Alongside the Spring Statement, the Government published a new consultation on the research and development (R&D) tax regime which considers the benefits of advanced assurance clearances for R&D claimants or prospective claimants. The proposals are aimed at tackling error/ fraud and providing more certainty to businesses making claims under the R&D tax regime. The consultation also looks at wider aspects of the R&D tax regime, including the role of agents and proposals such as the re-introduction of a minimum expenditure threshold for R&D claims below which claimants could not file claims.
The existing advance assurance process has a narrow scope and essentially applies to first time claimants with less than 50 employees. The proposals set out in the consultation consider a widening of the advance assurance clearances process. In the context of tackling non-compliance, there is a preference on behalf of the Government for risk-based mandatory clearances, for instance based on the company size, sector etc. The consultation also considers what the criteria should be for companies wanting to do a voluntary advance clearance to obtain longer term certainty of the R&D tax position.
Although an expansion of the advance assurance clearances regime is welcome news, particular care will be needed to consider the practical aspects of any such regime and the likely impact on fraud and error. The design of any new advance assurance process would also need to work in the context of the limited HRMC resource available which is referenced in the consultation document.
