Your accountant is your financial advisor - confidant of sorts. And you generally have trust and loyalty, perhaps a relationship, certainly familiarity. Your accountant takes care of all the numbers, and all the tax.
In this scenario, two things are true:
1. There’s no need to get anyone else involved to do something that your accountant already does, and you pay for
2. Your accountant knows your books, is qualified, and recommends you use their services.
Why would you tell your accountant “I’ve decided I no longer want you to do my R&D tax claims and I’m going to pay someone else to do it”?
Perhaps it will make them feel you think they’re not doing a good enough job. Potentially it’s an awkward conversation to have. And you’ll most likely get pushback and be asked to reconsider. It can be a sensitive task to navigate as your accountant and R&D tax specialist would have to work together at some point.
So, we understand the reluctance.
Generally, you wouldn’t be an R&D expert so to your knowledge, your accountant is successfully claiming money back, to everything you are entitled to, as they are experienced and know your company’s finances inside out.
Ergo, no need to stir the pot.
But this last year has been challenging, and we’ve all been suffering financial difficulty with Covid’s impacts seemingly never-ending. Perhaps there is more that you are entitled to, and you should think about exploring.
How can you go about this? We thought long and hard, had several conversations, and spoke to our past clients to understand the topic a little better from your perspective.
In this scenario, the two compelling reasons to even consider going down this route are: (a) in majority scenarios an R&D tax specialist can claim back more, to the point that even after paying their fee you are left with a higher return than you would have if you claimed with your accountant and paid their usual fee, and (b) in our case, there is a six-year security and responsibility that covers you from any liability for the claims, which your accountant doesn’t offer.
Here’s a possible way to go about the situation:
Before even talking to your accountant, you should confirm this is the case. Have a free assessment by a specialist. If you’ve made a claim in the past, this can be as easy as sending them your last report, the specialist will tell you if there are qualifying costs that were missed out on. If there aren’t, then you can put your mind to rest and not need to take it any further.
If the specialist confirms there was money missed, you should have a conversation with your accountant. Firstly, explain the situation and secondly try to understand why they didn’t believe the costs qualified. A possible scenario is that your accountant will dispute what the specialist has said and advise you that the costs do not in fact qualify.
I’ll point out at this stage that this is where the six-year security plays a role. As an accountant’s standard approach is to work on their client’s explicit instructions, generally the onus remains with the client, hence a compliance-based approach most of the time resulting in smaller claims. If an R&D tax specialist takes responsibility, they need to be, and are, 100% sure about the costs they think qualify because being wrong will not affect the company they are claiming for but will damage the specialist’s reputation and put them on HMRC’s radar. The difference is a specialist adopts both a compliant and a subjective point of view.
What likely happens next is that you, your accountant, and the specialist will have a conversation about the discrepancy. The R&D specialist will explain to the accountant and yourself why the missed costs qualify, and how they would go about describing and justifying this to HMRC.
Sometimes, the perception is an accountant vs specialist rivalry. This is not the case, from our perspective anyway. At the end of the day, all our jobs are to contribute to the success of the business in question. R&D tax claims require accountants working with the specialists, to corroborate information etc., and as a personal preference, we enjoy working with companies whose accountants recommend us.
This approach is far less conflicted and leads to a collaborative approach if you ever consider an R&D tax specialist going forward.
The fact is, specialists aren’t for everyone, and you don’t always need one or it’s not always in your company’s best interest for one. By first exploring and confirming the value, and then having a discussion with your accountant and asking for their point of view before discussing with the specialist, it can lead to a better, more involved outcome.