A Guest Blog by Matthew Jones, ACA CTA, R&D Tax Credit Expert.
It is no secret that HMRC are enforcing a variety of measures to prevent abuse of R&D tax credit claims following the recent identification and prevention of fraudulent attempts totally over £300 million. This is a loud and public warning. Choosing the wrong adviser can potentially place you in very deep water. So, I will answer some FAQs to provide clarity on the supplier selection process.
What are the main considerations when choosing an adviser?
When looking to employ any professional service, there are inevitably a mix of factors to consider before selecting your preferred supplier. To put it simply, you should ask yourself the following questions:
Can they do the job effectively and efficiently?
Can you find evidence on how the supplier has helped others?
These questions seem simplistic enough on the surface but in practice, how do you find the answers? My advice would be:
Check the supplier’s credentials
R&D tax credits is a complex area of tax law, one of which is not offered as standard by mainstream accountants as it is not a compliance service. Due to its highly technical nature, it is imperative that your adviser has the necessary qualifications needed to undertake the work with the highest level of detail and accuracy.
The adviser should be a qualified chartered accountant (ACA or ACCA) or chartered tax adviser (CTA). Having these qualifications will guarantee that they have passed the necessary exams and are regulated by professional bodies, enforcing them to follow strict codes of conduct.
A chartered adviser should have experience in a variety of areas of corporation tax, allowing them to understand how the R&D tax credit claim will impact other aspects of your finances, which is important. I would investigate the volume of claims made by the adviser. Should they only help prepare a handful a year, it is unlikely they will have the detailed knowledge and experience to deal with all aspects of your R&D tax credit claim.
Investigate the service level available
A full-service consultancy will take you through the entire R&D tax credit journey, from initial consultation, through to submission and beyond. This will not be the case with all suppliers, with some forcing you to rely heavily on your own accountant after the claim has been put together.
Learn from others
Check the supplier’s website for any testimonials or case studies providing information on the experiences of other clients. I would also recommend browsing their social media channels to see if they have published any good news stories or successes.
Get a second opinion
The majority of consultancies will provide a free no obligation assessment of your company’s situation and will provide advice on whether they feel it is worth pursuing a claim. I would recommend getting a second opinion, you have nothing to lose.
Look out for unusual behaviour
When engaging with an R&D tax credit adviser, I would advise to proceed with caution if any of the following situations occur:
Without the relevant investigations and detailed calculation exercises, it is impossible to say how much your claim will be worth from an introductory meeting.
Not all employees will spend the same amount of time on R&D activities, so it is important that an adviser looks at each employee separately when calculating costs to include in the claim.
We have seen some advisers charging 25% – 35% contingent fees. This cannot be justified. Other advisers charge super low fees. This too should concern you – either they will not spend much time on your claim, or they will have to use unqualified staff to prepare it.
We have seen companies tied into 5 year contracts with super high fees, and in some cases, some clients being duped into signing for long periods with the tie in clause being hidden in the supplier’s contract.
Surely all R&D tax credit advisers are qualified accountants or tax advisers, aren’t they?
Unfortunately, not. Surprisingly, unlike in the law profession, regulation is not compulsory in order to set up an R&D tax credit consultancy.
Should I re-evaluate my current adviser?
As with any supplier, it is important to evaluate the service you are receiving on a yearly basis. This will ensure you are continually getting the best service for your requirements at any given time.
Who has the overall responsibility on the accuracy of my claim?
If you are a company director then you have the overall responsibility for the accuracy of your claim. Therefore, you need to have full confidence in your supplier to do the correct calculations and produce an accurate report. You need to ensure that the company has the relevant insurance policies in place which will go towards protecting you if anything did go wrong.
To speak with Matthew for specialist R&D tax credit advice, please click here.
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