As companies grow, the services they use also need to grow with them. The same is true for R&D tax credits. We often find that the companies looking to change providers do so because they’ve outgrown their current providers. In most cases, that will be their accountant, but it can also be a small or a traditional R&D tax credit advisor.
In this article, we detail the tell-tale signs that you’ve outgrown your current R&D tax credit advisor.
The claim takes too much of your tech team’s time
An R&D claim can be divided into two parts. Firstly, there’s the data collection, and secondly, there are the technical narratives. The data collection details the company’s financial position and provides data on R&D costs; the finance or founding team usually handles it. The technical narratives are written accounts of your R&D projects. They explain to HMRC how your tech activities count as R&D and are typically authored or contributed to by your tech team.
Accountants and a smaller R&D tax credit advisor may not have the expertise in-house to help your team with this section. In that case, the majority of the work will fall onto your senior tech team.
What’s more, each year, you will likely claim for an increased number of R&D projects. Therefore, each year you will need to write an increasing number of technical narratives. If your provider does not support your tech team, they will likely find this work significantly taxing.
At EmpowerRD, we combine staff narrative writers with an intelligent online claims platform. Our platform will help your tech team to identify the raw information needed to help build the narratives. And once they’ve used the platform to identify this information, our writers will build those contributions into valid technical narratives for HMRC.
The platform also allows your tech team to record the information needed for the narratives throughout the year. This “in-year” collection prevents your tech team from needing to hazily remember their work from 11 months ago when you submit your claim.
Project managing the claim takes too much time
Similarly, as your claim grows in size and complexity, you will begin to engage with more stakeholders, both internally and externally. While your first claim may have been a collaboration between your CEO and CTO, your later claims can involve multiple parties in your finance team, your engineering team, your product team, your accountant, multiple subcontractors, and your management team.
As the claim grows, so too does the need to coordinate these parties effectively. Often that will fall onto a senior member of the finance team, and without much assistance from their claim provider, that work can become seriously burdensome. Indeed, our client Cognism had to switch to us because this coordination effort became too challenging to manage.
At EmpowerRD, we design our claims platform to aid this coordination process. Each stakeholder receives a login with customisable permissions. The coordinator can track the progress of the claim using the activity dashboard. At the same time, our claims team will also help ensure your claim’s robustness before sending it for review.
The claim takes too long to compile and submit
Generally speaking, a claim shouldn’t take longer than a couple of weeks to create and submit. Traditional advisors may gather claim data by interviewing your team over calls, lengthy email chains, and spreadsheets, which can quickly drain your team’s time.
Equally, as the claim grows in size and complexity, the work can drag on if the provider doesn’t have the tools to manage this. We’ve heard of claims being worked on for over 4 months.
You claim too little credit
This can be hard to know. Once the claim is submitted and you receive no enquiry, then any amount of credit can seem like a boost to your finances. However, there are significant differences between providers. This is especially true for generalist accountants versus claim specialists.
Inevitably if your expertise is split across various services, then the standard of delivery for one of those services will not match a specialist. Indeed, when we worked through Bloom & Wild’s claim, we realised they had been underclaiming significantly. We then retrospectively looked at their past claims and were able to secure 290% more credit.
HMRC launch an enquiry
HMRC launching an enquiry is perhaps the most apparent sign! In most cases, enquiries occur when an accountant or other non-specialist completes the claim. Enquiries typically take 6-12 months to resolve and can become a significant drain on resources.
Estimates suggest that the enquiry rate for R&D claims is around 5%, although HMRC has not released this data, so it can’t be guaranteed. More certainly, HMRC has in 2021 more than doubled the number of claims inspectors looking at R&D claims and has also expanded their random enquiry programme. We have seen an increase of customers coming to us as a result of an enquiry this year. HMRC implemented these measures after a critical Auditor General’s report in 2020.