Smart moves to make when setting up your in-house R&D service
Once you’ve wrapped your head around the guidelines, your next step is to put effective strategies in place that will add value to your business and best of all... your clients! Here’s our top tips on how to do just that.
1. Create Consistent Structures
The key to a successful R&D tax relief process is consistency! HMRC expect claims to be prepared in line with the published guidance, and the best way to ensure that this happens is to put clear structures in place around training, delivery and claim output.
Training is the first step to making sure that you deliver a consistent service. Make sure all members of your team understand the guidance and have agreed on what would and would not be considered eligible work. Without this, you run the risk of clients being given conflicting advice from claim to claim, or even during the preparation of a single claim.
It’s also good practice to develop a suite of template documents to support your team throughout the claim process. Ensuring that all documentation is produced using the same template ensures that standards are maintained, and the same information is gathered about every claim for every client.
As you work with a wider range of clients, you’ll find that their understanding of the scheme can differ wildly, especially if they have claimed before using external consultants. It’s important to make sure that you can explain the process and collaborate easily with them, so that they understand how their claim has been put together.
A major benefit of putting in the effort to develop these consistent structures is the downstream time savings. This can enable your team to manage more claims than they have in the past, or free up time for other activities such as business development.
Tip: If you are a user of WhisperClaims software you won’t need to develop your own suite of templates. 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.
2. Demonstrate Your Value
Your superpower when doing R&D tax claims for your clients is your in-depth knowledge of their finances, company structure and also their pain points, problems and plans for the future. This can help you both service your client in the best way for them, and pull together R&D claims that are more robust than those prepared by external consultants. Part of demonstrating this value can be in using technology to make the process easy for your client.
Being able to pre-populate a claim with technical and cost information that you already hold can save your clients time and differentiate you from external consultants who are starting from scratch. Using white-labelled software can enable you to achieve this without the cost or difficulties associated with developing an in-house system.
3. Collaborate with your clients
Collaborating with your clients on their R&D tax relief claim is incredibly important. They are the competent professionals in HMRC’s eyes, and are the only ones who can judge, with your guidance, whether the work they have done constitutes an advance in science or technology. It’s also good for your client to have a sense of ownership over their claim, the same as the rest of their financial documents and reporting.
Collaborating with your client can be done in person, over the phone or through software, and we’d recommend a combination of all three! Using software can be a great way to gather information in a consistent manner, but it’s always best to spend some time chatting with your client to make sure they understand the guidance and which projects they should be claiming for.
4. Don’t overcomplicate your reports
When preparing supporting documents for an R&D tax claim, it pays to remember that less is more. Making sure HMRC can see that you’ve considered all of the relevant parts of the guidance, and have assessed the technical work and costs appropriately, is all that’s really needed. There’s no need to include details that are irrelevant to the claim, like the commercial achievements of the company or details of who prepared the claim. In fact, the more ‘padding’ that you include, the more material you give HMRC to question if they inquire into the claim.
The key thing is to make sure that you’re ticking all of the important boxes, all of the time. This is where using R&D claim preparation software can really add value – every report contains all of the information that HMRC need, and you can be sure that nothing is ever missed out.
5. Cut out the middle-man
Bringing your R&D service in-house has two major advantages – you retain control of your client relationship, and you can realise a much bigger proportion of the revenue from making claims.
Referring your clients to a third-party carries a big reputational risk for you. If they do a bad job, or, in the worst case, prepare an ineligible claim, you’ll be left clearing up the mess. Defending an enquiry into a claim that you didn’t prepare is difficult, and it can be close to impossible to retain your client in these circumstances.
Even when the claim goes well, you’re still reliant on a third party to deliver the customer service and support that your client expects.
Doing the work in-house may take longer, but you can make sure that your client’s experience is in line with your brand and values. You’ll also keep 100% of the fee you charge, compared to the small referrer fees you get from these third-parties.
“What we ended up finding [when outsourcing R&D claims to specialists] was that you get dragged into the conversations anyway. Yes, there’s a pay-away, and, yes, you get a cut in, but there’s still a lot of work to do. We seemed to be doing the bulk of the work, managing the client and managing the partner. So when WhisperClaims came along, it gave us a template and a structure to allow us to manage the process ourselves.”
- Phil Ellerby, Founder, Northern Accountants
6. Maximising your margins through efficiency
Following the previous steps should mean that you’re equipped with a well-trained team, effective and efficient processes, and consistent and easy to produce documentation. This all adds up to a cost-effective delivery and therefore maximised margins for your R&D claim service. Best of all, you’re doing this in house, so there’s no need to share your revenue with a third-party consultant.
Get to grips with the fundamentals of the R&D tax relief scheme
Download 'The accountant's game changing guide to preparing R&D tax claims in-house'. A 30-page comprehensive guide written by R&D experts and designed for accountants and consultants looking to build robust in-house claims processes.
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