What are your options?
If you are exploring options for your upcoming R&D tax credit claim, our guide will help you weigh up the pros and cons of every potential R&D claim route. Alternatively, you can instantly navigate to the pros and cons of each option by clicking the relevant links above.
1. DIY - In-House
- You have control: There is no outside influence; you have control over R&D cost collection and the technical information you choose to include in your R&D tax relief claim.
- You can keep it confidential: Rest assured, knowing that your R&D costs and technical information will remain secure and confidential.
- It could be a quicker process if there are not too many stakeholders: With the lack of external advice or help, it could make the process of building a claim quicker.
- You can save money: Constructing your claims in-house guarantees that; there are no fees.
- Lack of specialist R&D tax relief expertise in-house: While you may have a financial officer or developer in-house, building an R&D tax relief claim is complex. Without experience or knowledge, you could very easily build and submit a claim incorrectly.
- Time-consuming claims process: When it comes to the technical narrative or cost collection, it can be time-consuming and laborious, especially when a novice.
- High risk of undervaluing your claim: Without experience or knowledge of the scheme, you might miss qualifying R&D costs or lack the technical detail required and undervalue your claim.
- High risk of an HMRC enquiry: A lack of scheme knowledge can increase the chance of an HMRC enquiry.
- Enquiries can hinder your company’s progress: Enquiries can take up to 13 months to resolve, wasting valuable time and energy for your company.
- Trusted partner: An accountant that’s worth even a fraction of their weight in gold will know your company inside out and can provide essential advice regarding all sorts of financial matters, including R&D tax credits.
- Adept at collecting cost data: Your accountant should have a good understanding of your accounts and be able to collect your R&D cost data quickly and efficiently.
- Basic knowledge of the scheme: An accountant will possess the fundamentals of the scheme, especially the tax implications.
- You’re in control: Your accountant will gather the necessary R&D costs, file the relevant documents and associated papers. Nevertheless, you retain complete control over the specific information included in your claim.
- Lack of specialist expertise in R&D tax relief: Though accountants are well-versed in several financial matters, the R&D tax relief scheme is an intricate field with many potential pitfalls. It requires specialised knowledge that accountants do not possess since they do not typically manage R&D claims on a regular basis.
- High risk of undervaluing your claim: As explained, accountants do not handle R&D tax credit claims on a daily basis, meaning they might miss qualifying R&D costs and undervalue your claim.
- Time-consuming claims process: Accountants lack the expertise to write technical narratives meaning you or your technical team will need to step in. This can be time-consuming and cause delays, because compiling a technical narrative is not an easy task.
- Risk of an HMRC enquiry amplified: A lack of scheme knowledge can increase the chance of an HMRC enquiry. For instance, an accountant might overvalue your claim by including outdated costs that no longer qualify, or allocating a disproportionately large percentage of costs to the R&D activity being claimed for.
- Unfamiliar with handling HMRC enquiries: Accountants rarely encounter R&D tax credit claims, so are typically inexperienced when it comes to responding to enquiries. Without the necessary technical expertise, you may have to seek enquiry advice from an R&D specialist- a costly and timely endeavour.
3. Traditional R&D Advisors
- Rigorous claims process: Traditional advisors spend significant time on phone interviews, email, and spreadsheets for both the cost data and the technical narrative. They may also conduct site inspections at various companies to acquire further knowledge.
- Relevant domain experts and experienced technical writers in-house: A good traditional R&D specialist advisor might have a relevant domain expert on their staff who will help with the technical narrative or experienced technical writers to write up your claim.
- Single point of contact: Traditional advisors will usually have a single point of contact who oversees the whole claim-building process and can also oversee its submission.
- Straightforward process once the information has been acquired: Once they’ve extracted the information from your tech team, building the claim itself should be relatively smooth. On top of that, they’ll also usually submit the claim for you.
- Lack of automation or technology: Traditional R&D advisors seldom have the automation or tech to capture your cost data from whichever modern finance platform you use, which makes cost collection an arduous process for everyone involved.
- Lack of integration with accounting systems: This leads to siloed data and cumbersome manual processes.
- Time-consuming claims process: The lack of technology and rigorous claims process can be time-consuming for your team.
- Expensive option: Traditional R&D advisors range from 10% to 33% of your claim.
- Lacks transparency: Once they’ve extracted the information from your tech team, there is very little communication or way of tracking the progress of your claim.
- Lock-in contracts: In certain instances, traditional providers have a reputation for binding companies into multi-year contracts at exorbitant rates.
- Won’t share the claim before submission: Often, advisors will not give you the opportunity to review your claim before it is submitted – leading to the potential for essential R&D costs or technical information being omitted.
- Lack of enquiry support: This lack of pre-submission review makes enquiries much more complex as some traditional advisors do not offer any form of support. They may even charge you extra for enquiry support, even if they assisted in building the claim.
- Lack of historic insights: Without an intuitive platform, traditional providers lack insights into claim history, which can affect the accuracy and speed of building a claim.
4. Software R&D & Specialist R&D Advisors
- One source of truth: If your team needs to collaborate on your R&D claim, R&D advisors who utilise technology to collect your data and technical information are a good option. Using a technology platform gives you a single source of truth, reducing the danger of duplication or omission.
- R&D Advance Funding Partners: If you need to access your R&D credit quickly, some specialist R&D advisors have funding partners who can help you get 80% of your credit 9 months prior to receiving the receipt.
- Quick and efficient claims process: A platform should create significant efficiencies, allowing multiple users to collaborate on a claim together. You’ll also find that integrations and data uploads significantly reduce the burden both on tech and finance teams.
- Year-round access: Access to an R&D platform means that you can build your claim throughout the year, logging in and capturing costs in real-time; or logging technical details whilst they’re fresh. The ability to regularly update a claim in-year ensures that it’s as robust as possible.
- Accounting software integration: A platform is likely to have integration with accounting software like Xero, allowing for quick and easy cost collection.
- Cost-effective: Thanks to the software in use, you’ll spend less energy and time creating your claim. This translates into cost savings: expect to pay only up to 10% of what your claim is worth.
- Specialist R&D advisors and ex-HMRC staff in-house: Software R&D & specialist R&D advisors will often utilise technology alongside knowledgable specialist R&D advisors to ensure compliant and optimised claims.
- Varying levels of expertise: Unfortunately, not all Software R&D advisors include specialists within their team. Make sure to check that the ex-HMRC inspector and experienced R&D advisors will also be working on your claim.
- Less interaction than the traditional approach: For some, 24/7 chatbots and video calls may not be suitable. There are no face-to-face meetings, phone calls or onsite visits.
- Lack of enquiry support: Not all advisors in this area offer an enquiry service as part of their package, so it’s important to double-check before moving forward.
- Unfamiliar with handling HMRC enquiries: Not all Software R&D & specialist R&D advisors will have experience dealing with HMRC enquiries. With enquiries rising, this is a red flag. Ask to hear about their approach to enquiries.
Why choose EmpowerRD?
- 150 X faster than traditional providers: We use our proprietary R&D tax claim platform to speed up the process of creating the claim. This ensures that your cost data is captured as fast as possible: either by importing your costs from accounting software, like Xero, or a simple data upload.
- Up to 6 X cheaper: 5% OR less of the final credit back: Our combination of platform + service allows us to provide you with a claims process that is both cost-effective and compliant.
- Streamline the claim processes with both platform + service: Our in-platform prompts help you to build your claim by leveraging the knowledge of over 2000 claims, as well as the expertise of our R&D advisors.
- Demystify the claiming process with our specialist R&D claims team: Our tax specialists take your technical data from our platform and will write the technical narrative to make it compliant for HMRC, using their expertise to make it as robust and optimised as possible.
- Reduce risk: At EmpowerRD, we use a range of qualified tax professionals. This includes R&D technical narrative specialists, ATT (Association of Tax Technicians) qualified specialists, and ex-HMRC staff. And that’s why our enquiry rate is 2.2%, with only just 0.4% adjustment.
- Trusted by: 1,000+ customers with a total claim value of £160m
- Fast access to R&D Advance Funding: If you need to access your R&D credit quickly, we have excellent funding partners who can help you get 80% of your credit 9 months prior to receiving the receipt.
We can streamline the claiming process for those who have claimed before, while first-time claimers can rely on our intuitive platform and expert guidance to navigate the process with ease. Feel free to speak to our team to learn more.
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