R&D tax relief advance clearances

Question 1

Summary

Accepted Answer

Subject of this consultation

This consultation seeks views on clearances for the Research and Development (R&D) tax reliefs, with the aims of reducing error and fraud, increasing certainty for customers, and improving customer experience.

Scope of this consultation

The government wishes to understand whether a system of clearances would deliver these aims, and, given there are different ways to design and operate a service, which of these do this best.

Who should read this

The government welcomes responses from businesses of all sizes, claiming or intending to claim Research and Development reliefs, interest groups, representative bodies, industry bodies and agents.

Duration

The consultation will run during the period from 26 March 2025 to 26 May 2025.

Lead official

The lead official is David Harris of HM Revenue and Customs (HMRC).

How to respond or enquire about this consultation

You can respond to this consultation by submitting this form by 26 May 2025.

Please email to enquire about this consultation.

Additional ways to be involved

As this is a policy area of interest to a fairly specialist audience, HMRC will mainly be conducting the consultation online, as set out above.

However, there is the possibility of holding roundtables where a membership organisation is able to gather a range of stakeholders.

If you or your organisation would like to discuss doing this, please email us.

After the consultation

The government will announce its preferred approach later in the year.

Getting to this stage

The R&D tax reliefs are part of the Corporation Tax system, with legislation in Part 13 of the Corporation Tax Act 2009. They are administered by HMRC. The government announced this consultation in Autumn 2024 and held preliminary conversations with a range of stakeholders before the end of the year.

Question 2

1.  Foreword

Accepted Answer

In the Corporate Tax Roadmap published at last autumn’s Budget, the government committed to providing the stability needed by businesses to invest and support economic growth – including actions to increase the certainty available to taxpayers. It committed to launching several consultations, which are delivered today.

This consultation seeks views on the options for a revised system of clearances that will aim to reduce error and fraud in the R&D reliefs, provide certainty to businesses, and improve the customer experience.

It seeks views on the issues encountered by taxpayers and sets out thoughts on how a new process could work.The government is consulting separately on proposals for a new process to provide increased tax certainty for major projects in advance.

Question 3

2.  Introduction

Accepted Answer

Rationale for R&D relief

The UK R&D tax reliefs are generous incentives that support companies investing in innovative projects in science and technology. They aim to unlock additional private sector investment in R&D across the UK.

Increasing private investment in R&D is essential to the government ’s growth mission. There is a strong link between R&D and increased productivity, which is one of the drivers of growth.

The economic case for R&D reliefs recognises that investment in innovation generates positive externalities – value to the wider economy that the investor cannot capture. These wider benefits are also referred to as spillovers. Tax reliefs were established to address this “market failure” by reducing costs for businesses to better align the private returns on investment with the wider social benefits.

Analysis from the Organization for Economic Cooperation and Development (OECD) shows a link between overall R&D levels and productivity levels across global economies, with R&D providing spillover benefits to firms technologically linked or geographically nearby. The ratio of the social return to the private return from R&D ranges from 4:1 to 2:1.

HMRC is committed to periodically evaluating the R&D reliefs to ensure they are as effective as possible and underpinned by a credible, up-to-date evidence base. In 2020, HMRC estimated that the R&D Expenditure Credit (RDEC) scheme incentivises £2.40 to £2.70 additional R&D for every £1 of public money spent, and in 2019 estimated that the small and medium-sized enterprise (SME) scheme incentivises £0.60 to £1.28 additional R&D for every £1 of public money spent.

Necessary attributes of R&D reliefs

The R&D tax reliefs must support the right activities and costs. Over the past few years the reliefs have been extensively reformed with this in mind.

The government must also ensure the reliefs operate effectively and provide value for money. HMRC must therefore tackle non-compliance (whether due to error, or to deliberate behaviour) while enabling legitimate claimants to benefit. In recent years non-compliance has been unacceptably high.

At Autumn Budget 2024, HMRC published its Approach to Research and Development tax reliefs 2023 to 2024 which sets out in more detail the context to R&D relief error and fraud and what has been done to tackle it. The document includes illustrative estimates suggesting that action taken so far has reduced error and fraud by almost 10 percentage points between 2021 to 2022 and 2023 to 2024, from 17.6% to 7.8% but that there is more to be done.

Changes to tackle error and fraud included modifications to the claims process and increased compliance resource. HMRC now has over 500 people working on R&D compliance, compared with around 100 people in 2020 to 2021. This additional resource alongside the targeted risk-based approach has enabled HMRC to undertake more compliance checks into claims for R&D reliefs, especially those made by SMEs, reflecting the higher error and fraud rates in the SME population.

This consultation

It is vital that the R&D reliefs continue to support economic growth, which is a core mission of the government. The government’s new Industrial Strategy is central to that and will deliver the certainty and stability businesses need to invest in the UK’s growing and high potential sectors.

A Green Paper (published 14 October 2024) set out the government’s vision for a modern industrial strategy ‘Invest 2035’ and identified 8 growth-driving sectors – those in which the UK excels today, and which will propel us tomorrow.

The government announced, in the Corporate Tax Roadmap, its commitment to:

maintaining the generosity of the rates for the merged R&D Expenditure Credit scheme and the Enhanced Support for R&D Intensive SMEs
enhancing the administration of R&D reliefs by establishing an R&D expert advisory panel and by continuing to improve signposting and guidance on R&D reliefs. HMRC will publish further detail and launch a recruitment exercise to find suitable independent advisors to sit on the expert advisory panel in due course
launching an R&D disclosure facility – this was achieved by the end of 2024
confirming a consultation on widening the use of advance clearances in the R&D reliefs – the aim of the consultation is to:
- reduce error and fraud
- improve the customer experience
- provide certainty to businesses

With this consultation document, the government is delivering on that final commitment.

To be successful, the reliefs must be predictable and straightforward to access, and provide certainty to genuine claimants to allow them to plan and increase their R&D investments. The three goals of the consultation are therefore distinct but interrelated. Greater certainty on the eligibility of their R&D claim will improve customer experience of the reliefs, enabling business to better plan R&D investment. It will also enable errors to be screened out and help HMRC identify potential risks, reducing error and fraud.

In the chapters that follow, this consultation document describes the current claims process for the R&D reliefs, and the current voluntary R&D ‘advance assurances’, asking why these have not been widely used. It is important that lessons are learned about how to design a better service. Then the consultation discusses voluntary and mandatory assurances, including eligibility, and sets out the options currently being considered. The government wants to understand which approach or combination of approaches works best, while providing value for money at a time when resources are constrained.

Question 4

3.  Subject chapters

Accepted Answer

About you

Question 1: Are you responding to this survey as:

a company
an agent
a professional body
an academic
other (please provide details)

If responding as a company

Question 2: What is the size of your company?

micro (turnover < £1 million, Balance Sheet < £500,000, Employees < 10)
SME (turnover < £15 million, Balance Sheet < £7.5 million, Employees < 50)
mid-size (turnover < £54 million, Balance Sheet < £27 million, Employees < 250)
large (turnover > £54 million, Balance Sheet > £27 million, Employees > 250)

Question 3: Have you claimed R&D tax reliefs previously?

Question 4: Please choose which sector your main business activities are in:

agriculture, forestry and fishing
mining and quarrying
manufacturing
electricity, gas, steam and air conditioning supply
water supply, sewerage, waste management and remediation activities
construction
wholesale and retail trade; repair of motor vehicles and motorcycles
transportation and storage
accommodation and food service activities
information and communication
financial and insurance activities
real estate activities
professional, scientific and technical activities
administrative and support service activities
public administration and defence; compulsory social security
education
human health and social work activities
arts, entertainment and recreation
other service activities
activities of households as employers; undifferentiated goods – and services –producing activities of households for own use
activities of extraterritorial organisations and bodies

The following questions apply to all respondents

Question 5: Where does your business operate? (please select all that apply)

England
Scotland
Wales
Northern Ireland
Isle of Man
EU
Other (please specify)

Question 6: Please provide your company’s or organisation’s name unless you are responding on your own behalf.

Question 7: Please provide the best email address we can use to contact you.

Question 8: To help us monitor the demographic of respondents, please provide the postcode for your company or organisation.

Current claims process

The current R&D tax credits system balances prompt payment of relief for most claimants with identifying and addressing risks. The company submits an R&D tax relief claim in its self-assessed Corporation Tax return (either when it is made, or by amending it later). All claims are risk assessed and where risks are identified, HMRC opens checks within established legislative time limits.

Generally, HMRC has 12 months from the date of the claim being submitted to open a check and the majority of compliance checks are opened within this period. The length of an enquiry will vary from case to case and where errors are found in the claim, it is possible that HMRC will look into previous years. This is consistent with HMRC’s powers, which generally allows HMRC to look back as far as 4 years and in some instances as much as 20 for the worst behaviour.

HMRC recognises the importance of certainty to businesses. It aims to identify the need for a compliance check early and, where possible, before any payment is made. Depending on the type of risk or behaviour identified, HMRC will also open some compliance checks post-payment. Post-payment checks have the advantage of enabling the majority of customers to receive payment quickly but can result in uncertainty for customers about whether their claim might later be found to be non-compliant and their payment recovered.

The claims process is illustrated in the diagram below.

Diagram 1: Normal R&D tax relief claims process

A flow diagram depicts the claim process for R&D tax relief, there are two journeys following the risk profiling which lead to different outcomes.

The main flow:

company considers undertaking R&D
company submits claim notification form (if required)
company draws up plans and begins to undertake R&D
company compiles claim
company submits additional information form and files claim
basic automated risk profiling checks

Following the risk profiling, the claim is selected for compliance intervention or passed to payments team.

If selected for compliance intervention the claim either results in payment or claim reduced or rejected leading to possible appeal.

If the claim is passed to payments team the payment is made and either it is not selected for enquiry within time limit so the claim is complete or post payment checks followed by repayment may be required.

An arrow from the end of the process to company compiles claim shows that the process is repeated every year.

Current approach

This approach does not therefore require approval ahead of a claim for relief. Nor does it require significant amounts of resource for HMRC to administer or add significant delay to a company starting work.

However, it does mean a degree of uncertainty for some companies at the point they make R&D investment decisions and also does not guarantee that a non-qualifying project can be screened out before money has been spent on it. Non-compliant claims are sometimes made in the hope that HMRC will not identify them.

The policy and operational changes made in recent years to reduce error and fraud have necessarily added additional steps and information requirements to the claims process, which has added to the costs of businesses making fully compliant claims.

New additional information requirements mean HMRC can better focus its efforts to tackle non-compliance. This means more accurately identifying claims that may not be compliant and reducing the risk of valid claims being picked up for a compliance check. Previously, detailed information about claims was not mandatory, and the information which was provided did not have to be delivered digitally in all cases. HMRC is now able to take a more sophisticated approach in assessing the merits of claims, allowing better identification of risk.

Increased compliance activity has meant that more higher-risk claims are being enquired into. The proportion of claims undergoing checks increased from 10% in 2022 to 2023 to 17% in 2023 to 2024. HMRC currently has over 500 people working on R&D compliance, compared with around 100 people in 2020 to 2021.

Given the level of error and fraud, increasing the number of compliance checks was necessary. However, this does mean that the perception of uncertainty for claimants has increased as they are now more likely to be taken up for a check than previously. The proposals set out below could address that issue of uncertainty.

Current advance assurances

The concern that uncertainty may discourage legitimate claims is not new. To address this, voluntary ‘advance assurances’ were introduced by HMRC several years ago for certain companies (those who have not claimed before, and who have 50 employees or fewer). Following submission of information, they are invited to discuss their claim with HMRC and then, if successful, given a degree of assurance that the claim will not be subject to enquiry for three years (provided the R&D undertaken is consistent with the initial information provided).

Companies which are refused an assurance are free to proceed and claim as part of their CT600 return if they believe their project does qualify for relief. These claims are then considered in the normal way, and as described above, a compliance check may be opened where risks are identified.

This advance assurance service was originally limited to the former SME scheme. With its replacement by the merged Research and Development Expenditure Credit (RDEC) and Enhanced R&D Intensive Support (ERIS), it has been extended to both reliefs, although the focus currently remains on smaller businesses (those with turnover below £2 million and fewer than 50 employees) who have not previously claimed.

Diagram 2: current advance assurances in the claims process

Diagram 2 shows the claim process for R&D tax relief, with the option of the company seeking advance assurance under the current rules. There are 2 journeys following the risk profiling which lead to different outcomes.

The main flow:

company considers undertaking R&D
company submits claim notification form (if required)
company draws up plans and begins to undertake R&D
company compiles claim
company submits additional information form and files claim
basic automated risk profiling checks

Following the risk profiling the claim is selected for compliance intervention or passed to payments team.

If selected for compliance intervention the claim either results in payment or claim reduced or rejected leading to possible appeal.

If the claim is passed to payments team the payment is made and either it is not selected for enquiry within time limit so the claim is complete or post payment checks followed by repayment may be required.

An arrow from the end of the process to company compiles claim shows that the process is repeated every year.

In the main flow, above the stages ‘company submits claim notification form (if required)’ and ‘company draws up plans and begins to undertake R&D’, to indicate the current advance assurance process an additional box indicates: ‘advance assurance: customer submits information to HMRC and receives approval covering 3 years claims’.

Current advance assurances uptake

However, the advance assurance scheme has seen low and declining take-up, with around only 80 applications received in 2023 to 2024 out of approximately 11,500 customers who were eligible to apply.

Some of this may be due to lack of awareness. HMRC has included references to advance assurances in a recent communications campaign and within the claimant support packages, which have been rolled out to a small population on a trial basis. HMRC is monitoring whether this has any impact on uptake but would like to understand more broadly what works and what doesn’t about this service. While any new service might not be based on the current assurances service, it is the closest thing HMRC currently operates.

Question 9: Were you aware of the advance assurance scheme before this consultation?

Question 10: Have you or your clients used the current advance assurance scheme?

Question 11: If you or your clients have used the current advance assurance scheme, please tell us if and how this met your needs.

Question 12: If you or your clients have used the current advance assurance scheme, please tell us about what worked less well in the process.

Question 13: For those who are aware of the current advance assurances, but chose not to use them, what were the reasons for this?

Question 14: Is the current focus in advance assurances on treatment of a whole claim right or should it focus on a particular issue or number of issues in a claim?

focus on the whole claim
focus on one particular issue in the claim
focus on more than one particular issue in the claim
other (please specify)

Question 15: Which issues in R&D claims are of the most concern?

Question 16: Do you have any views on the current criteria for eligibility for advance assurances?

Design of clearances

The government is considering who could be entitled to use a new clearances scheme and who might be obliged to use it, as well as where in the claims process a scheme could fit, and the role of agents. This chapter therefore discusses the advantages and disadvantages of both voluntary and mandatory assurances and how they might affect the three objectives. It also considers delivery by HMRC, the role of agents, and international comparisons.

Voluntary assurances

Under a voluntary service, companies would not have to obtain an assurance to go on and claim. The current advance assurances are voluntary. The advantage of this is that where companies see no advantage to using the service, they do not have to. No additional burden, for example of providing information, is created for those who do not wish to use it. The disadvantage is that less well-informed claimants, who are more likely to make errors and who will be less aware of it, are less likely to use it, as are those knowingly making abusive claims.

Voluntary assurances are therefore more likely to be used by those who consider they are carrying out genuine R&D but have concerns their claim may be found to be ineligible in whole or in part by HMRC. Voluntary assurances enable companies in doubt about their position to clarify this ahead of claiming, or possibly, ahead of undertaking their activity. This should prevent some incorrect claims due to error and provide support for customers who might be concerned that they had been approached by a less reputable advisor, also reducing non-compliance.

Voluntary assurances could be made available either generally to any company, or specifically to those in a defined group (such as high-growth businesses).

Voluntary assurances could address customer experience and certainty goals (provided their design is useful to customers) and also, to some degree, error. They would help less with deliberate non-compliance as those seeking to submit speculative or boundary-pushing claims would likely avoid using them.

There might be circumstances in which voluntary assurances could be provided on a paid-for basis, where companies saw sufficient value in obtaining them.

Question 17: Can you foresee circumstances in which paid-for voluntary assurances might be attractive?

Mandatory assurances

A wholly voluntary service would not materially reduce non-compliance, and could actually hinder HMRC’s ability to address error and fraud overall because resources that would otherwise be deployed on high-risk cases could be taken up carrying out advance assurance on compliant customers.

Mandatory assurances (for example, having one would be a requirement for a valid claim) are better adapted to addressing deliberate non-compliance but would put more requirements on businesses, increasing burdens. On the other hand, they might also promote certainty.

Therefore, the government believes the objectives of the consultation – to reduce error and fraud, improve the customer experience, and provide certainty to businesses – may well be best met through mandatory assurances in areas where there is a very high degree of non-compliance.

These would be required for companies which, in HMRC’s experience, were at greater risk of making incorrect claims. If well targeted, mandatory advance assurances could have the added benefit of preventing companies from making low quality or non-compliant claims.

Deliverability

Full advance assurance for all is not feasible. There is a limited pool of resources and expertise so there would be an opportunity cost from a wider provision of advance assurances, whether voluntary or mandatory. Increased advance assurance does reduce the need for some post-claim compliance, but this will vary depending on the level of compulsion and remaining risk levels in wider claims.

To manage the opportunity cost, the government will target intervention carefully. It believes an advance assurance system needs to be focused on a well-defined subset of claims and/or companies. A voluntary service would therefore not be available to all, and a mandatory service would only be mandatory for some.

The government also believes that the limitation in the current advance assurances to companies making a first claim is overly restrictive, as many smaller companies may still experience uncertainty later. The government proposes instead to focus voluntary assurances on growing and high potential companies, as well as sectors set out in the government’s Industrial Strategy.

The service might also be limited based on company size.

Question 18: Do you agree that a voluntary service could be focused on growing and high-potential companies as well as sectors set out in the government’s Industrial Strategy?

Question 19: If not, at which companies should a voluntary service be focused?

The government believes that such a new service should be piloted with some specific sectors.

All options would require additional resourcing and potentially draw resource away from current compliance work. The government will therefore have to weigh carefully the impact on certainty and on error and fraud before deciding whether to proceed with any of the options.

One change that might make a wider service more feasible would be to exclude claims to the R&D reliefs based on expenditure below a minimum expenditure threshold (MET). As there is a higher level of E&F in smaller claims, a MET set at an appropriate level could reduce this and also lower the number of claims, freeing up resources to carry out assurances. The SME scheme introduced in 2000 included a MET set at £25,000, which was later reduced to £10,000 before being removed.

In the 2023 consultation on R&D reliefs some stakeholders argued that it would be difficult to undertake R&D that would meet the definition for less than £25,000 as activity being done under this expenditure threshold is unlikely to be pushing the boundaries of science and technology.

Question 20: Do you agree there is a minimum expenditure below which significant R&D does not take place?

Question 21: If yes, please give that level (in thousands).

Again, to manage the opportunity cost, the government believes that a mandatory service should apply to companies which would be specified in legislation based on factors such as sector, size as well as previous compliance history.

Question 22: Do you agree that the assurances should be mandatory for some?

Question 23: If so, what factors should be considered in determining who must seek assurance?

Agents

Agents play a significant role in the R&D reliefs. Many assist companies in getting their R&D claims right. Others have encouraged companies to abuse the scheme, for example by submitting claims for activity, which is unlikely to qualify, HMRC has taken more action in recent years to address this.

HMRC wants to ensure that any new service supports competent and ethical agents acting on behalf of their clients, and encourages responses from them to this consultation on this and on making it harder for unscrupulous actors.

As a result of the requirement for companies to supply additional information with their claim, R&D is an area where HMRC has extensive data on agents. There may therefore be an opportunity to use this data when designing the clearances, limiting the service for example to customers who use an agent who is registered with HMRC or a member of a recognised professional body (HMRC is consulting separately on new measures to ensure all tax advisers meet the high professional standards that taxpayers deserve and expect).

Question 24: How can HMRC best recognise the role of agents in designing a clearance service?

International context

Many countries offer R&D tax reliefs and have forms of pre-approval. How these work depends on the purpose of the relief. For example in France the Ministry of Higher Education pre-approves for a scheme which is aimed at technical employment. Others, as with some of the UK’s grant competitions, link approval to particular technology the government is supporting.

Those who require pre-approval by a Ministry of Science, Technology or Innovation or a similar agency are: Australia, Chile, China, Columbia, Czech Republic, India, Japan, Lithuania, Luxembourg, Netherlands, Norway, Poland, Slovakia, South Africa, South Korea, Thailand and Vietnam.

Others offering various sorts of advance assurance include Austria, Belgium, Canada, Hungary, Italy and Slovenia.

Countries (other than the UK) where there is no pre-approval and the tax authority processes the claim include Brazil, Denmark, Germany, Indonesia, Malaysia, New Zealand, Philippines, Portugal, Romania, Russia, Singapore, Spain, Sweden, United States.

Case study: Australia

Companies must apply for registration with AusIndustry each year they conduct eligible R&D activities, within 10 months of the end of the income year during which the company completed R&D activities.

They can apply for an advance finding on activities conducted in the current income year (regardless of whether started or completed in that year) or activities they plan to conduct in the subsequent 2 income years.

The advance finding, carried out by Industry Innovation and Science Australia, provides certainty about whether R&D activities are eligible before registering.

Options under consideration

The government believes that there are 3 stages at which a form of assurance may be useful:

at an early stage, when research activity has not started or has only recently begun (‘pre-activity’)
when activity is well underway but before the claim is made (‘pre-claim’)
when a claim has been made but before payment (‘pre-payment’)

‘Pre-activity’ assurance

A pre-activity assurance could take the form of an early, less formal conversation/ exchange between the company and HMRC, seeking to identify areas of uncertainty and address these. Because of the stage of activity, this would not be able to deliver as much certainty as an assurance at a later stage for both the claimant and HMRC. The company will know less at this point, and its plans may change. Detailed evidence which might be available later to formulate or support a claim will not exist. The purpose of this engagement is therefore more to set the company on the right track.

Such a process could cover either the whole claim (subject to information being available) or particular aspects of it. It would be valid so far as the eventual claim were aligned with what was agreed.

Question 25: Do you see value in pre-activity advance assurance?

Question 26: If so, what sorts of issue might be raised with HMRC?

Question 27: What sort of information might companies be able to provide to HMRC at this stage?

Pre-claim assurance

Pre-claim assurance would be closer to what HMRC currently provides. These would be sought closer to the time of claim, when activity is under way. The company would need to provide a suite of information, either across the claim, or about the particular issues it was raising. The government’s priority here is mandatory coverage for higher-risk claims, to target error and fraud. However voluntary assurances (either of whole claims or of particular aspects) could follow in the longer term.

Pre-payment assurance

Pre-payment assurance would allow companies to request, when claiming, that any checks usually made post-payment take place instead before payment.

These would be checks that already take place, but by carrying them out sooner, a company which received a payment could be certain that it would not have to repay the amount later, for example after an enquiry. This provides certainty. The disadvantage could be that while for many companies there should not be a significant additional delay, for some companies there would (for example, if an enquiry was opened which took several months to conclude).

Combining these potential stages at which assurance could be given, the options for selectivity, whether assurances might cover the whole of a claim or focus on particular aspects, and voluntary or mandatory services, gives a wide range of alternatives. However, the government is considering 3 specific options for services and would be grateful for views on them. They are set out in the table below and illustrated in Diagram 3 which shows how each would fit with the current claims process.

Table 1: Options for voluntary or mandatory services

Option	Stage in claims process	Description	Voluntary or mandatory	Eligibility	Comments
A	Pre-activity	Greater facility for early, informal discussions	Voluntary	Growing and high potential companies, subject to size condition	Provides early assurance but could only offer limited certainty. Main impact would be on customer experience and certainty with perhaps some impact on error. Less focussed on fraud.
B	Pre-claim	Binding assurance across claim	Mandatory	Specified sectors	Main impact would be on error and fraud.
C	Post-claim, pre-payment	Company may request that post-claim checks are carried out pre-payment	Voluntary	Growing and high potential companies, subject to size condition	Would address issue of companies having received payments and then seeing that money rescinded.

Question 28: Which of the options A to C do you think would be most useful? (please rate all options: not useful, somewhat useful, useful)

Question 29: Please give reasons.

Diagram 3: The 3 options, in the context of the current R&D claims process

The flow diagram depicts the claim process for R&D tax relief, together with additional boxes to indicate the point at which each of the five options proposes in this document would apply. There are two journeys following the risk profiling which lead to different outcomes.

The main flow:

company considers undertaking R&D
company submits claim notification form (if required)
company draws up plans and begins to undertake R&D
company compiles claim
company submits additional information form and files claim
basic automated risk profiling checks

Following the risk profiling the claim is selected for compliance intervention or passed to payments team.

If selected for compliance intervention the claim either results in payment or claim reduced or rejected leading to possible appeal.

An arrow from the end of the process to company compiles claim shows that the process is repeated every year.

Consultation options are indicated as follows:

option A – under company considers undertaking R&D and company submits claim notification form (if required)
option B – under company compiles claim and company submits additional information form and files claim
option C – under selected for compliance intervention and passed to payments team

The options are not necessarily exclusive

It would be possible to combine them, for example options A and B to give both an early view on activity for priority growth sectors and later, whole claim scrutiny for sectors where there is a higher risk of error or fraud.

The government is considering how these options would fit with the current claim requirements, especially the claim notification. It would be desirable for the assurance application to provide the basic information required for a valid claim notification, so that receiving advance assurance would satisfy the claim notification requirement. The government is considering the feasibility of this.

Question 30: Please give any other suggestions you have for useful changes to R&D relief administration, particularly those that would address error and fraud.

Question 5

4.  Assessment of impacts

Accepted Answer

Summary of impacts

Exchequer Impact Assessment

Any Exchequer impact will be estimated following the consultation, which would provide the final scope and design of the measure, and it will be subject to scrutiny by the Office for Budget Responsibility.

Impacts	Comment
Economic impact	Any economic impact will be estimated following the consultation, which would provide the final scope and design of the measure, and it will be subject to scrutiny by the Office for Budget Responsibility.
Impact on individuals, households and families	This consultation seeks views on widening the use of advance clearances in R&D reliefs. The options presented in this consultation are expected at this stage to have no impact on individuals, as they would only affect businesses. Any future impacts of reforms, if taken forward by the government after consultation, will be fully examined and detailed.
Equalities impacts	It is not anticipated at this stage that there will be impacts on those in groups sharing protected characteristics. Any future impacts of reforms, if taken forward by the government after consultation, will be fully examined and detailed. A full equality impact assessment is not recommended at this stage.
Impact on businesses and Civil Society Organisations	The options presented in this consultation are likely to impact businesses applying for R&D reliefs, though the nature of any impacts would depend on subsequent decisions on reforms. Any future impacts of reforms, if taken forward by the government after consultation, will be fully examined and detailed.
Impact on HMRC or other public sector delivery organisations	Publication of the consultation document is not expected to have any impact on HMRC. Any future impacts of subsequent policy measures will be fully examined and detailed.
Other impacts	No other impacts have been identified.

Question 6

5.  Summary of consultation questions

Accepted Answer

Question 1: Are you responding to this survey as:

a company
an agent
a professional body
an academic
other (please provide details)

If responding as a company

Question 2: What is the size of your company? (please select)

micro (Turnover < £1 million, Balance Sheet < £500,000, Employees < 10)
SME (Turnover < £15 million, Balance Sheet < £7.5 million, Employees < 50)
mid-size (Turnover < £54 million, Balance Sheet < £27 million, Employees < 250)
large (Turnover > £54 million, Balance Sheet > £27 million, Employees > 250)

Question 3: Have you claimed R&D tax reliefs previously?

Question 4: Please choose which sector your main business activities are in:

agriculture, forestry and fishing
mining and quarrying
manufacturing
electricity, gas, steam and air conditioning supply
water supply, sewerage, waste management and remediation activities
construction
wholesale and retail trade; repair of motor vehicles and motorcycles
transportation and storage
accommodation and food service activities
information and communication
financial and insurance activities
real estate activities
professional, scientific and technical activities
administrative and support service activities
public administration and defence; compulsory social security
education
human health and social work activities
arts, entertainment and recreation
other service activities
activities of households as employers; undifferentiated goods – and services –producing activities of households for own use
activities of extraterritorial organisations and bodies

The following questions apply to all respondents

Question 5: Where does your business operate? (please select all that apply)

England
Scotland
Wales
Northern Ireland
Isle of Man
EU
Other (please specify)