In the past you may have considered R&D tax relief as straightforward, a standard tax service that was easily managed by your accountant with a general tax knowledge approach. However, the landscape has significantly changed in recent years set against a backdrop of an increased level of scrutiny by HMRC. Changes are culminating with the SME and RDEC schemes merging for tax years starting on or after 1 April 2024.
Historically you may have prepared the technical aspect of the claim yourself. In the past many accountants will have been comfortable preparing R&D tax credit claims. Now you may find that your accountant isn’t as confident that they can compile or approve compliant claims. The upshot is that many are refusing to do this work and suggesting that their clients use a third-party specialist. Or perhaps you have used an R&D provider, but they have let you down with an uncompliant claim which has gone into enquiry with HMRC.
Choosing the right R&D specialist is vital, so here are some of the qualities you should be looking for.
When considering R&D tax services, the selection process should consider several factors to ensure a successful and long-term relationship.
Businesses should look for providers with proven service levels, expertise and integrity. It is essential to consider if providers are compliance-led, but you should also expect that they will add value to your business.
It is important to choose a provider with a proven track record in handling R&D tax claims and a deep understanding of the industry. You may want to establish if they have successfully navigated complex cases or have relevant expertise in your industry or sector. It’s helpful for them to have a range of commercial and technical experts to draw on who can identify and substantiate your qualifying R&D activity alongside relevant tax know-how.
An advisor should have demonstratable technical and financial credentials in compiling R&D claims. They should have the confidence that those claims will withstand the toughest HMRC scrutiny.
Of course this requires a thorough understanding of the complexities and subtleties of the UK R&D tax relief schemes and staying up to date with changes in legislation. With the Merged Scheme R&D expenditure credit applying to accounting periods beginning on, or after, 1 April 2024 both SME’s and large businesses will claim under the same scheme. It’s never been more important to be able to trust that your advisor is on top of things.
Advisors should be able to show a long-term commitment to the integrity of the R&D tax relief schemes. You may be aware that some providers have been happy promote R&D tax relief as ‘free money’ that could, and should, be claimed by every business. Although it may seem that they got away with that approach up until now, the chickens are coming home to roost. Their clients are now increasingly facing the stark reality of having to repay their R&D tax relief benefit, and more than that, they are risking financial penalties.
Credibility can be assessed through peer recommendations or accountant referrals. It is also crucial to assess the advisor’s compliance with relevant regulations and standards to ensure ethical practices and data security.
With any business relationship it is important that you feel well looked after and you should expect top-class service. Will you be allocated a dedicated account manager who will have a holistic view of the work being done and to act as your single point of contact? It’s helpful to have someone who is there to ensure that work is progressing as planned.
Find out how the work will be scheduled. Does your advisor agree milestones with you in advance, such that the work is to your timetable and with your priorities in mind? Will there be a kick-off meeting that clearly lays out what you can expect to happen and when.
Consider if your R&D specialists has the scope to offer a wider IP offering. IP expertise brings the particular benefit of establishing the technical baseline, a compelling proof point in your R&D claim. But beyond that, IP expertise could support your Patent Box claims and go further to help you identify your IP assets and then transform them into tangible commercial value.
From early start-ups to multinational corporations, understanding and harnessing the power of IP has become crucial for success. IP is not merely a legal concept but a strategic and commercial tool for businesses seeking to thrive in today’s knowledge-based economy. The right R&D provider should have the potential to deliver advice across the whole of your innovation journey.
To find out what Source Advisors can offer your business, please contact us.
