Don’t be swayed by big names or the illusion of convenience. Hiring an R&D Tax Credits specialist can increase your relief, save you time, and protect your business from a time-consuming HMRC enquiry.
When I was GrantTree’s CFO, there were a few things I demanded from all our service providers: efficiency of service, value for money, timely communication, and above all, specialism in their field.
As financial professionals, we have a keen sense of the power of specialism.
There’s a reason why there are so many different job titles in accountancy and finance. We pay attention to these when we’re hiring. And sometimes we favour certain qualifications when picking between CIMA candidates and ACCA candidates for certain roles.
We do this because matching the right skills to the right responsibility makes a difference.
This is true throughout the financial world, and particularly in complex areas like claiming for R&D Tax Credits.
Building a maximised, compliant, HMRC-friendly claim is a highly nuanced practise, requiring a blend of legal, financial and technical acumen that can’t be found at generalist providers.
Local firms and large multinationals are excellent at many things. But just like hiring the right person for the job, bringing in the purpose-assembled team of an R&D tax credits consultancy can pay major dividends for your business.
R&D Tax Credits specialists – the practical argument
I do see the attraction of ‘one-stop-shops’.
Particularly for CFOs and other high-level pros, who spend their days making one high-stakes decision after the next.
In a high-pressure environment, ‘set it and forget it’ services can be worth their weight in gold.
Plus there’s actual gold to consider. Bundled services, after all, are generally cheaper than retaining a range of different providers.
But when it comes to issues as intricate as tax relief, it’s important to know what the real cost of this convenience is. And what are the risks and limitations of hiring generalists to complete highly specialised work.
The answers to these questions are unique to each business and its finance team. Although I can speculate based on my own experience, I’ll offer the other side of the equation: the benefits of hiring an R&D Tax Credit specialist.
Maximise your claim
The first and maybe most important reason is to make sure you’re claiming as much tax relief or as large a cash credit as possible.
Claim maximisation is all about identifying expenditure which is admissible under the scheme and then building a watertight technical narrative which justifies your submission.
Using their advanced technical expertise, financial knowledge and an in-depth, continuously-evolving understanding of the R&D Tax Credits scheme, a specialist firm will identify every penny you’re allowed to claim for.
Then they will defend your claim with a convincing narrative written in a language the tax inspector will understand and more readily accept without contest.
A bigger claim means a larger corporation tax relief or a more substantial cash credit. It also means more investment capital and a longer cash runway for your business.
Get the complete picture of your funding options
The expertise of an R&D Tax Credit specialist yields all sorts of benefits beyond claim development.
For example, we’ve recently been helping many of our clients understand the implications of Coronavirus loans and financial aid on their R&D Tax Credits eligibility.
Outside of the demands of COVID-19, we help CFOs and FDs navigate the multiple government funding options available, such as grants and VGTR.
Having someone that can help you develop a more robust understanding of your business’s options, and to decide on the most lucrative course of action, can pay sizeable dividends for your short and long-term financial planning.
Increase your efficiency
Retaining another service provider might sound like it would decrease efficiency. That work would be doubled up, or that there would be coordination issues between agencies that you would have to spend time resolving.
In fact, hiring a specialist usually has the opposite effect.
R&D Tax specialists are experienced in working alongside incumbent corporate accountants.
In many cases, the R&D Tax Credits specialist will retrieve all the financial data they need directly from your accountant, meaning you don’t have to share information twice.
This free sharing of information can actually help increase your claim size, because it gives the specialist more visibility into your finances, identifying costs you might have assumed weren’t relevant to your claim.
Reduce your risk of an enquiry
In most cases, HMRC processes R&D Tax Credits claims without a problem. But some claims – those which have any kind of irregularity – will face what’s called an HMRC Enquiry.
Enquiries, which are also called compliance checks, are a long, time-consuming processes where you have to defend your claim, line by line, to one of HMRC’s tax inspectors.
Even if you successfully navigate the enquiry, with no reduction in your claim size, it can delay your tax refund or cash credit by several months.
The best way to avoid an enquiry is to file a flawless, fully-compliant R&D Tax Credits claim, which requires the years of experience and insider knowledge that only a specialist can provide.
Maintain a strong relationship with HMRC
The consequences of an enquiry go deeper than months of stress and delay.
HMRC might decide to reexamine all of your old claims – they can reopen up to seven years worth of filings – to see if there are any inconsistencies. If there are issues, you might have to pay back R&D Tax Credits you received years ago.
Undergoing an enquiry also damages your relationship with HMRC, making investigations and other complications more likely in the future.
In this way, working with a specialist not only reduces your chances of enquiry, it also helps you present a trustworthy image to HMRC. This becomes increasingly important as your business grows, and your claims become bigger and more complex.
A specialist’s entire livelihood depends on maintaining an excellent reputation with HMRC, which aligns perfectly with your interests: strengthening your relationship with the government.
Receive full enquiry support at no extra cost
Without a doubt, working with a specialist will reduce your chances of facing an enquiry.
Still, your chances won’t be zero.
This is why some specialists offer a free enquiry resolution service; a form of safety net strung underneath their tax credit offering.
Enquiry resolution is where a specialist’s tax experts will manage your back-and-forths with HMRC’s R&D Tax Unit and ensure your financial and technical teams are fully prepared for their interviews with the tax inspector.
Nobody wants a claim to end in an enquiry, but an enquiry resolution service will save you time, minimise reduction to your claim, and give you peace of mind.
Ready to switch to a specialist?
I hope I have laid out the benefits of specialism in R&D Tax Credits claims. And the benefits expertise could bring to your company’s financial health and performance.
If you would like to talk to a specialist, please get in touch.
One of GrantTree’s team would be very happy to talk to you about our service, and how we could help your business kick on in 2021.