What is the advance assurance pilot for R&D tax relief

The Autumn 2025 Budget unveiled a new R&D advance assurance pilot to help SMEs obtain HMRC’s view on specific aspects of a claim before submission. The government’s commitment to innovation remains clear: R&D tax reliefs are central to achieving the OECD goals of improving quality of life and driving sustainable economic growth. R&D tax relief is also at the forefront of the UK government’s stated intention to keep the UK at the forefront of World Innovation.

What is the advance assurance pilot?

The advance assurance pilot is a voluntary HMRC service that allows SMEs to obtain confirmation on specific high-risk areas of an R&D claim before it is submitted. Companies can make up to two applications for assurance.

Each application is limited to one project and one issue, meaning coverage is deliberately narrow. Applications are made online and require a concise explanation of the project and the specific issue being considered. Companies can seek HMRC’s view on the following:

• Whether a project meets the definition of R&D.
• Whether overseas expenditure qualifies.
• Whether R&D relief can be claimed where work is contracted between parties.
• Application of the PAYE/NIC cap.

Why would I need advance assurance?

New R&D tax relief rules came into force for accounting periods commencing on or after 1 April 2024. Claimants should now have evaluated the effect of these changes and the extent to which they may impact the value of future R&D claims.

The new rules introduce several key changes, including:

• Who has the right to claim relief in contractual arrangements, with the starting point being the instigator of the R&D, which may typically be the customer (contracted-out arrangements).
• These rules apply to both upstream (customers) and downstream (subcontractors).
• The restriction of offshore expenditure on subcontractors and Externally Provided Workers (EPWs), unless exemptions apply.

The challenge for businesses and advisers is one of certainty:

• The legislation is new, with no specific case law to draw on.
• The rules require multi-factor, judgment-heavy assessments, including what is “reasonable”.
• HMRC’s manuals add complexity.
  • Examples are limited and often difficult to apply in practice.
  • HMRC make clear that the offshore exemption is not a binary test, but a question of degree.

Crucially, there is little established precedent relevant to these rules.

Who can apply — and is it only for SMEs?

The pilot is available to SMEs only, provided they:

• Are carrying out R&D, or are planning to for the accounting period for which assurance is being requested.
• Have not yet submitted an R&D claim for the relevant period.
• Are undertaking (or planning) a qualifying R&D activity.

It is not available where:

• There is an open HMRC enquiry.
• Assurance has already been received on the two areas of R&D work or projects for the same period.
• The company falls within certain compliance risk categories. This includes where a disclosable tax avoidance scheme (DOTAS) has been used by the company.

This remains a targeted service, rather than a broader pre-clearance system.

What does the advance assurance pilot not cover?

The pilot does not provide full claim clearance.

• It focuses on the treatment of specific issues only.
• It does not review the full claim or the quantum of costs.
• HMRC can still enquire into the remainder of the claim.

In practice, this means assurance is partial, not comprehensive.

4 key considerations of the advance assurance pilot

1. No right of appeal- HMRC guidance confirms there is no right of appeal. While a company may still file on a different basis, doing so may increase the likelihood of enquiry and could have penalty implications depending on the circumstances. Of specific concern is the potential behavioural impact where a company departs from HMRC’s stated view. While this will always depend on the facts, having obtained HMRC’s position in advance may, in certain circumstances, create exposure to higher penalties, should the filing position ultimately be unsuccessful.
2. Timing uncertainty- HMRC aim to respond within around 40 days, although this depends on the completeness of the information provided and may involve further queries. There is no specific timetable for resolution beyond this date. This may create challenges where assurance has not been obtained before statutory filing deadlines are reached.
3. Cashflow vs certainty- Seeking advance assurance may delay submission and therefore repayment timelines. Businesses will need to weigh certainty against cash flow.
4. Duplication of effort- preparing an application often mirrors the work required for the claim itself, creating additional compliance effort.

Can the advance assurance pilot speed up claims?

Not necessarily. It might reduce enquiry risk on specific issues; however, it can delay your submission, and it does not remove wider enquiry risk as a whole. In practice, it focuses HMRC’s attention on specific risk areas a lot earlier in the process.

The pilot is most useful where there is a genuine uncertainty. For example:

• Borderline eligibility positions
• Complex subcontracting arrangements
• Overseas R&D under the new rules
• High-value or higher-risk claims

Used selectively, it can help de-risk specific aspects before submission. However, it might be less suitable to use where:

• Your claims are straightforward and well-supported
• Positions are established and consistent.
• Filing timelines are already tight.

How can AAB help?

The advance assurance pilot is a useful tool, but that doesn’t mean it isn’t limited. It provides an opportunity to address key uncertainties in the newer R&D regime, particularly where precedent is still developing; however, it doesn’t come without challenges, especially around timing, behavioural considerations, and it doesn’t fully remove risk. It is, however, a positive step, particularly given the lack of established precedent in key areas.

Its value is likely to depend on how it is used in practice and the business’s appetite for risk. In many cases, the key decision will be whether to use it at all.

If you have any queries about the positioning of your R&D claims for assurance or need support navigating the evolving rules with confidence, please do not hesitate to get in contact with Ross Parsler or a member of our Corporate Tax team.