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Research & Development tax relief
HMRC launch advance assurance pilot
scheme for small companies
How could HMRC help your company apply for research and development
tax relief?
What is Research & Development (R&D)
tax relief?
There are two forms of tax relief for which small companies
can qualify:


R&D Relief offers enhanced deductions for
expenditure on R&D projects. For small companies
200% of qualifying expenditure on R&D can be
deducted against profits chargeable to corporation tax.
R&D Tax Credits which allow the company to "sell" the
R&D Relief to HMRC in return for a cash payment.
A small company for these purposes is one with 50 or
fewer employees and a turnover or balance sheet total of
less than €10 million.
The government recognises the value of R&D tax relief to
companies and is keen to encourage small companies to
carry out further R&D in the UK. In these difficult economic
times, R&D Tax Credits can be a vital cash lifeline for small
companies with significant R&D expenditure.
For further details about R&D tax relief, please ask us for a
copy of our 'Tax Tips – R&D Tax Credits'.
How can HMRC help small companies?
HMRC have recently announced their willingness to help
small companies claim the R&D tax relief to which they are
entitled. In response to a recent consultation on R&D,
small companies told HMRC that they would like more
certainty and support in applying for R&D tax relief. In
response to this, HMRC have launched a pilot scheme
which will enable small companies to approach HMRC for
advance assurance that their first R&D tax relief claim will
be successful.
The companies that enter this voluntary pilot scheme will
have the support of a designated HMRC R&D tax relief
expert, who will offer support on putting a claim together.
The company and the HMRC expert will agree a basis of
application for the first R&D claim and the subsequent two
claims which provided the company sticks to the agreed
terms, will normally be treated as accepted and accurate.
Throughout this period the company will have a designated
HMRC 'assurance contact', who will be available to discuss
any elements of the claim with the company.
If a small company would like to get involved in the pilot
scheme it can contact its local HMRC R&D specialist unit,
which you can find by searching under the companies
postcode on the HMRC website.
Our view
Whilst this is a welcome improvement for small companies,
this scheme will not eliminate all of the difficulties
companies face when applying for R&D tax relief. For
example, difficult issues can arise when a small company
has investment from venture capital funds which can
sometimes prevent the company falling within the small
company rules, even if the other size and turnover tests
are met.
Osborne Clarke Life Sciences team
It is crucial to use a legal advisor with real experience of
the sector and in-depth understanding of both the scientific
and business issues. An excellent life sciences practice will
have expertise in private equity, M&A, intellectual property,
tax, regulatory, competition and commercial law. Osborne
Clarke has strength across the board in each of these key
areas. Not only does the team understand the technical
and legal issues, but several members also have
advanced scientific qualifications and industry experience.
As well as assisting clients with financial aspects of their
business, we help them develop and manage products to
ensure that they are both compliant and commercially
successful. This includes helping clients to maximise R&D
Relief claims.
These materials are written and provided for general information
purposes only. They are not intended and should not be used as a
substitute for taking legal advice. Specific legal advice should be taken
before acting on any of the topics covered.
“Osborne Clarke is noted for its good [life sciences] industry
knowledge, responsiveness and value for money.”
Legal 500, 2011
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© Osborne Clarke November 2011
Publication number 13125550
osborneclarke.com
Research & Development tax relief
HMRC launch advance assurance pilot
scheme for small companies
For further information on this topic or for any other queries
please contact your usual Osborne Clarke contact or:
Erika Jupe
T: +44 (0)117 917 4260
E: erika.jupe@osborneclarke.com
Clare Nicholson
T: +44 (0)20 7105 7214
E: clare.nicholson@osborneclarke.com
Janita Good
T: +44 (0)118 9252146
E: janita.good@osborneclarke.com
2 of 2
© Osborne Clarke November 2011
Publication number 13125550