMRC grants assurance, it can cover up to your first 3 accounting periods, provided your claims match the information supplied, the facts remain accurate, and your R&D activities do not materially change.

Targeted advance assurance is different. It is designed for SMEs that want HMRC’s view on up to 2 specific areas of a claim, such as whether a project meets the R&D definition, whether overseas expenditure qualifies, how contracted-out R&D is treated, or whether the PAYE and National Insurance cap exemption applies.

This distinction matters. Full claim assurance is not available to every company. Targeted assurance is not a blanket approval for the entire claim. Both routes can be useful, but neither removes the need for careful evidence, accurate costs and proper claim preparation.

If your business needs help deciding which route applies, working with accountants in Slough who understand current HMRC requirements is a practical first step.

Who Is Eligible for R&D Advance Assurance?

Full claim advance assurance is aimed at small SMEs making their first R&D claim. To apply, your company must generally meet the following conditions:

• It must be an SME for R&D purposes.
• It must be claiming R&D tax relief for the first time.
• It must have turnover below £2 million.
• It must have fewer than 50 employees.
• It must be planning to carry out R&D, or have already carried out R&D but not yet claimed.
• If it is part of a group, none of the linked companies must have claimed R&D tax relief before.

If your company has previously claimed R&D relief, full claim advance assurance will not usually be open to you. However, targeted advance assurance may still be available if you are an SME and want assurance on specific areas of a claim for a period you have not yet claimed for.

Targeted assurance is not available to large companies, to companies seeking assurance on 3 or more areas, or where there is an open Corporation Tax enquiry. It is also unavailable in certain serious compliance situations, such as where a relevant party has entered a disclosable tax avoidance scheme or has been categorised as a Corporate Serious Defaulter.

If your business is slightly larger, has already made R&D claims, or does not meet the advance assurance conditions, you can still claim R&D relief in the normal way where the work qualifies. A trusted accountant can help you decide the safest route.

What Counts as R&D for Tax Purposes?

This is where many businesses go wrong. HMRC’s definition of R&D for tax purposes is specific. It is not enough that your company has created something new to you, improved a process, invested in technology or worked hard on a difficult commercial problem.

For tax purposes, R&D must seek an advance in science or technology. The project must involve scientific or technological uncertainty, and the solution must not be readily deducible by a competent professional in the field.

Activities that may qualify include:

• Developing new software, products or processes where genuine technical uncertainty exists
• Trialling new materials, components or production methods where the outcome is uncertain
• Adapting existing technology for a genuinely novel use where the technical solution is not obvious
• Creating tools, platforms or systems where the technical challenges go beyond applying standard methods

Activities that generally do not qualify include:

• Routine software development or website building
• Standard configuration of existing technology
• Market research, branding or commercial development
• General management change
• Work carried out simply to comply with existing regulations
• Cosmetic or design changes without a scientific or technological uncertainty

HMRC has tightened scrutiny in recent years. Claims that rely on vague wording around “innovation” are much more likely to be challenged. Good R&D claims explain the advance sought, the uncertainty faced, why competent professionals could not readily solve it, and how the company tried to overcome it.

The Merged R&D Scheme: What Changed From April 2024?

For accounting periods beginning on or after 1 April 2024, the old SME and RDEC schemes were replaced for most companies by the merged R&D expenditure credit scheme. A separate Enhanced R&D Intensive Support route remains for qualifying loss-making R&D-intensive SMEs.

The current position is broadly as follows.

Scheme	Qualifying Business	Credit/Relief Rate	Net Benefit (Approx.)
Merged R&D expenditure credit scheme	Most companies carrying out qualifying R&D and chargeable to Corporation Tax	20% taxable expenditure credit	Around 15% at 25% Corporation Tax, or 16.2% at 19% Corporation Tax
Enhanced R&D Intensive Support (ERIS)	Loss-making R&D-intensive SMEs meeting the intensity condition	Extra 86% deduction plus payable credit at 14.5% of surrenderable loss	Up to 26.97% of qualifying R&D expenditure
Legacy SME scheme	Mainly accounting periods beginning before 1 April 2024	Historic enhanced deduction rules	No longer the main route for new periods
Legacy RDEC	Mainly accounting periods beginning before 1 April 2024	Historic expenditure credit rules	No longer the main route for new periods

The merged scheme has simplified the structure in some respects, but it has not made R&D claims simple. The rules around contracting, overseas work, PAYE/NIC caps and evidence are technical.

If you were claiming under the old SME scheme, your benefit may now be lower unless you qualify for ERIS. If you are loss-making and R&D-intensive, ERIS may be valuable, but it has specific conditions and should be checked carefully.

Getting your self-assessment tax return services and company tax planning right means understanding how your personal tax position, company profits and Corporation Tax claims fit together, even though the R&D claim itself is made through the company’s Corporation Tax process.

Claim Notification and Additional Information Forms

Advance assurance is not the same as making a claim. Even if HMRC grants assurance, you still need to follow the normal R&D claim process.

For many first-time claimants, a claim notification form may be required. This is particularly important where you are claiming for the first time, or where your last claim was made more than 3 years before the end of the claim notification period.

You must also submit an Additional Information Form before, or on the same day as, the Company Tax Return containing the R&D claim. If the Additional Information Form is not submitted correctly, HMRC can reject the R&D claim.

The order matters. If you submit the Company Tax Return before the Additional Information Form, the claim may be removed. This is one of the most common procedural traps in current R&D claims.

Good company accounts and properly maintained records make this process much easier.

How to Apply for R&D Advance Assurance

The application process is handled through HMRC’s online services. For full claim advance assurance, you need to provide information about your company, your R&D activities, the scientific or technological uncertainties involved, the costs related to the work, and the people with direct knowledge of the project.

For targeted advance assurance, you can ask HMRC for a view on up to 2 areas. These areas can include whether the project meets the R&D definition, whether overseas expenditure qualifies, whether contracted-out R&D rules apply, or whether the PAYE and National Insurance cap exemption applies.

HMRC aims to process targeted advance assurance applications within 40 calendar days where full and accurate information has been provided. Full claim assurance timings can depend on the complexity and completeness of the application.

If assurance is not granted, you cannot appeal HMRC’s decision through the advance assurance process. You may still be able to submit an R&D claim in the normal way, but you should review the reasons carefully before proceeding.

What HMRC Looks for in a Strong R&D Claim

HMRC has significantly increased compliance activity around R&D claims in recent years. The department has been particularly concerned about weak claims, speculative submissions and claims prepared by advisers who do not properly understand the technical work.

A strong claim will include:

• A clear explanation of the scientific or technological advance
• A specific description of the uncertainty
• Evidence that the uncertainty was not readily solvable by a competent professional
• Records prepared during the project, not only after the event
• A cost breakdown supported by accounting records
• Clear time apportionments where staff worked on both R&D and non-R&D activity
• Evidence that the directors and competent professionals understand the claim

HMRC is particularly focused on the quality of the technical narrative. A vague description of “developing a new system” or “improving efficiency” is unlikely to be enough. The narrative needs to explain what made the work technically uncertain and how the company tried to resolve that uncertainty.

Using a chartered accountant in Slough who understands both the accounting and compliance side of R&D can reduce the risk of errors.

Common Mistakes SMEs Make with R&D Claims

Perfectly legitimate projects can still lead to problematic claims if the paperwork is poor. Common mistakes include:

• Claiming for work that does not meet HMRC’s R&D definition
• Describing commercial innovation rather than scientific or technological uncertainty
• Using template narratives that do not explain the actual project
• Failing to submit the Additional Information Form correctly
• Missing claim notification requirements
• Including overseas subcontractor or externally provided worker costs that no longer qualify
• Claiming subcontractor costs without checking the contracted-out R&D rules
• Failing to apportion staff time properly
• Including costs that are not qualifying R&D expenditure
• Assuming advance assurance removes the need for normal claim documentation

Mistakes in R&D claims can lead to repayment of relief, interest, penalties and, in serious cases, fraud concerns. A good adviser will not simply maximise the claim. They will make sure the claim is defensible.

Costs That Qualify as R&D Expenditure

Once you have established that your project qualifies, you need to identify which costs can be included.

Under the merged scheme and ERIS, qualifying categories can include:

• Staff costs, including salary, employer National Insurance and employer pension contributions for employees directly engaged in R&D
• Externally provided workers, subject to the qualifying rules and PAYE/NIC conditions
• Subcontracted R&D costs, subject to the contracted-out R&D rules
• Consumable items used or transformed in the R&D process
• Software used directly in the R&D work
• Data and cloud computing costs used directly in qualifying R&D
• Clinical trial volunteer costs where relevant

For payments to unconnected subcontractors and externally provided workers, the claimable amount is generally limited to 65% of the qualifying cost. Connected-party rules can produce a different result.

Overseas expenditure is now much more restricted. For accounting periods beginning on or after 1 April 2024, overseas subcontractor and externally provided worker costs are generally excluded unless strict exceptions apply. The fact that overseas work is cheaper or that skills are easier to find abroad is not enough. If overseas R&D is part of your project, this should be reviewed early.

If your business uses bookkeeping services on an ongoing basis, your bookkeeper can set up the chart of accounts to track R&D expenditure separately from the outset, which saves significant work at claim time.

How Does R&D Relief Interact with Other Taxes?

R&D tax relief interacts with several other parts of your tax position.

Under the merged scheme, the R&D expenditure credit is taxable income and is then used to reduce Corporation Tax or, where the rules allow, produce a payable amount. The PAYE and National Insurance cap can restrict the amount payable in cash unless an exemption applies.

Under ERIS, qualifying loss-making R&D-intensive SMEs can claim an enhanced deduction and surrender losses for a payable credit, but the intensity condition and loss-making status must be reviewed carefully.

You should also consider how R&D interacts with capital allowances, grants, subsidies, Patent Box, group arrangements, overseas costs and connected-party transactions. Looking at R&D relief in isolation can lead to poor tax planning.

That is why it is worth reviewing your financial reporting services and tax planning together, rather than treating the R&D claim as a standalone exercise.

If you operate as a sole trader or partnership, the company R&D relief schemes are not directly available because they apply to companies within Corporation Tax. Incorporation may be worth considering in some cases, but it should not be done only for R&D relief without wider tax and commercial advice. You can read more in our guide to sole trader accounting services.

Why the Advance Assurance Route Is Worth Considering

Advance assurance can be valuable for SMEs that want clarity before submitting an R&D claim.

For first-time claimants that qualify, full claim advance assurance may reduce the risk of HMRC opening a compliance check into the first 3 accounting periods, provided the claim matches what was agreed and the facts remain accurate. For existing claimants, targeted assurance can help with specific areas where the rules are complex or high-risk.

The benefit is not just technical. Assurance can improve financial planning, reassure lenders or investors, and show that your business is approaching the claim transparently.

However, advance assurance should not be treated as a shortcut. You still need a proper technical narrative, accurate cost analysis, claim notification where required, the Additional Information Form, and a valid Corporation Tax claim.

You may also want to read our blog posts on understanding late filing fees at Companies House, how an accountant supports you during HMRC enquiries, and why choosing the right accountant matters.

How Asmat & Co Can Help with Your R&D Claim

R&D tax relief can be valuable for UK companies, but it is also one of the most frequently mishandled areas of business tax. At Asmat & Co, our accountancy services cover the full range of business and personal tax needs, and we work with SMEs across Slough, Reading and beyond to make sure claims are prepared properly.

We can help you assess whether your project meets HMRC’s qualifying criteria, decide whether full claim or targeted advance assurance is appropriate, prepare the technical narrative and cost schedule, review subcontractor and overseas cost issues, and check whether your claim notification and Additional Information Form obligations have been met.

We also offer ongoing support through our financial reports and analysis service, so your records are in better shape before claim time.

For businesses in Reading, our dedicated team offers the same standard of support. You can find out more about our accounting firms in Reading services on our Reading page. We also support small business accountants across the region with compliance and growth planning.

For more background reading, take a look at our posts on MTD for income tax, corporation tax mistakes to avoid, what an accountant does for an SME, director pay: salary vs dividends in 2026, and setting up a limited company in the UK.

Frequently Asked Questions

Can I still claim R&D relief if I have already spent the money?

Yes. R&D tax relief is claimed through your Company Tax Return after the accounting period ends. You can claim for qualifying expenditure already incurred, provided the claim is within the deadline and the work meets the rules. Advance assurance can still be useful where you have carried out R&D but have not yet made your first claim.

What happens if HMRC rejects my advance assurance application?

A rejection does not automatically mean you cannot make an R&D claim. It means HMRC is not prepared to grant assurance based on the information provided. You cannot appeal the advance assurance decision, but you may still submit a claim in the normal way if you believe the work qualifies. You should take advice before doing so.

How far back can I make an R&D claim?

You can normally amend a Corporation Tax return to include an R&D claim up to 2 years after the end of the accounting period. For example, if your accounting period ended on 31 March 2024, the deadline to amend and include an R&D claim would usually be 31 March 2026.

Does advance assurance cover multiple projects?

Full claim advance assurance can cover the R&D activities described in your application for up to your first 3 accounting periods, provided the facts remain accurate and the work does not materially change. Targeted advance assurance is narrower and covers the specific area or areas HMRC has reviewed. It is not a blanket approval for all future R&D work.

Do I need a specialist R&D firm to make a claim?

No. Many businesses make successful R&D claims with support from their existing accountant, especially where the projects are well documented and the qualifying criteria are clearly met. The key is to work with an adviser who understands HMRC’s current standards and does not rely on generic template narratives.

Can overseas R&D costs still qualify?

Sometimes, but the rules are much tighter for accounting periods beginning on or after 1 April 2024. Overseas subcontractor and externally provided worker costs are generally excluded unless strict conditions apply. If overseas work forms part of your R&D project, it should be reviewed before the claim is prepared.

Ready to Find Out if Your Business Qualifies?

If you think your company might be doing work that qualifies for R&D tax relief, the best first step is a conversation with someone who can give you an honest assessment.

At Asmat & Co, we offer straightforward, jargon-free advice with no obligation. Get in touch with Asmat & Co here to book a meeting, and let’s find out whether there is a legitimate R&D claim waiting to be made for your business.