Because of the specialised knowledge required to make a R&D Tax Credit claim, many companies use an advisor.
The choice of such an advisor is very important as there exists wide variations in fees, service levels and competency.
Always make your own assessment of of the advisor and do not rely on their claims of success, as these can be hard to substantiate.
Broadly speaking, our experience is that smaller, local, accountancy practices are rarely able to offer the necessary degree of expertise in identifying, quantifying and presenting R&D claims to maximise the claim. Many of them recognise this by introducing a specialist provider for this aspect of the work.
Some of the larger accountancy practices also have full time R&D teams. However, a specialist firm will have lower overheads than a large accountancy practice and may be able to offer significantly better fee terms.
A few advisors employ their own technologists who are trained in the use of the R&D guidelines. The thinking behind this is that this may enable better communication with the claimant’s own technologists. It will result in a more reliable – and quicker – confirmation of the qualifying R&D, and a better identification of the advances and uncertainties.
Remember – there is frequently a trade-off between fee and service level.
If the fee is very low, the amount of work the adviser can afford to carry out is also likely to be low. And, to maximise their return, large firms will get much of the work done at a junior level, so the headline staff you see on their pitch for the business may not be the ones who prepare your claim.
Some companies negotiating a low fee arrangement may find themselves with a very reduced service from the adviser.
At a minimum level, this might consist of an initial briefing on the regime, and a template for the company to fill in so that the adviser can then cut and paste this into a claim document using largely standard text.
By contrast, a maximal service might consist of several key stages.
These should include scoping a claim potential, together with initial briefing sessions on qualifying R&D and allowable costs.
There should be interviews with the competent professionals for each claimed R&D project, to extract the necessary information for the claim.
There needs to be clear and informative recording of narratives for each project – in the form requested by HMRC – and a clear interpretation of contracts for external assistance, to identify if they meet the qualifying conditions.
This high-end service will provide the assistance needed to extract the necessary financial information. It will also ensure clear advice on best practice, regarding issues such as reasonable approximation and estimation, together with identifying capital and revenue R&D expenditure.
It will combine technical and cost information into an individual claim narrative document for presentation to HMRC, claiming any available capital or revenue R&D reliefs as appropriate.
You’ll get advice on how this affects the tax computation and how to detail the claim in the company tax return.
And, should it be necessary, conduct any necessary negotiations or enquiry work with HMRC.
MSC R&D has been delivering this level of service successfully since the inception of the R&D Tax Relief scheme, and can advise on R&D Allowances and Patent Box.
We also provide a full range of R&D funding solutions, so the understanding we gain of a client’s business during a R&D Tax Credit claim can be put to productive use in helping them access the full level of R&D funding they require.
Contact us on 0114 230 8401 to discuss your requirements.