Accountants: Watch Out For Poor Quality R&D Tax Consultants

27th Oct 2020
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There are plenty of excellent R&D tax relief consultancies out there, but sadly some others are less than scrupulous. Read on.

Open to abuse

Research and development (R&D) tax relief has brought to life the innovative plans of companies up and down the UK. Since its launch in the early 2000s it has boosted employment and economic prosperity, supporting companies to grow and thrive.

Unfortunately however, the R&D Tax Credits scheme has also been open to abuse, not to mention the rise of less than reputable R&D tax relief claims firms. The fact is that R&D tax relief is an incredibly niche, highly dynamic area of accountancy, requiring expert advisors with years of experience and finely tuned skills.

While there are plenty of excellent R&D tax relief consultancies out there providing invaluable support to both accountants and their clients alike, there are also ones that bring the sector into disrepute with their poor advice and low professional standards. The impacts of such practices can have far reaching financial affects, particularly if HMRC suspects inaccuracies in a company’s claims.

Here we look at why it’s so important to avoid them, and why choosing an established, experienced R&D tax consultancy is something that can’t be underestimated.

The importance of R&D

With COVID-19 wreaking havoc on the economy, the UK needs innovative companies more than ever. The R&D Tax Credits scheme has proven to be an effective way of promoting investment in innovation, keeping businesses competitive and driving progress forward.

When choosing an R&D advisor to work with, remember: Any R&D tax adviser worth their salt will work to understand both the company and its R&D projects in detail. This will happen right from the outset, and could take some time, but it’s an essential ingredient in laying the foundation for a successful claim.

Case study

A recent tribunal case around R&D Tax Credits serves as a warning against trying to make a DIY claim, or in using an R&D consultancy that’s less than top drawer. Unfortunately it’s not the first company to fall foul of R&D Tax Credits legislation, and undoubtedly it won’t be the last.

The case (AHK Recruitment Limited v HMRC) relates to an R&D Tax Credits claim that was made to HMRC and subsequently rejected. After a First Tier Tribunal (FTT) the claim was denied because the R&D adviser the company used did not submit an analysis of the costs included within the claim. Additionally, they also didn’t provide any clear indication about the basis on which the claim was made. Not only did this leave the company empty handed, but could have a negative effect on any claims made in future. You can read more about the case here.

A “competent professional”

The company described in the case above was repeatedly unsuccessful in its claim because the relevant “competent professional(s)” in the company were also largely absent. Again, any decent R&D tax advisor would outline the role of the competent professional from the outset, and their importance to the claim.

Claimants must have a designated “competent professional” available who can substantiate that the outcome of an R&D project was not easily solvable from the outset. They are also expected to clarify what technical and/or scientific challenges were addressed in the project and how.

At this point, it’s worth reminding ourselves on what constitutes a 'Competent Professional' for these purposes (see our recent blog: R&D Tax Credits: Who’s "Competent" To Decide?)

Further risks

Poor advice from R&D consultancies can also arouse suspicion from HMRC, leading to further questions. If HMRC is still not satisfied, it is likely to launch an enquiry into a company’s wider tax affairs over the last six years. This can even be extended if HMRC inspectors believe any fraudulent activity has taken place. And don’t forget, even if an award has been made HMRC can ask for it back, plus penalties.

Acting in a reputable, competent manner is in the interests of all credible firms in the sector to maintain high standards. It will also of course be of benefit to all innovation-focused businesses across the UK. Not only will claimants receive better quality advice, but it can help reduce fraudulent applications that could threaten the future of R&D funding.

Work with an experienced R&D tax specialist

You know your clients better than anyone, having spent your days looking after their interests. Part of this role is choosing the best R&D tax relief advisor to partner with, so offering your clients a more comprehensive tax relief service.

As you’ll already know all too well, company accountants have a huge range of demands on their time. This means that taking on an extra, more niche area of accounting (and doing it well) can be a major headache.

Claiming R&D Tax Credits is difficult, and there are many pitfalls to negotiate. The legal goalposts move often and the process itself is complex and often laborious. Mistakes are all too common, and HMRC will pick up on even the smallest of inaccuracies. Substantial delays and financial costs are then likely to follow, which your client won’t be happy about.

At Myriad Associates we not only have the experience, skills and in-depth knowledge to work with you and your client on their R&D Tax Credits application, but we can maximise it too. We only work in the field of R&D funding, and we’re proud of our 100% success rate.

Essentially, our team takes the hassle out of advising your clients on their R&D tax situation to give them the very best outcomes - so that’s one less thing on your to-do list.

Don’t let your clients get sucked in

Spurious providers are everywhere and it’s hard to spot the good from the bad. If your client is lured into working with a less than credible R&D tax relief firm then you lose control of the situation and the damage could be huge. In a worst-case scenario, a poorly constructed R&D report could in fact contradict the accounts you so painstakingly prepared. The fines and penalties for your clients can also be severe.

Myriad Associates specialises only in R&D tax relief and funding, and we have no interest in straying beyond our expertise. We’re simply about helping you and your clients avoid poor quality R&D advisors so you can continue offering your clients the service they deserve.

Get in touch with our expert team of R&D funding specialists today to discuss our partner programs on 0207 118 6045 or leave us a message.