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How do your clients perceive R&D tax claims?

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Author: Tom Mason

We recently reported on a story by the BBC on ‘error and fraud’ in the R&D tax system, allegedly costing the taxpayer up to £4.1 billion since 2020.

Although reflective of the state of the R&D tax scheme in days gone by, it was our view that such reporting relied too heavily on outdated comments and data.

It was, therefore, not illustrative of the scheme as it is now – particularly after the introduction of anti-abuse units and the merged scheme.

However, we also found that the BBC’s report reflects the wider attitudes towards R&D tax after a period when the sector was marred by unscrupulous operators and a lax approach to claim approval.

We know that this has an impact on accountancy firms as they try to assist clients in claiming tax reliefs for which they are eligible – so we’re going to look at how you can address clients’ uncertainty around R&D tax claims and set the record straight.

Client concerns

We’ve heard from business clients and partnered accountancy firms that, in the last 18 months, businesses have become more reluctant to make R&D tax claims.

This has been largely driven by HMRC crackdowns on non-compliance and claims being increasingly investigated before approval.

Concerns that have led to these trends include:

  • Uncertainty over what information is needed
  • Being unsure of how to proceed through enquiries
  • A reduction in accountancy firms offering advisory services in this area
  • Trouble navigating sweeping changes such as the merged scheme

Part of the issue, as we’ve seen, is that reporting from trusted sources on these topics is out of date and focuses on the history of the scheme, rather than its future.

Tackling pre-conceptions

To address these concerns, you’ll need to communicate to your clients that:

  • You’re working with the experts in R&D tax (or have in-house expertise)
  • You’re confident that their claims are compliant and well-evidenced
  • You’ll be there for them every step of the way
  • You can help them navigate pushback against compliant claims
  • The scheme has been overhauled to address these very concerns

However, your messaging needs to go beyond that. Most client concerns around R&D tax relief come from the ideas that you may not be acting with integrity and that their claim will be ineligible, potentially landing them in hot water with HMRC.

To tackle these concerns, you’ll need to show your clients that you understand what goes into a successful claim and that you’re able to guide them through creating and submitting it.

This also means acknowledging when this isn’t something your firm has the capacity for and bringing on help from the experts.

The future of R&D

We firmly believe that R&D tax relief will have a major role to play in the coming years, as the Government pledges investment in sustainable technologies and infrastructure improvements.

However, this relies on the layperson’s attitude towards the relief shifting. It is currently stuck in the era of non-compliance, which is now firmly over, and the R&D tax sector heads into a period of stability.

Your firm can support this change in perspective, with help from the experts where necessary to ensure your clients are reaping the full benefit of R&D tax relief.

For advice on supporting your clients with R&D tax claims, please contact a member of our specialist team today.