How Best To Educate Your Clients About R&D Tax
Having excellent tax knowledge and numerical skills make business accountants essential to any organisation. But simply being good at your job is only half the story. To really stand out from the crowd it’s important to not only have the technical skills required but to also possess a thorough knowledge about your client’s businesses and objectives. An up-to-date working knowledge of the various financial incentives on offer from the government is also crucial.
R&D Tax Credits
The R&D Tax Credits scheme is one of those government incentives. However, unfortunately many businesses are still missing out on some serious cash because they wrongly believe it doesn’t apply to them. A particularly outdated perception is that it’s all about science or techy companies, or lab workers in white coats - but this simply isn’t true. In fact just about all innovation in all sectors can be eligible.
The R&D Tax Credits scheme was unveiled by the government in the early 2000s to encourage and reward innovation and in turn bring about economic growth. Throughout the years, HMRC has consistently kept the spectrum of qualifying projects and costs extremely broad, meaning that a vast number of companies can benefit.
Essentially, if a specific technological or scientific uncertainly has been addressed then R&D tax relief is highly likely to apply. The work could involve designing a new process, service or product, or it could simply make an improvement to an existing one. The R&D project itself doesn’t even have to have been a success, and claims can be made for two years from the end of the tax year in which the project took place.
R&D Tax Credits work by bringing down the amount of Corporation Tax a company owes, in relation to its R&D expenditure. For companies that have made a loss, the relief is offered as a cash lump sum instead. Throughout our time in business as expert R&D tax relief advisors, we’ve found that eligible companies come from all sorts of sectors, including construction, healthcare, pharmaceuticals, engineering, arts and entertainment, finance, education, retail and many more.
It is important that you begin discussing R&D Tax Credits with your clients at the earliest opportunity. Most are likely to be keen to get started (especially when you tell them how much they could receive!) but some may be cautious or sceptical so will need reassurance. It is also true that even for the most proficient business accountants, compiling an accurate, optimised R&D Tax Credits claim that is accepted first time by HMRC is extremely tricky. The strict criteria must be met in full and only the applicable R&D costs should be included - which is incredibly easy to get wrong.
This is why we strongly recommend that accountants work alongside a specialist R&D tax relief consultancy like us here at Myriad Associates. We have many years of experience entirely dedicated to R&D tax relief and no other area of accounting. This means that you can rest assured you’re offering clients an accurate, complete accountancy service, and we will guide you (and them) through their application from start to finish. Not only that, but we will compile much of the paperwork on your behalf, saving you and your clients precious time and hassle. We also charge nothing up front - we’re simply about helping your clients receive the R&D tax relief they deserve, so you can get on with everything else!
The average R&D Tax Credits claim in the UK currently stands at around £65,000. Don’t let your clients miss out - see more on our R&D Tax Credits webpage.
How to get potential new R&D tax relief applicants on board
Some of the accountants we’ve worked with over the years have expressed a difficulty in discussing R&D Tax Credits with their clients initially. As we only deal in R&D tax relief, we’ve come up with just a few ideas to help with this.
1. Be confident in spotting R&D activities in your clients’ companies
Your client’s work is classified as R&D if their activity resolves a scientific or technological uncertainty. Essentially if your client's company has taken a financial risk in developing a brand new product, service or process - or in substantially improving an existing one - then R&D is highly likely to have taken place.
2. Clearly discuss the benefits of R&D Tax Credits with them
There are some very distinct benefits to R&D Tax Credits that it’s important your clients understand. These include:
- The fact that the scheme is a reliable, valuable way of funding business, and will boost cash flow
- It offers the chance to take on new challenges with less fear of the financial implications
- The relief can be claimed each year, not just once
- Companies of all sizes can apply, as long as they are UK registered
- An R&D tax relief award can make the company attractive to investors
- It encourages future business growth, as the money raised can be used to expand capacity, buy materials or take on new staff for instance
3. Work alongside an R&D tax relief consultancy like us
As mentioned, it’s strongly advised that going it alone when it comes to R&D tax relief is not a good idea. Myriad Associates has worked with both companies and business accountants alike, and we will take the worry and complexity out of your clients’ claim.
Making a mistake with an R&D Tax Credits application can damage your client’s relationship with HMRC, which is likely to be costly. Not only are questions likely to be raised which will hold up the claim, but a full tax investigation could be launched too. By working alongside you, we will navigate the claims process with you and we’re proud of our 100% success rate. No stress, and no issues with HMRC.
4. Tailor your approach
You will know your client and their individual requirements better than anyone. We can work with you to understand your client’s R&D work too, identify costs and tailor an approach that suits them.
Don’t forget to use the Tax Cloud portal too
The team at Myriad Associates also developed our excellent Tax Cloud portal for accountants. It contains the Tax Cloud calculator allowing for your client’s real-time figures to be entered, and offers a cost-effective, end-to-end solution to claiming. Plus of course we’re here if you need us with any questions or advice.
Get in touch today using our contact page, or call 0207 360 4437.