Get 2022 off to a great start

Accountants may be experts at analysing the numbers, but the main challenge of an R&D Tax Relief claim is first understanding the extent of a company's technical eligibility, and meeting HMRC's two key eligibility criteria of ‘technological advance’ and ‘technological uncertainty’, which provide the basis of the costs presented in the claim.

From a costs’ perspective, do you fully understand the factors that could unexpectedly lead the client to be claiming under the incorrect scheme, such as the impact of grants or changing group structures, or the impact of offering subcontracted work? Asking clients to write their own technical narrative, whilst you do the numbers, might be tempting but this in itself runs the risk of the client including standard work or failing to start from the current industry baseline, and you ultimately submitting an incorrect claim.

ABGI's Best Practice:

Since few accountants are in a position to build the necessary in-house technical resource and expertise in, for example, physics, biology, chemistry, mechanical engineering, electronics and software, the ideal scenario is to work with a specialist partner that complements their range of accounting-based tax services with a breadth and depth of technical industry experts. Presenting accurate and robust claims remove the element of risk of over-claiming while maximising the client’s claim accuracy and value. You should also make sure they are confident enough to defend all of the work they produce for you, in the event of an HMRC enquiry relating to a client claim.

Busy on day-to-day accounting work? Quite rightly so, you do have a business to run! Unfortunately, the clock ticks when it comes to claims for R&D Tax Relief – whilst the scheme is generous in allowing clients to claim two years back, there are strict hard deadlines, which once missed, allow no flexibility to submit further claims for that period. This can lead to some very embarrassing conversations with clients when a deadline is missed, or worse still, the client has been eligible for a number of years but has never been made aware they can claim.

ABGI's Best Practice:

Introducing a reputable specialist partner such as ABGI to your clients, as a value-add service, minimises the time and effort that both you and your clients have to devote to the process, therefore freeing up your tax department to work on potentially more lucrative core business activities, while still benefiting from outsourced R&D tax relief work.

Changes to R&D tax legislation happen regularly – keeping up to speed with the changes in the rules of the scheme is crucial to avoid claims being challenged by HMRC, if costs have not been compiled or interpreted in accordance with the legislative guidelines...

So far this year, we’ve encountered several significant factors that are already impacting the way R&D tax claims should be made. Companies who have claimed for several years, either with the help of their accountant or on their own, are now at risk of getting it wrong. These updates to HMRC’s interpretation of the legislation apply to sub-contracted R&D and the use of competent professionals, relevant to businesses in any industry sector, where collaboration on technology projects is key to success.

ABGI Best Practice:

As parts of HMRC's Corporate Intangibles Research & Development manual are open to interpretation and judgement, it is no mean feat to ensure your team has a consistent and accurate understanding of HMRC’s sometimes subjective, and frequently changing, guidelines.

To meet this challenge, it's a good idea to choose a partner who operates continuous training & development on HMRC rules and legislation, to ensure staff are knowledgeable, up-to-date and consistent in applying the CIRD guidelines to their clients.

A common area of friction by clients is the feeling of being ignored when their accountants are simply too busy with day-to-day accounting work to give their R&D tax claim the attention it deserves. A request for support with an R&D claim can be put on the back burner when accountants are busy with multiple clients and accounting deadlines – this can cause bottlenecks in client service and result in frustration from clients expecting timely support with their R&D claims.

ABGI Best Practice:

Seek support from a partner who doesn't just provide your clients with knowledge of technology and the R&D tax relief programme, but also delivers an excellent level of support throughout and after the claim process - proactively engaging with clients to schedule meetings, calls, webinars and friendly reminders that enable them to prepare their claims in a smooth, efficient and timely way; Tailoring the service to each client, giving a bespoke support package every time and; Monitoring claim progress and timescales, proactively identifying clients who are struggling and providing extra help and supportive gentle reminders.

Do you do most of the work required to prepare a claim for your clients? Very often we find that accountants will complete the cost computations whilst the clients are left to complete their own technical narrative, often with little direction or a very generalised template to support them.

The job of putting together an R&D claim is usually assigned to either the clients' Finance department or their Managing Director, but certainly not the Technical Teams who are usually busy with their own demanding workloads. As such, asking a Financial Manager or MD to divert their Technical Teams' precious time into writing a claim's technical narrative often becomes the root of inter-team frustration within the business, which in turn reflects negatively on the accountant. It might even put the client off claiming for R&D Tax Relief altogether.

ABGI Best Practice:

When preparing R&D tax credit claims, provide your clients with a 5-star process that does more for them, from start to finish. Introduce your clients to a specialised value add service that minimises the time and effort that the client has to devote to the process, including the business risks of either under or overclaiming. Work with a specialist partner who will manage the complexity, while maximising the accuracy and value of your claims. Ask your potential partner about the level of customer loyalty they achieve with their clients – do they often remain with them for many years?

Accountants are increasingly focused on becoming their clients’ ‘Trusted Business Advisor’ and moving away from the perception of the commodity accountant. To achieve this, you need to make sure your processes clearly reflect where you act in the best interest of your clients and their future success, by not just providing them with a generalist R&D tax service but, by also delivering an excellent level of support throughout and after the claim process.

ABGI Best Practice:

Provide your clients with a 5-star service that that consistently exceeds expectations. Do this by proactively engaging with them to schedule meetings, calls, and webinars to enable them to prepare their claims in a smooth, efficient and timely way; Tailoring the service to each client, giving a bespoke support package every time and; Monitoring claim progress and timescales, including any HMRC delays in processing, proactively identifying clients who are struggling and providing extra help and supportive gentle reminders.

Submitting a complete and accurate R&D tax relief claim is a specialist skill and as such you will benefit from using a specialist when providing this service to clients. If you needed surgery you would go to a surgeon not your GP, and the concept of knowledge and experience is the same when it comes to a fully successful R&D claim.