Finance
The Accountants’ Game-Changing Guide to Preparing R&D Claims In-House
Global Banking & Finance Review®
Company
In the last 12 months, HMRC have made changes to the R&D tax relief scheme in a bid to eradicate the malpractice that has developed within the R&D tax sector. While this extra scrutiny is welcome in a market that has, without any doubt, experienced problems due to a few bad apples, this shift in HMR...
In the last 12 months, HMRC have made changes to the R&D tax relief scheme in a bid to eradicate the malpractice that has developed within the R&D tax sector. While this extra scrutiny is welcome in a market that has, without any doubt, experienced problems due to a few bad apples, this shift in HMRC’s behaviour has caused some ripples to be felt across the R&D tax advisory sector. Some accountants are rightly seeing this as an opportunity to improve their operations, move their clients away from third party providers and implement a new R&D tax service offering under their own brand. They are realising that their clients are hungry for support, and there is a way to add more value to these client relationships.
A good accountant who understands the claimant’s business and who can steer them effectively through the eligibility criteria is precisely the kind of advisor who should be preparing claims in the eyes of HMRC. A deep, existing relationship is the very best way for an advisor to identify legitimate R&D work, which in turn helps remove the risk of SMEs being exposed to bad practice.
So, what are the essential tools that accountants will need to deliver a dependable R&D tax service in-house, and what role can R&D tax technology play? Mike Dean, Managing Director at WhisperClaims explores further…
It is absolutely possible for businesses to bring R&D tax relief services in-house without compromising on quality. Adopting the right technology, expert-led support, and training, accountants can provide a level of service that exceeds clients’ expectations and ensure that you meet all of HMRC’s requirements.
There are some key elements to success. First, ensuring clients have at least a passing understanding of the relevant parts of the guidance is crucial. In the end they’re the ones who have the detailed knowledge of their projects, and are best placed to assess whether they are eligible. Accountants need to ask the right questions so that they understand what HMRC’s definition of R&D looks like and can assess if the eligibility criteria have been met.
Using appropriate software, questions flex around the data being input—none can be missed or skipped, ensuring all data is reliably gathered and the clients is faced with the questions that you have confidence will ultimately meet HMRC’s criteria.
If reassurance is needed, live chat and 1-1 support channels in the software give the accountant quick and easy access to a team of R&D tax experts to lean on for scheme or eligibility advice. While built-in learning tools, explainer videos, and links to HMRC’s online guidance help to remove uncertainty as the accountant and client work through the claim.
How can firms also ensure that claims are produced consistently, even during the busiest times of the year? Just like other areas of running a practice, utilising software to deliver R&D tax claims is a key factor in delivering a robust process that is applied in the same way every time, for every claim, and is key to preventing errors and maintaining compliance.
Using technology to prepare claims provides structure, removes the grunt work, relieves friction and frees up accountants’ time, allowing the business to focus on more important aspects such as understanding eligibility and building the relationship with clients. Additionally it means that accountants can process more claims at the same time without compromising on quality, consistency and customer service.
When preparing supporting documents for an R&D tax claim, it pays to remember: ‘less is more’. It is critical to make sure that HMRC can see the claimant has considered all the relevant parts of the guidance and assessed the technical work and costs appropriately; padding the report with irrelevant details, commercial or otherwise, is simply counter-productive and in fact, recent anecdotal evidence suggests the harder a report is to read, the more likely it is to result in an HMRC nudge letter or compliance check.
The value the accountant adds is in the robustness of the claim produced and the advice that they can give to the client—not the length of the technical narrative!
Added to this is the requirement for an additional submission to support claims from August 1st – the new Additional Information Form. This represents an additional layer of overhead for any advisor submitting a claim and, again, by utilising the right software solution this process can be streamlined significantly.
With HMRC’s new approach to the R&D tax scheme, changing legislation and an emphasis on removing fraud and maintaining compliance, we are seeing more and more service providers either squeezed out or pro-actively leaving the market.
This is inevitably leaving gaps in the market, with accountancy firms in the front line – clients need support and need a way to navigate the changes and it is their accountant that they turn to first.
Now, more than ever, it’s important to keep ahead of the legislative changes, maintain compliance and service clients effectively, so that you can fill this gap in the market – as well, of course, as growing a revenue stream from this service line.
Utilising technology to ensure you have structured, repeatable and compliant processes in place whilst also freeing up your time to give the best possible advice and guidance to your clients is now possible, even in this complex, niche area of tax.
Eligibility criteria refer to the specific requirements that must be met for a business or individual to qualify for a particular program, benefit, or tax relief.
Tax compliance is the process of ensuring that a business or individual adheres to tax laws and regulations, including timely filing of tax returns and payment of taxes owed.
R&D technology refers to the tools and software used to facilitate research and development activities, helping businesses streamline processes and enhance innovation.
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