5 Questions to Consider When Choosing a R&D Tax Credit Advisor
5th July 2021
You’ve likely heard of the R&D tax credit scheme; many businesses have. It is a lucrative government tax incentive, which can credit your business up to 33% of your R&D costs.
While there is good awareness of the scheme, a critical element of claiming R&D tax credit is the process of selecting the best advisor for your claim.
As one of four businesses on an expert panel put together by the Chartered Institute of Taxation – and part of HMRC’s R&D Consultative Committee – R&D specialist EmpowerRD, has recently helped develop a set of credibility indicators to evaluate when looking for an R&D tax credit advisor. Here are the key questions to consider when choosing a specialist for your claim.
1. How long will it take to receive the funds?
Two factors can affect the time it takes to receive your credit.
How long it takes to create and submit the claim
There are advisors who spend weeks gathering data by interviewing your team over calls and email chains, which drains your teams time and energy and unnecessarily delays you receiving your funds. This method is avoidable; both Charlie HR and Sen saved significant amounts of time and money by moving away from this approach.
How long it takes to receive the money after the claim.
The credibility of your R&D tax credit advisor can affect the time it takes to receive the money, but you can also speed up the receipt of funds through “R&D Advanced Funding.” This is a short-term loan on your future credit. If you want to find out more, we also provide an Advanced Funding service known as EmpowerRD Now.
2. Could my claim be undervalued?
All claims have their intricacies, which is why it’s so important to have an experienced and qualified team who are incentivised to claim the right amount for your case. Here are two factors that affect how much your advisor will claim for you:
% vs flat fee pricing
At EmpowerRD, we charge a % fee so that we’re incentivised to maximise the amount you receive back from HMRC. If your advisor is charging you a flat price, they are no longer incentivised to maximise your claim. Instead, they are incentivised to keep your claim low so that HMRC is less likely to launch an enquiry.
In fact, in all the cases where we have increased a claim amount for a client retrospectively, the previous advisor charged a flat fee. For example, we uncovered that Bloom&Wild’s previous provider had claimed three times less credit than they were due!
An experienced claims team
Your R&D tax credit advisor may say that they’ve made over 100 claims, but if they don’t employ ex-HMRC inspectors or tax professionals, you could receive back less than you are due. For instance, they might not be benchmarking your claim against other claims from your industry, meaning your claim won’t be maximised, and could come under scrutiny from HMRC.
Also, claimants can encounter problems when their providers do not respond to the scheme’s rule changes. HMRC is constantly evolving the scheme to improve outcomes for businesses and reduce fraud. Being on the wrong side of these rule changes can result in your claim being delayed or reduced.
3. Am I paying the correct amount?
An acceptable market rate for a claim is anything below 10% of your claim value. Anything above that needlessly exceeds the cost profile of making a claim.
Unfortunately, many providers exploit the lack of market awareness of claimants and charge 15% or more. In some cases, we’ve seen claimants pay as much as 40% for their claim!
4. What’s in the small print?
Are they happy to work with your accountants?
Some advisors won’t work with accountants because they are uncomfortable with transparency. Even if you plan to submit without your accountant, this is a red flag.
Do they share your claim report with you?
If they do not do this, then this raises serious questions about their commitment to transparency. A responsible provider should have nothing to hide.
Don’t let an R&D advisor lock you into a multi-year contract at a high price rate. Once you’ve signed the agreement, the provider no longer has the incentive to deliver a good service
5. Will my claim be successfull?
Are they transparent about key metrics?
Your R&D tax credit advisor might advertise a 100% success rate, but this metric doesn’t always tell the whole story of their claim history. Even claims that resulted in enquiries, penalties or reductions can eventually be deemed ‘successful.’
For that reason, it’s always a good idea to ask your advisor how many times their claims have resulted in enquiries, penalties or credit reductions.
Do they have references and testimonials?
It’s always worth asking more questions. An advisor’s client might have had a good experience, but it’s also useful to ask how their claim was processed. How much time did they spend on their claim? And how much time did the advisor dedicate?
Also, looking on third-party websites such as TrustPilot, allows for a more complete view than the references from clients.
We hope that provides some useful insight into what to look for in an R&D tax credit advisor. If you think you might have a qualifying project or are looking to switch providers, get in touch to speak to one of our experts and find out how much your business could be eligible to claim.