HMRC’s Targeted Advance Assurance Pilot

On May 18, 2026, HMRC launched its new 12-month Targeted Advance Assurance Pilot for R&D tax relief claims. This article answers crucial questions, provides context, and aims to help you understand whether this new process is right for you and your business. 

What Is HMRC’s New Targeted Advance Assurance Pilot?

Advance Assurance allows eligible businesses to acquire HMRC’s agreement that their R&D projects (or an element within these) will generally be compliant before they are submitted, as long as the agreed conditions continue to be met. This is not a new service from HMRC; indeed, they offer a similar scheme under the Full Claim Advance Assurance Service (although only 80 applications were received in 2023 to 2024 out of approximately 11,500 customers who were eligible to apply). 

However, instead of being limited to Small and Medium-Sized Enterprises (SMEs) with turnover below £2 million and fewer than 50 employees who are claiming for the first time, this new Targeted Advance Assurance is open to all. Furthermore, the Full Claim Advance Assurance Service assessed the entire claim, while the new Pilot focuses only on up to two specific, high-risk or complex areas per project. These topics include: 

• Whether the project qualifies as R&D for tax purposes 

• Whether overseas expenditure qualifies for relief 

• Whether R&D relief can be claimed for work contracted between companies 

• Whether the company is exempt from the PAYE/NIC cap 

   

Therefore, even if you have claimed R&D tax credits for many years, further clarification may be useful for up to two of these specific areas, especially if you have a significant overseas cost base or a complex contractual arrangement regarding R&D ownership. 

 

Why Has HMRC Introduced It? 

The primary aim of the new scheme is to give eligible businesses greater confidence that genuine R&D claims will be accepted, reducing uncertainty. It is a direct response to the significant increase in HMRC scrutiny and compliance activity surrounding R&D claims over the last few years. By providing certainty for eligible businesses, HMRC hopes to encourage legitimate innovation while strengthening trust in the regime, while also helping first-time claimants understand HMRC’s expectations before submitting a claim. 

Who Can Apply?

There are four criteria that a company must meet to apply for Advance Assurance. 

A company can apply where it: 

• is a small or medium-sized enterprise (SME) 

• is carrying out R&D, or is planning to carry out R&D in the accounting period Assurance is being requested for 

• has not yet claimed R&D tax relief for the period they are requesting advance assurance for 

• has not already received assurance on the 2 areas of their R&D work or project for the same period 

 

It is most beneficial for first-time claimants seeking reassurance before making an R&D claim who may be unfamiliar with the process or do not have an established R&D record-keeping process in place; however, it can also be useful for companies that have already claimed and have questions regarding the eligibility of a specific project or aspects of the new RDEC Merged Scheme, such as the overseas contracting rules. 

 

What Does the Application Involve?

Once you have confirmed your company’s eligibility, an application can be submitted directly to HMRC, providing company information and details of the projects in question. Within this application, there must be a detailed description of the relevant R&D project or the issue requiring clarification. This application must clearly explain the scientific or technological advances sought and the uncertainties overcome. 

Once this application has been received by HMRC, they will have 40 calendar days to review the information provided and either issue a response or ask for further clarification before reaching a decision. Once this has been provided, HMRC will either grant Advance Assurance on the specific area in question or explain why the application has not been accepted. This prevents non-compliant or ineligible projects and costs from being included in the R&D claim, ultimately reducing fraud and error. 

What Happens if HMRC Grants Advanced Assurance?

If HMRC grant Targeted Advance Assurance, it is important to remember that this is only for the area being assessed. For example, if you have a query regarding overseas subcontractors that HMRC accepts, this does not mean that HMRC has provisionally approved your entire claim. Therefore, there is still a risk that HMRC can open a compliance check to assess other areas of the claim. This differs from the existing Full Claim Advance Assurance Service, where, once approved, HMRC agrees to accept your claims without further enquiry for your first three accounting periods, provided your activities and expenses remain in line with the approved application. 

Furthermore, Targeted Advance Assurance generally applies to the agreed claim period(s), provided the relevant conditions continue to be met. The assurance relies on the information provided remaining accurate, complete and materially unchanged. Therefore, HMRC may still challenge a claim if the facts differ from those presented, there are eligibility changes, or inaccurate information is discovered. 

 

Benefits 

There are several benefits to seeking Advance Assurance under HMRC’s new pilot scheme: 

• Greater certainty – Targeted Advance Assurance provides businesses with greater confidence when making an R&D claim. 

• Reduced risk of compliance checks - It can reduce the likelihood of HMRC opening a compliance check into covered claims due to illegible costs and projects being removed.

• Faster internal decision-making - Increased certainty can help businesses make investment decisions more quickly, knowing their claim is robust.

• Better cashflow planning - Greater certainty allows businesses to forecast the financial benefit of relief with more confidence. 

 

 

Potential Drawbacks 

However, there are some limitations of the scheme: 

• Not every business qualifies - Many businesses will not meet HMRC's eligibility requirements for Advance Assurance. 

   

• Additional preparation before claiming - Applying requires businesses to prepare detailed technical and financial information in advance. 

   

• HMRC still expects accurate information - Businesses remain responsible for ensuring all information submitted is complete and accurate. 

   

• Assurance depends on facts remaining consistent - Any significant change in the facts could affect the validity of the assurance. 

   

• It won't fix weak technical narratives - Advance Assurance cannot compensate for technically weak or poorly evidenced R&D projects. If they don’t qualify, no amount of increased processes will change that! 

Common Misconceptions 

Common mistakes in R&D tax credit claims include; 

•  "It's only for technology companies." - Businesses in any sector can qualify if they undertake eligible R&D activities and meet the scheme's criteria.  

• "Advance Assurance guarantees every future claim." - Advance Assurance only applies to qualifying claims that continue to match the agreed facts and conditions. 

• "You don't need evidence anymore." - Businesses must still retain sufficient evidence to support every R&D claim they submit. 

• "HMRC won't ever open a compliance check." - HMRC retains the right to enquire into claims where appropriate, even if Advance Assurance has been granted. 

 

Practical Tips Before Applying

Given the increased administration associated with applying for Targeted Advanced Assurance, there are several practical steps you can implement within your company to aid not just this application process, but your R&D claims as a whole: 

 

• Keep contemporaneous project records - Maintain records throughout the project rather than trying to recreate them later. 

   

• Record staff time where possible - Keeping accurate time records can make qualifying expenditure much easier to support. 

   

• Ensure accounting records support expenditure - Make sure your accounting records clearly evidence the costs included in your claim. 

   

• Involve technical staff early - Engage the people carrying out the R&D early to ensure the technical narrative is accurate. 

   

• Speak to an experienced adviser if you're unsure - Professional advice can help identify eligibility issues before they become costly mistakes. 

   

• If these practical tips are followed, quantification and the writing of the technical narratives associated with the R&D projects become much simpler to follow, providing full transparency to HMRC and thereby reducing the risk of a compliance check. 

 

If you have any questions regarding Advance Assurance or whether it is right for your business, please contact Wilby Jones for an initial free consultation.