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Why R&D Tax Consultants Get a Bad Rap (& How to Separate the Wheat from the Chaff)

21st May 2021
Brought to you by
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Myriad Associates helps businesses maximise tax reliefs.

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Why R&D Tax Consultants Get a Bad Rap

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:

  1. If they don’t ask to see your client’s paperwork
  2. If they don’t wish to spend time with your client to understand the project and their business
  3. If their claim is on the aggressive side (eg. If they’re trying to claim 100% of your client’s staffing costs)
  4. 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.