In the March 2025 Budget, the government launched a two-month open consultation, closing on 26th May 2025, on a potential new system of ‘Advance Clearance’ for R&D tax relief claims.

While it might sound like a technical tweak, the proposal could have far-reaching consequences for companies claiming R&D tax incentives and those advising them.

This move appears to signal HMRC’s renewed interest in overhauling the rarely used ‘Advance Assurance’ scheme, which is currently limited to first-time claimants with fewer than 50 employees.

The broader context is HMRC’s ongoing efforts to combat abuse and error in the R&D tax system, while ensuring it continues to support innovation in science and technology.

Not just a box-ticking exercise

At first glance, advance clearance might seem like an optional layer of admin for a small subset of claimants but dig deeper and it’s clear the consultation raises some transformative ideas.

Chief among them is the aim to provide more predictability for businesses at various points in the claims process: before undertaking the R&D, before submitting a claim, and before receiving payment.

In theory, this could help companies plan their innovation investments with greater confidence. But achieving this at scale would require HMRC to make major strides in speed, consistency, and communication, areas where the department has historically struggled.

Certainty comes at a cost

Choosing to seek advance clearance would mean your claim is reviewed in full – no exceptions.

That’s a major shift compared to the current system, where HMRC only examines a fraction of submissions in detail.

While this guarantees early clarity, it could also mean significantly more time and effort up front. The trade-off between certainty and compliance burden will be a central consideration for many businesses and advisers.

Compulsory for some, optional for others?

One idea floated in the consultation is that advance clearance might become a requirement for certain types of companies, perhaps based on their size, industry, or risk profile. This could provide targeted oversight where it’s most needed, but it may also raise questions around fairness and consistency.

If implemented, it’s likely that others would still be able to opt in voluntarily, seeking peace of mind in return for a more rigorous process.

Classification codes in the spotlight

A shift towards industry-specific scrutiny would also make Standard Industrial Classification (SIC) codes more important than ever.

Although originally intended for statistical use, these codes are now playing a role in HMRC’s internal risk assessment processes, particularly via the mandatory Additional Information Form.

Their influence could grow further, potentially shaping the level of scrutiny applied to a claim based purely on sector classification.

Revisiting the spend threshold debate

Surprisingly, the consultation also brings back a once-shelved idea: setting a minimum level of R&D expenditure to qualify for relief. This threshold, previously set at £25,000 and later £10,000, was removed to widen access.

Its return would represent a clear attempt to focus support on more substantial and credible R&D efforts and reduce claim volumes.

While this might streamline the system and reduce lower-value claims, it could also limit access for smaller or early-stage innovators, depending on where the bar is set.

Final thoughts

This consultation might not be grabbing headlines, but it could quietly redefine the future of R&D tax relief.

From deeper scrutiny to greater certainty, and from mandatory gates to sector-specific treatment, the ideas on the table point to a more targeted and structured regime.

As always, the devil will be in the detail and in HMRC’s ability to deliver a streamlined and fair process.

At Williamson & Croft, we have deep expertise in R&D tax incentives and are well-placed to guide businesses through the evolving landscape.

Whether you’re navigating your first claim, considering voluntary advance clearance, or facing new mandatory requirements, we can help you prepare robust submissions, assess eligibility, and manage communication with HMRC.

Our team stays on top of policy developments and understands what HMRC is really looking for. So, you can focus on your innovation, while we handle the compliance with clarity and confidence.

Get in touch with our R&D specialists today to discuss how these proposed changes could affect your business, and how we can help you stay ahead.