R&D Tax Credit Advisers
There are now many advisers who prepare R&D tax credit claims on the market, although a lot of the work is very low in quality (we know because we have seen it!). Companies involved in a core R&D sector are being inundated with phone calls, letters and emails from advisers on a weekly basis.
HMRC are well aware that low quality claims are being prepared and they are currently recruiting 100 new staff to review claims. Therefore, it is important that you do what you can to make sure your R&D tax claims are robust and well prepared. Otherwise you could be faced with an HMRC enquiry which could potentially go back 4 years (not due to careless or deliberate conduct) or even 6 years (due to careless conduct) where there is insufficient disclosure. Where there is deliberate conduct (previously referred to as negligence or fraud) the time limit escalates to 20 years. You really do not want that to happen to your company.
Choosing the Right Adviser
It is therefore important that you choose an adviser that has your best interests at heart rather than someone whose main interest is profit. When you are at the stage of choosing an R&D tax adviser, the following checklist should be useful in terms of making a decision:
- Does the adviser make big claims about your company’s R&D costs but show little interest in the R&D being undertaken? Claims should always start by identifying qualifying R&D activities rather than an expectation of what costs can be claimed. Every company is different and R&D can vary year on year.
- What qualifications does the business owner(s) have? As R&D tax credits are about R&D and tax, the business owner(s) should have a relevant background to be able to advise in this area properly.
- Are experts employed by the adviser in a technical field relevant to your company? True R&D tax advisers should have the capability to discuss R&D with you at a technical level. This will enable them to understand the R&D your company undertakes which will mean claims are reasonably maximised. Otherwise, R&D activities may be missed or be incorrectly claimed for or you will be expected to write a lot of information to support R&D projects which will be very time consuming.
- Does the adviser claim to have a seal of approval from HMRC? HMRC do not give approval to any adviser, although a positive reputation can be built up over time with HMRC due to quality of work.
- Is there a lot of pressure from the adviser for you to enter into a contract for several years, maybe 3 or 4 years or even longer? This suggests that the adviser is not confident you will want to re-engage with them when you have seen the quality of their work or the level of their expertise.
- Will the adviser help you if HMRC asks for further information in relation to a claim and do you think they have the expertise to be able to do this? You don’t want to be left high and dry should HMRC ask questions into a claim. Receiving questions from HMRC with no reasonable answers is not where you want to be.
Now is a good time for you to review your approach to claiming R&D tax credits. Are you happy your current arrangements are robust and are not at risk from HMRC challenge? If you use a third party adviser, are you confident of the quality of their work and they will be there with you should HMRC come calling?
Our Approach to R&D Tax Credit Claims
In terms of our approach to preparing claims, we have a specialist R&D tax team which includes 3 engineers, 2 scientists at PhD level and a software specialist.
If you would like to know more about R&D Tax Credits, please get in touch to arrange a no-obligation discussion.