You’re likely aware that, when a business wishes to submit an R&D tax claim, they’ll make a beeline for their accountant or tax adviser.
However, R&D tax is a hugely complex area of the UK’s tax code, and many firms lack the in-house expertise to manage a large number of ongoing claims.
If you’re in this position but you want to grow your R&D tax service, or offer an enhanced service to your existing clients, a specialist R&D tax adviser may be the right choice for you.
Complex claims
With the addition of the Additional Information Form (AIF), requiring a detailed technical narrative and cost breakdown for each claim, R&D tax submissions have quickly become more complex than ever before.
We find that non-specialists may experience particular challenges over qualifying costs and separating these from ineligible expenditure when preparing a claim.
If this isn’t done thoroughly, it can lead to an investigation or the rejection of an otherwise valid claim.
Unconventional sectors
There are certain sectors that are more likely to raise eyebrows with HMRC than others.
Although each claim is assessed on its own merits, some sectors such as media, have found themselves on the wrong end of a relatively high number of enquiries.
This is largely because of previously high levels of ‘error and fraud’ within the scheme. As a result, HMRC looks for potential indicators of non-compliant claims on all submissions – and particular industries can set of alarms.
If your client is submitting a claim for work outside of sectors such as life sciences or manufacturing, it is particularly important for you to have the right expertise on board.
An experienced R&D tax adviser can assess the claim thoroughly and support with the technical narrative in a way that conveys the eligibility of the work.
Ambiguous projects
One of the major challenges facing accountancy firms preparing R&D tax claims is the initial assessment of the client’s project.
A qualifying project must address or overcome an uncertainty within a particular sector, and it must be in the fields of science or technology.
Both of these fundamental requirements present difficulties for tax teams and their clients, in particular:
- Originality – An eligible project will develop a new product or innovation within the claimant’s industry, rather than applying an existing product to a new situation
- Sector exclusions – While the development itself must be scientific or technological in nature, the claimant doesn’t have to trade within these sectors.
For example, a fashion brand that develops a new textile through chemical engineering may qualify for the scheme.
A specialist R&D tax adviser can help your firm navigate these challenges and more, to deliver the best service possible to your clients.
The most important considerations when taking on an external R&D tax advisory are client experience, integrity and the strength of the partnership between your firm and your adviser.
If an R&D tax adviser could take your firm’s client service to the next level, please contact our team today.
