Despite the substantial financial benefits, many companies are still reluctant to claim Research and Development (R&D) tax relief.
The reluctance is not necessarily due to a lack of awareness but often because of psychological barriers that prevent businesses from taking advantage of this valuable opportunity.
So, why do so many resist an opportunity to claim free for relief?
One common obstacle is Imposter Syndrome.
Many businesses, particularly in the tech and manufacturing sectors, may feel that their work doesn’t qualify as “real” R&D.
This feeling often arises from a lack of understanding of what constitutes R&D for tax purposes.
The reality is that R&D can include efforts to improve existing processes, products, or technologies (for the industry, not just their own business) – efforts that are often seen as ordinary business practices.
Overcoming this self-doubt is crucial to ensuring they receive the relief they deserve.
As their accountant, you can help your clients understand that if they are innovating or solving technical challenges, they are likely eligible for R&D tax credits.
Another significant barrier is distrust of HMRC. Given the tax system’s complexity, businesses often fear being scrutinised or even penalised for submitting a claim.
This fear is especially common among new entrepreneurs and smaller businesses without dedicated tax departments.
Alleviating these concerns requires transparency. Reassure clients that claims for R&D tax relief are routine and that HMRC has clear guidelines to follow.
Highlight the fact that, when prepared correctly, R&D claims are legitimate and often straightforward.
Another issue that can deter companies from applying for R&D relief is the idea that the process is too time-consuming.
However, with the help of an experienced R&D tax consultant, the process can be simplified and streamlined, and the administrative burden removed.
By addressing these psychological barriers head-on, accountants can enable their clients to take full advantage of the tax relief they are entitled to.
Not only will they unlock significant financial benefits, but they will be encouraged to approach innovation proactively and with confidence.
Want to help your clients overcome their R&D tax claim fears? Get in touch today for expert guidance.
