As an accountant, you have a responsibility to help your clients maximise their financial opportunities – and this includes applying for Research and Development (R&D) tax relief.
However, major changes to the scheme and negative press attention have resulted in the unfortunate perception that R&D tax credits are impossibly hard to access, highly risky, and simply not worth the effort.
A proliferation of myths and misconceptions about the scheme are holding back accountancy firms and their clients from making claims.
While we understand where these concerns are coming from, they could not be further from the truth.
With the right support and guidance from a specialist R&D tax consultant, preparing and submitting an R&D tax claim can bring much-needed funds to your clients.
Read on to find out why three of the most common myths around the R&D tax relief scheme are completely false.
Myth #1: R&D tax credits are just for science and tech companies
The R&D tax relief scheme is the Government’s flagship incentive to support and encourage R&D activities across any sector, providing the R&D activity itself is within an eligible field of science and technology.
Qualifying R&D work can be found in a broad range of sectors – not just electronics and life sciences, but also food and drink, manufacturing, and sports, to name a few.
The R&D tax relief scheme is designed to support any business doing eligible work.
A specialist R&D expert can advise you on whether your client’s project qualifies.
Myth #2: The R&D tax claims process is too complex – so R&D tax advisory isn’t for my firm
There is no denying that claiming R&D tax relief has become more complicated in recent years with a whole suite of new administrative requirements.
Unfortunately, this has led to accountancy firms deciding against offering R&D tax services or closing existing ones.
However, the right adviser will be able to help you handle the additional admin burdens.
Indeed, now is an excellent time to start offering R&D tax services.
Most businesses – especially small and medium-sized enterprises (SMEs), which will benefit most from the scheme – need significant help to prepare and submit claims that are accurate, credible, and optimized.
It’s also likely that demand for R&D tax services will only increase as a result of investment in innovation and growth by the Government.
Therefore, it makes sense for the majority of accountants to offer R&D tax as a service, particularly if you are already working with claimants on their accounts and tax returns.
Integrating R&D tax credits into an existing tax strategy can be hugely beneficial for your clients.
R&D tax claims for accountants can be challenging, since most firms lack the time or specialist knowledge to deliver effective claims.
randd UK’s R&D tax consultants can guide you through the scheme and help you prepare a robust claim.
Myth #3: Claims are always denied
Many businesses and their accountancy firms are concerned about enquiries from HM Revenue & Customs (HMRC), particularly since such enquiries are on the rise.
Figures differ, but HMRC states that it now challenges or rejects around 20 per cent of claims, although some sources say this figure is as high as 60 per cent.
However, a challenge does not mean that a claim will be rejected.
In fact, the majority of claims still go through and are accepted.
HMRC are just asking a lot more questions now than they did a few years ago.
Some compliance checks will have nothing to do with any perceived issues in a claim. HMRC checks a large number of claims on the principle that it will catch some non-compliant claims this way. Through the mandatory random enquiry programme (MREP), claims are randomly selected for investigation. An MREP enquiry doesn’t necessarily mean that your client’s claim is invalid, but it does highlight the importance of making sure all claims are as detailed as possible.
When conducting a compliance check, HMRC may simply check a detail in your client’s claim or ask for more information.
Commonly, it may approve part of a claim while investigating or rejecting others, or claims may be reviewed simply because the data says it needs to be. HMRC typically takes a risk-based approach to compliance.
What accountants and their clients have to watch out for is when HMRC makes an enquiry because of a discrepancy within a claim.
To minimise the chance of enquiries, therefore, you should focus on the data and information you have provided to ensure that each claim is as airtight as possible.
So, while the data on challenged R&D tax claims provides a useful insight, not separating rejected and challenged claims can make clients and firms view the scheme as riskier than it actually is.
Of course, it is not all plain sailing, and sometimes you need help defending your claim. At randd UK, we can and do win compliance checks and appeals for rejected or investigated claims.
We provide expert R&D help for accountants to put together watertight claims that minimise the chance of HMRC enquiries – but should they occur, we’ll help you defend your claim and give you the best chance of success.
How to help my client with R&D tax relief
R&D tax credits are not something shy away from – with the right knowledge and experience of the scheme, accountants should be advising and assisting their clients to prepare and submit accurate claims.
While the R&D tax relief scheme can seem complex, working with an expert R&D tax consultant can simplify the process and ensure that your claim is prepared to the highest standard.
R&D tax relief provides an excellent opportunity to access financial support for innovative projects. We’ll help your clients claim up to nine times more and ensure that you never miss an R&D claim deadline.
At randd UK, we offer accountants R&D assistance with all aspects of the relief process, from preparing a robust claim to resolving any challenges from HMRC.
Contact our expert consultants today to help your clients with their R&D claims.
