Controversial, coming from an R&D tax specialist company. It seems that as R&D tax specialists, we spend all our energy trying to convince people that we’re the best way to go. And of course, we sound bias. So, this is our attempt to walk over to the other side, not as a specialist, but in the shoes of anyone considering or claiming R&D tax credits.
There are, of course, instances where a specialist is not the best option for you. Here are a few scenarios:
1. If you or your accountant know what you are doing
The R&D tax credit legislation started in 2000. There are many people out there who were aware of the scheme since then and have been making claims for their company. If this is the case, there is no value in using an R&D tax specialist. You don’t have to be an expert to file a claim. If you have experience, that’s all the more reason to do it yourself. Similarly, you can have an accountant who has experience filing your claims, and this is something you could do together.
It’s also not something that is impossible to learn. The government allows anyone to file a claim on the premise that anyone could write an adequate report. The factor that comes into play here is time: R&D tax specialists will save you time and effort; if it is something you have, provided you also know what you are doing, then there is no need to hire someone else.
We can imagine that this may be the case especially with lockdown and businesses having to close.
Many R&D tax specialists will even go far as to provide you with guides on how to do it yourself.
2. If you have impeccable account keeping
The quality of an R&D tax claim is dependant on how much of the costs you have incurred can be qualified as R&D expenditure. How well you keep records of these will drastically impact your ability to write a report that justifies all the costs relating to your R&D projects. A paper trail will strengthen your claim, decrease the chances of an enquiry and will likely lead to a successful claim provided you have adequately described the R&D relating to your company and the costs thereof.
It may be the case that with really good accounts, the task become easier and leaves you not in need of an R&D tax specialist.
In this case, a specialist is beneficial if you are not sure which of your costs qualify. As a business owner, nobody knows your company better than you. Great accounts, plus a solid knowledge on HMRC’s qualifying costs, means you could do without a specialist.
3. If you want to cut costs
An R&D tax specialist’s costs are often justified with the work they are putting in. There are many instances that they can claim higher returns. Often, great time and effort is put into writing reports, on the basis that this is what we do daily, and there are more costs associated with putting in a claim for a client than you would think.
Nonetheless, there are people who genuinely cannot justify the cost of working with an R&D tax consultant. Especially for those who have in-house accountants or are already paying for accounting services, R&D tax credits is something that accountants are generally familiar with to some extent. In today’s economy with Brexit and the pandemic, cost efficiency is vital. We, as specialists, understand that you’ve spent your hard-earned money, and you need every penny you can get back.
While we personally believe outsourcing increases efficiency, there is no dispute that one-stop shops and in-house is a widely used strategy.
If you’re in a situation where you can’t afford the luxuries of an R&D tax consultant, by all means go with your accountant or give it a go yourself.
An R&D tax specialist’s objective lies with (a) raising awareness of a scheme that many UK companies can benefit from who are unsure of their eligibility, and (b) providing services to those who are unable to write reports and file claims themselves, whether they don’t have the experience or they are more comfortable with an expert handling it for them. A third point is using their expertise to enhance the return that a company receives from HMRC. This is all in an attempt to ‘empower businesses growth and innovation’.
If none of these apply to you, don’t use one. If the cost of hiring an R&D tax specialist will outweigh the benefits, don’t use one. If the fee you pay could be better used in another part of your company, don’t use one.
Here’s a little tip: if you prepare your reports yourself or through an accountant, get in contact with an R&D tax specialist who offers free assessments. Have them take a look at your reports and see how well you’re doing. Companies will tell you, for free, if you are claiming exactly what you’re entitled to by looking at your report. If they find nothing, then you’ve done a great job without paying extra. If they say they’ve found something, have your accountant or yourself take another look. Ultimately, if you’re really struggling and you want to also receive the extra that they’ve found, they can do a claim only on that difference, which will reduce the fee you pay.
The bottom line is that every company is unique and has different circumstances and needs. For those who would benefit from using an R&D tax specialist, the service can be extremely valuable. For those who don’t need one, this may not be in your company’s best interest. Part of the thought process of deciding whether to use a specialist is whether you are in a position where it will benefit you in relation to the service you need and the cost you can afford.