Interested in exploring R&D tax relief for your business? Time to choose a specialist R&D adviser. The right consultancy can mean the difference between a successful R&D claim, and a large headache for your business. In this article, we’ll run through what to look out for, and what to avoid, when it comes to choosing your R&D adviser.
One of the most frequently asked questions we hear is “why can’t my accountant complete our R&D relief claim?” While your account may have a good general knowledge of tax (including R&D corporation tax relief), this is a very specialised subject area. As such, an experienced tax consultant will be able to advise you much more confidently about what is (and isn’t) considered R&D, and which costs are eligible to claim.
We also urge businesses to take great care when choosing their R&D adviser. We hate to sound all doom and gloom, but the risks are, unfortunately, much greater than just having your claim rejected by HMRC.
Most R&D advisers charge customers a proportion of the successful R&D claim paid. If your claim is unsuccessful, you don’t have to pay anything. Unfortunately, this contingent fee basis can become susceptible to fraud and general abuse. We’re aware of ‘cowboy’ R&D firms that attempt to make inflated claims for their clients, just so they can receive a larger cut.
Even if you unknowingly work with an under-qualified or low experience R&D agency, you (the client) could be liable for a penalty from HMRC worth 100% of the value of your R&D claim. Despite working with an adviser, this is technically a form of self-assessment. A good adviser will support you through any disputes with HMRC, but some R&D consultants may not. Either way, the buck stops with you.
We don’t mean to fear monger, but it is worth being aware of the severity of the consequences. There are plenty of reputable R&D firms out there, so this guide will help you be more aware of what to look out for.
The following characteristics are the hallmarks of a trusted R&D consultancy firm:
- Accredited as a chartered tax firm
Like many other industries, tax advisers can receive accreditations demonstrating a higher level of skill. To become accredited, advisers must study and take exams to gain additional qualifications. If the company advising you is a member and regulated by the Chartered Institute of Taxation (CIOT), you can feel confident in their expertise. At the moment, there is no rule against non-chartered tax firms submitting R&D relief claims, so take care the company you are speaking to are more than general ‘consultants’.
- Willing to give references
A reputable R&D consultancy firm has nothing to hide and will go out of their way to help you feel confident. A good R&D firm will be willing to put you in touch with existing clients, so you can hear a first-hand account of the R&D claim experience. A good idea is to ask for references from similar companies, for example if you are an architect then ask for a reference from an architect.
- Supplier-client relationship more like a partnership
Although your R&D adviser will do the grunt work in preparing your claim for HMRC, your business should still feel involved in the process. A good R&D firm will view this relationship as a partnership. They will take your feedback on board, ensure you understand what is going on, and will request your sign-off before submitting the claim to HMRC. It is right to feel wary of a firm that ploughs ahead without your involvement.
If you spot any of the following behaviours from your R&D advisers, we urge you to seek a second opinion:
- Aggressive behaviour
Bullishness is a classic trait of a cowboy R&D firm. They may apply pressure in the sales process or push you to make large R&D claims that seem dubious. If you are not comfortable with the claim produced, always question it!
- Tying you into excessive multiple-year contracts upfront
After making a successful R&D claim, most clients are more than happy to repeat the process every year. However, we’re aware of unscrupulous R&D advisers insisting on five to seven-year contracts upfront. This is excessive and should be a red flag.
- Claims submitted without the involvement of a director
When making an R&D claim, a director or senior figure should be involved from both parties: your business, and your R&D consultancy. We’re not saying junior employees can’t contribute to the process, but your R&D consultants should be proactively ensuring this process is signed off by senior decision-makers. Further, we have seen examples where directors have not even seen the final report submitted to HMRC – as this is self-assessment you should ALWAYS be privy to any submission.
- A lack of understanding
Be wary of generic cold emails from R&D tax relief consultancies: how can they promise to save your business thousands, when they have no idea what your company does? A good R&D tax relief firm should be able to inform you what elements of your work are considered research and development.
The Hamilton Blake approach
To put your mind at ease, here’s a little bit more about how we do things.
We won’t tie you in with a multiple-year contract: we have an excellent client-retention rate, and we’re happy for you to make your own mind up if you enjoy working with us. However, we do offer a three-year price promise. So, if you do want to work with us on repeat business, we promise to honour the same price as when you sign on.
We’re also a little more specialised than other R&D relief firms out there. Most of our clients come from the architecture and engineering sectors. While we don’t claim to be architects or engineers, we are pretty clued up on their technical terminology. That means you can just talk to us about your work, in your own language, and we’ll be able to spot which elements are eligible for a successful R&D claim.
We are a chartered firm, regulated by the CIOT and the CPAA with all our senior staff having either accounting or tax qualifications. We also ensure that a partner oversees every single claim which ensures the quality of our output. We always share final reports with our clients and spend time adjusting to ensure they are as accurate as possible prior to submitting to HMRC.
We will always give a reference from a company not only in the same sector as you but also one with a similar size, portfolio of projects or is in some other way comparable. This will show both our working method and gives potential clients a useful insight into R&D within their sector.
Whilst we specialise in architecture, engineering and design we also have experience in many other sectors so if your business is completing innovative work in another sector, we’d be more than happy to work with you on your R&D relief claim. So far, we have supported businesses in food and drink, product design, software, technology, and more.
Spotted the warning signs of a bad R&D tax relief firm? We’d be happy to provide a second opinion.
Contact us using our online form, and one of our advisers will get in touch.