Accountants are reflecting upon their ability and appetite to continue to offer R&D tax relief services to their client base.
Some accountants may even be discouraging clients from making R&D tax credit claims due to their lack of confidence in identifying compliance, and their ability to advise to the necessary technical standard. This could result in clients missing out on valuable tax relief. A more constructive response is to recognise that the changing market requires specialist expertise, acknowledging that their eligible clients should still make claims with the support of a trusted advisor.
The outsourcing decision is a positive and forward-thinking conclusion to this evolving landscape. Many accountants are concerned at their ability to robustly defend their clients R&D tax relief claims, so partnering with a specialist brings additional confidence and assurance, putting their client needs before commercial gain.
Why won’t my accountant prepare my R&D tax relief claim?
Accountants will always have their clients’ best interests at heart often providing value-added services alongside statutory or compliance work. They seek to give their clients the best support and guidance whilst also meeting their legal obligations. To ensure they always deliver to the highest standards, many accountants will also reflect on their ability to provide a service internally versus using a trusted, specialist partner.
R&D tax relief claims, while a Corporate Tax relief, require significant technical expertise. The financial calculation of an R&D tax relief claim must be prepared with accuracy and diligence, but the focus always starts with the assessment of compliance from a technical perspective. This may be in complex fields of engineering, software development, pharmaceuticals, or other sectors, and due to the depth of knowledge required to prepare a robust claim, many accountants believe it’s in their client’s best interest to partner with a specialist.
The weight of evidence and detail in the R&D submission is necessary to mitigate the risk of enquiry. Many accountants we speak to understand the theoretical requirements of the R&D claim but are less comfortable in advising on technological baseline and how their client needs to evidence advancement in the specific field of research and development.
Can my accountant still prepare my R&D tax relief claim if I want them to?
Some businesses are reluctant to use an unknown provider and would rather their accountant continue to prepare their R&D tax relief claim. It is perfectly understandable but rest assured that Accountants will have carried out their own thorough due diligence to find the right R&D partner to recommend to their clients. It is not a decision that will have been taken lightly, it can be hard to hand over your trusted client relationships to a third party.
Accountants are working hard to reassure their clients that the outsourcing decision has been made to provide their clients with the highest level of expertise, reducing the risk of enquiry and having the benefit of an experienced partner to defend any enquiry should one be opened.
Clients often assume that if their claims are relatively small, that the chances of enquiry are reduced. This isn’t accurate and compliance checks of claims are across all sizes of businesses. The current assessment is that 20% of all claims will have a compliance check. The increase in resource within HMRC also suggests that this focus on compliance will not reduce at any time soon.
Accountants can still prepare and file claims as they’ve done historically should a client insist that is what they want. This can cause issues if the accountant is less comfortable in preparing these submissions than they were in the past. We’re aware of accountants asking to put disclaimers in place in these situations, but as these have been deemed as unenforceable, many accountants are as a minimum demanding a claim receive a third-party health check before submission. Clients should perhaps trust their accountant to tell them when they don’t feel confident to carry out work on their behalf.
What difference does it make who I use to prepare my R&D tax relief claim?
There are many things that should be important when deciding who to use to prepare an R&D tax relief claim. Experience, reputation and qualification are three areas to consider.
If an accountant has decided to outsource their R&D provision that will be because they believe that the chosen partner can bring additional depth of experience in this specialist area, to provide an enhanced service to their client.
Not all specialists are equal. If accountants have chosen to outsource that will be because they have confidence in the technical expertise, customer service and partnership offering of their chosen provider. From ground up claim preparation to global R&D consultancy, having a voice in the space and policy opinion, all evidences a deep-rooted understanding and commitment to innovation and the R&D tax relief schemes.
Commercial viability will always be a focus of conversation, but increasingly recognition of technical expertise, experience and diligence will become far more important in any conversation or tender process. Accountants who recognise this do so for the benefit of their client.
What are the risks of my accountant continuing to handle my R&D tax relief claim as before?
Accountants are having discussions internally around Professional Conduct in Relation to Taxation (PCRT) adherence and for many practices this is resulting in a decision to outsource to reputable specialists in this field.
Some of the poorest R&D tax relief claims we have seen have been prepared by well-known accountancy practices. Big names aren’t immune from poor practice with a lack of detail, understanding and fundamentally, no compliance in projects. A small number of accountants viewed R&D tax relief claims as straight-forward, needing no more than a light-touch of pulling together a few notes on projects their client had undertaken. Those days are gone. Everyone in the profession now recognises that there is a need for technical knowledge, understanding, and expertise in evidencing eligibility.
R&D tax relief claims provide a generous tax relief and those that claim are expected to do so with appropriate care and attention. Due diligence is expected, and the behaviour of the claimant will be scrutinised alongside their qualifying projects, should the claim go into an enquiry process.
