Specialist versus Accountant for R&D Tax Credits
A common question people have when deciding how to approach their Tax Credits is “should we go with a specialist or with our own accountant?”. Accountancies often roll R&D Tax Credits into their service, so many people don’t see the value in another agency handling their R&D claim. This is a tricky decision to make. People naturally trust their accountant (and if they don’t they should probably change right away!), so they often find themselves hesitating between these two choices. This is not made easier when the trusted accountant says something about R&D Tax Credits and the specialist firm contradicts it. This article will be the guide about Specialist versus Accountant for R&D Tax Credits filing.
Sometimes you need a GP … sometimes you need a surgeon
Accountancies, by their nature, need a wide breadth of knowledge of many tax breaks and initiatives. However, as is so often in life, you can’t be everything to everybody. Accountancies are like the GPs of the tax world: they know their area very well generally, but they have so many bases to cover for all the other tax incentives that they often have only the most superficial understanding of R&D Tax Credits; R&D specialists are like surgeons: very experienced with a niche topic that they know in and out.
R&D Tax Credits are a complex field where depth and breadth of experience makes a large difference. “Science and Technology R&D Tax Credits” are not clear-cut and the qualifying costs can change year on year, making it difficult to keep up to date on what HMRC would deem as qualifying. To R&D specialists, this is their bread and butter, and they are up to date not only on qualifying costs, but also have the experience and know-how to identify how best to present the projects to maximise your claim.
If you are ever in doubt about whether you are eligible for R&D Tax Credits, it’s often best to contact a specialist (like us!) for a free qualification. It costs nothing but some time, and can give you a definitive answer which your accountant may not be able to provide unless they themselves have R&D Tax Credits specialists in the business and available to consider your case (which is quite rare among all but the largest accountancy firms).
Technical know-how and full understanding of the R&D scheme goes a long way
R&D Tax Credits is a very deep subject, one of those where there are innumerable edge cases and it is very time-consuming to acquire experience of all the different ways that a claim can be different from the norm. Even the few accountants who have some understanding of R&D Tax Credits are unlikely to have the depth of understanding of the scheme, not to mention the technological know-how, to write a kick-ass technical narrative. Perhaps even more important, almost no accountant will be able to defend the claim, from a technical perspective, should HMRC enquire into it., something which should be a significant factor when deciding whether to use a specialist versus accountant for R&D Tax Credits.
In GrantTree and other specialist companies, there will often be expert R&D writers whose job is to understand all the nuances of your projects and present them in a way so HMRC can clearly see the project is qualifying; they will also be familiar with how to best defend an R&D application to maximise your claim.
As a simple example, a manufacturer who develops and sells remote-controlled toy helicopters could disqualify themselves by declaring that their project was to develop new toys. HMRC may take the time to tease out the underlying innovation, but they often won’t, and if they push back, the discussion could easily end up disqualifying all the work, if the manufacturer doesn’t know how to handle an R&D Tax Credit HMRC meeting. Conversely, if this same manufacturer filed a claim focusing on the technologies they’ve had to develop and tune (remote control, aerodynamics, balancing, battery, integration of components), they would probably sail through without issues.
Accountants can’t and shouldn’t be expected to be experts in technology. That’s not their job. Unless they specialise in R&D Tax Credits and have a technology background relevant to your industry, you should check with a specialist before taking their word that you don’t qualify. They may be right, but given the amounts at stake, it’s certainly worth getting a second opinion.
Bigger isn’t always better
Some companies we talk to are using a big practice, and so they think they’re covered in terms of tax. It’s absolutely true that Deloitte, Grant Thornton, and other similar sized accountancies will have R&D Tax Credit experts on board who know the scheme inside out and then some.
However, it’s also true that most of the staff of a large accountancy won’t know much about R&D Tax Credits. Whether you get good R&D Tax Credits service will depend on who you talk to. They also won’t be cheap, and probably won’t bother filing R&D Tax Credits for you until the amounts get really large and worthwhile for them.
In one case we encountered, a highly technical company that was spending over a million pounds a year on qualifying R&D (and had been spending similar, increasing amounts, for over ten years), was with a large accountancy, who had not told them about R&D Tax Credits. We estimated that they had lost over a million hard pounds of tax rebates by not filing – and that was only counting the accounting years which were further than 2 years back, which could no longer be filed for.
So – when in doubt, ask and ask again. If you are unsure about using a specialist versus accountant for R&D Tax Credits and want to have a free qualification, or just want to ask us a question about the R&D service in general, get in touch and we would be happy to help.
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