What’s Your Accountant’s Role on R&D Tax Credit Claims?
How you involve your accountant is important – read why that is…
When it comes to research and development tax credit, accountants are my best friends although they don’t always get it right. If you are a small company, let’s say with £500k to £20m turnover your accountants will usually be able to advise you about the tax side of your R&D activities, but in many cases cannot help you scope out and decide which are your qualifying activities for Research and Development tax credit purposes.
Understanding what constitutes R&D for tax purposes is a specialist field so working out what activities and companies qualify is not always a simple process. If you ask your accountant whether you qualify (and that is what most company directors do) be warned, your accountant may not be any better equipped to answer that question than you are.
I have come across instances where a company’s accountant has categorically told them that they are not doing R&D, when in fact they are. Good accountants, like all good professionals, understand their limitations and will be happy for you to bring in a specialist. In fact many of my clients have been referred to me by their accountants. It’s a win win situation, your accountant helps you maximise your claim, is supported in doing so and does not have to worry about the costs associated with researching into the technical side of R&D claims.
An R&D specialist will understand the technical qualification aspects of your claim and they will know what activities and costs qualify. Apart from very large accountancy firms, most accountancy practices will not have a specialist in their team so even when they agree that you should claim R&D Tax Credits, they will very likely ask you to assess and scope out your own R&D activities and write a Justification Document to support your claim.
This is difficult for you and often causes under claiming or qualification disputes with HMRC.
If you find that your accountants ask you to write the supporting R&D Justification Document, or if they want to put in a claim without one, you should consider bringing in a research and development consultant.
In one recent situation, I talked with an accountancy firm who had dealt with a claim themselves. HMRC called a meeting and offered to give them just 50% of their claim on the basis they were not sure if what they were doing was R&D. Given that the average small to medium sized company claim is worth around £43k this is something that you will want to avoid.
At cobizfunding.co.uk we can help you scope out your claim so that you claim all you are able to claim and you are as confident as you can be about the nature of your claim. We will work with your accountants to support them in submitting your claim and that way we all play to our strengths.
Read more about what goes into a claim here…
Are you ready to find out if you qualify or how much your R&D claims could be worth?