Our story: why we built an R&D claims solution to empower accountants
After years of working in R&D tax, the team at WhisperClaims had observed a notable number of SMEs being turned away because because their claims were too small to be economically processed by consultants. All three founders felt that automating the process of preparing R&D tax claims would be hugely beneficial to the industry, enabling smaller companies to access support and accountancy firms to expand their offering.
And so our idea was born – a cloud based platform, easy to use, with all the help and guidance that accountants need to prepare R&D tax claims for their clients.
Navigating the R&D tax scheme
R&D tax relief was introduced for SMEs in 2000 and extended to large companies from 2002. The scheme is designed to encourage greater R&D spending, leading in turn to greater investment in innovation and is one of the main tenets of UK government business support. The more innovation, the more likely we are to remain competitive as a nation, or so the mantra says, and in the current climate UK businesses need all the help they can get.
Our observation was that many SME’s, especially the ones with smaller potential R&D claims, found it hard to get support to access the scheme. Many didn’t know that they are eligible, and even if they did, the 500 pages of HMRC guidance on the scheme was difficult to navigate!
Consequently, only around 43,000 claims were made under the R&D tax scheme in 2015-16, a tiny proportion of the UK business population and certainly only a small percentage of SME’s with eligible activities.
The landscape now
According to HMRC’s statistics, UK companies spent £31.3 billion on R&D during the 2017/18 financial year. This resulted in support from the Treasury of £4.3 billion, creating an estimated £1 billion in fees for accountants and specialist R&D tax relief consultants.
In February 2020, the government pledged to increase public investment in R&D to £22bn a year by 2025, meaning there is a significant opportunity for accountants to scale up their operations to help more SMEs access these funds.
So, with so much to gain why don’t more accountants support their clients to make claims?
In the last two years, we’ve had the pleasure of personally meeting over 300 accountancy firms and have uncovered a few key issues with their processes:
- Lack of knowledge of the scheme. It’s seen as a niche tax area, many firms don’t have the knowledge and are fearful of providing poor advice.
- Identifying SMEs who could apply. Many accountants struggle to assess their clients potential eligibility for the scheme.
- The return on investment. Many accountants outsource their client claims to specialist providers.
- Time consuming. Preparing claims for R&D tax relief without technology or processes can be a time-consuming and difficult process.
So what we have is a sector that, certainly from the perspective of the smaller SME, has a couple of structural problems. At one end, we have an army of high quality accountancy professionals who don’t have the knowledge to be able to provide support to their clients in this niche area, and at the other end we have specialist providers whose business model means that they are unable to support smaller claims.
Finding a solution
Given the importance of the scheme and the fact that it is there to provide support to innovation and business growth in the UK economy, it seemed to us that there ought to be a role for technology to play in solving this problem, and thus opening up the scheme to a broader base of businesses.
And that solution turned out to be WhisperClaims!
The system is white-labelled so any accountant or advisor can use it with their clients without the fear of affecting their brand value.
It’s also capable of producing all the documentation needed to support an R&D claim within an hour, which enables accountants nationwide to service more clients and scale up operations without recruiting more staff.
Reports at the touch of a button
The most innovative aspect of the solution is our technology’s ability to create comprehensive, detailed reports suitable for submission to HMRC at the touch of a button.
To prepare a claim, users of our technology are led through a responsive question set, probing all of the key areas of a claim to ensure that the end result is robust and defensible. Users can also invite their clients to sign-in and answer questions.
Unlike other systems that purport to generate reports, our system is capable of doing so without any free text entry – instead using a variety of sliders, multiple choice questions and numerical inputs to collect information about the client and their claim.
From a technical perspective, converting data into naturally written R&D reports was challenging to achieve and no other company has managed to achieve anything close to this level of automation. The time savings are considerable: a process that can take weeks or months has now been reduced to an hour.
It’s going well
Since development began in January 2018, our technology has won ‘Best Use of Innovation’ at the UK Business Technology Awards 2018 and the company has won ‘Emerging FinTech Company of the Year’ at the Business Insider Scottish Accountancy & Fintech Awards 2019.
In 2020 we’re also up for an ‘Accounting Tech Award’ at the UK Fintech Awards and ‘Innovation in the UK SME section’ at the MoneyFacts Awards.
In developing WhisperClaims, we have shown that it is possible to digitise a complex form of consultancy that was previously resistant to automation.
Where do we go from here? Scaling, testing, refining & listening to what the market needs. We’ve got plans to recruit two more members of staff over the next 12 months, to grow our UK customer base and to create new features and services to meet demand.
To book a demo and get access to a free trial head over to the WhisperClaims website.
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