Why R&D Tax Consultants Get a Bad Rap (& How to Separate the Wheat from the Chaff)
I’m not going to beat around the bush: Us R&D tax consultants have a bad reputation in the Accounting world, don’t we?
This is how it goes: you hire an R&D tax specialist. They promise to get your client the biggest R&D tax relief payout possible. Next thing you know, your client is being investigated by HMRC for fraudulent claims, your R&D tax specialist is nowhere to be seen and you’re left picking up the pieces with your reputation in tatters. Am I close?
Truth is, this type of situation can happen, but it doesn’t apply to all R&D tax specialists.
But let’s look at this in more detail. Why do R&D tax consultants get such a bad rap? Is it justified, or is it just a few rotten apples upsetting the entire applecart? And how do you spot a good ‘un in amongst all the bad ‘uns?
Where did it all go wrong: Why have R&D Tax specialists got a bad reputation?
Since it was introduced back in 2000, the government-backed R&D tax credit incentive has been incredibly popular, not to mention successful. The market is now saturated with specialist R&D tax advisors, specialists, consultants and practices.
And, when you consider that 59,265 R&D tax claims were made between 2018 and 2019, it’s clear that the R&D tax credit incentive has delivered incredible value to businesses, both large and small. It’s also boosted the UK economy with innovation and given legitimate R&D Tax relief companies a decent return on their investment.
However, all these positives have also contributed to the slight demise of the R&D Tax Credit scheme. Like the tax industry in general, the R&D tax credit sector is only partially regulated, leaving it open to anyone who wants to try their luck. As a direct consequence, there are now plenty of greedy R&D tax consultants, all claiming to be ‘’specialist R&D tax advisors’’, guaranteeing clients big payouts but spending little time, effort, care or due diligence when filing R&D tax credit claims.
In fact, HMRC has identified around £300 million worth of fraudulent R&D claims made by these so-called R&D tax experts.
What happens when a fraudulent R&D tax specialist makes a claim?
There are too many R&D tax claim horror stories to fit into this post. So, I’ll just give you one to highlight what could happen to your client if you were to hire a dud R&D tax advisor to file their R&D claim.
In this case, a small software business decided to hire this ‘specialist’ R&D tax expert to file their R&D tax relief. After a failed first attempt (they missed the submission deadline!), the R&D ‘expert’ did manage to secure the software business around £250,000 in R&D tax credits. Which sounds great, right?
Until…
A year later, after the software business had re-invested the £250,000 back into their business, HMRC came a ‘knocking. And, after a long, stressful investigation, they discovered that the R&D claim made by this R&D rogue had included expenditure that didn’t qualify, and it lacked the technical detail required for a claim of that size.
So, the software business had to repay the £250,000 back in full. Can you imagine the devastation that caused?
What does a dodgy R&D tax expert look like?
So, we know they’re about and we know what happens if you get caught up with one, but what do these fraudulent R&D tax advisors look like? How can you spot one?
With a professional-looking website and a word-perfect sales pitch; rotten R&D tax specialists can be tricky to spot.
There are no hard and fast rules. It usually comes down to pure common sense, due diligence and following best practices, like these:
- Only go with a recommended R&D tax advisor and avoid hiring one that’s cold-called you
- Check out their testimonials, paying attention to the bad ones in particular
- Find out how long they’ve been R&D tax consultants for (and don’t just take their word for it, check they’re telling you the truth)
- Look up their business’s status with Companies House
- If it doesn’t feel right, trust your instincts and walk away (as unjustified as it might seem)
For more helpful tips and pointers on how to choose the right R&D tax specialist for your clients R&D claims, read this post.
4 warning signs that your R&D tax consultant might be a phoney
Once you’ve made your choice, if you see any of these red flags then get out of there as fast as you can:
- If they don’t ask to see your client’s paperwork
- If they don’t wish to spend time with your client to understand the project and their business
- If their claim is on the aggressive side (eg. If they’re trying to claim 100% of your client’s staffing costs)
- If there are clear signs it’s a copy and paste job (repeated words, spelling errors, wrong names etc.)
What does a legitimate R&D tax specialist look like?
So that’s the rotten apples covered, but what does a good R&D tax specialist look like?
Well, let’s talk about ourselves for a minute and then let you decide! Having been in the R&D tax claim industry for over a decade, Myriad Associates are recognized R&D tax experts.
We’re incredibly passionate about what we do and as a result, are awarded mostly referral business through the knowledge, know-how and advice we give our clients. Our entire company ethos is centred around going above and beyond client expectations: To provide not a five-star service, but a seven-star service.
We always assign two experts to every R&D claim, an in-house technical and a tax/costing expert and would always prefer to meet your clients face to face (COVID-19 aside) so we can discuss their R&D project in detail and understand them, their R&D and their business inside out.
With a 100% success track record with R&D tax claims and a solid relationship with HMRC, Myriad Associates would be proud to offer your clients the most talented R&D tax advisors and the most innovative online offerings.
According to Myriad Associates founder and CEO Barrie Dowsett, the sole reason Myriad Associates started over a decade ago was to:
“Give government funding to the innovative businesses that needed it. The clients get a buzz when they receive funding, and I get a buzz from seeing a smile on their faces.”
But not all R&D Tax Credit Specialists are like us. As you can see, there’s a dark side to R&D Tax Claims so be careful about who you choose to take on your clients R&D Tax Claims.
If you’d like to know more about who Myriad Associates are, what we do and how we work, give us a ring on 0207 118 6045 or contact us.