Thousands of companies are now claiming valuable R&D Tax Credits or Tax Relief related to Corporation Tax. Some companies say to us that they receive more telemarketing calls on this topic than even PPI. Owners of SMEs (Small Medium Enterprises) considering a claim - or already claiming - have a bewildering choice of R&D Tax consultancies and accountancy firms claiming to be experts or specialists, claiming to get you more money, helping you to take less time preparing the claims, making it all very simple, getting more money from re-evaluating claims you have already submitted, or whatever.
Every Tom, Dick and Harry, as well as the large respected accountancy firms and specialist consultancies are pouring into a market that is growing at more than 20% per annum.
Prospects ask; “how much do you charge?” or “what percentage do you charge?” Very few seem interested in the track record or reputation of the consultancy, what exactly they get for their fees, how secure the payments or reliefs which HMRC make, or what the risks are of claims resulting in painful HMRC enquiries. They also seem disinterested in how skilful the consultancy is at helping the client to fully identify and scope qualifying R&D, describe it in a way which meets the HMRC R&D Tax Guidelines, and help to support claims.
These are areas to consider:
What experience do they have in scoping and helping companies to prepare claims, especially in your industry or sector.
Do not automatically believe the information which appears on the consultancy’s website. Talk to clients or accountancy firms who have introduced clients to the consultancy.
Many firms claim to have some sort of special relationship with HMRC by sitting on committees; the fact is that every R&D consultancy and agent can sit on those on an entirely equal basis, and we believe that it is important to do so to keep up to date on how HMRC are dealing with claims.
One of our competitor’s websites says; “HMRC estimates that 50% of all companies who submit their own claim are refused a payment”. This is totally not true only designed to make companies afraid to make their own claims. There may be good reasons to use a specialist consultancy, but that is certainly not one of them.
Fee rates charged by R&D consultancies are often, even mostly, quoted as percentages. Read and understand terms fully before signing. Make sure you fully understand what it is a percentage of as some will quote the fee as a percentage of the financial benefit to your company, and others as a percentage of qualifying costs. These can result in very different costs and some will quote a fixed price – often the best option.
Whatever it is make sure of two things: firstly, exactly what services are included in the cost, will they support you in the event of any HMRC enquiry and will they give back fees if HMRC ask for tax credits or relief given to be paid back after an enquiry? Make sure you understand how the benefit, and on which the fee is based, is actually calculated.
We were asked to help in a dispute between a company and their R&D consultancy, which had already gone to a court action. In this case, the difference between what the client expected to pay and what they were charged exceeded £500,000. We will negotiate with clients to establish and agree fair fees.
Fees in the sector are mostly based on a “No win, no fee basis”. This sounds very attractive, but no sensible R&D consultancy will choose to help with a claim unless they were sure it would succeed. Most consultancies will have a 100% claim success rate, as we do, and others will be very close to that. So there is no reason to charge very high fees.
Compliance and ethical standards are becoming increasingly important as the R&D consultancy market matures. The sector is entirely unregulated, which makes it difficult for both HMRC and claiming companies to differentiate between one consultancy and another, in the vital area of compliance.
There are sales practices employed in the sector that we would not want to be associated with, and in general we feel that telesales and telemarketing, as well as employing professional sales people in an environment where fees are based on the level of claim values is something that should be avoided if possible.
We depend on client referrals and introductions from trusted contacts such as accountancy firms and bankers - and have over 300 of those. This model helped us in winning the Business Innovation Award at the National SME Awards in December 2017. Our compliance processes are continually being review and strengthened.
We have 1,136 clients who have benefitted by £114 million, through 30 consultants covering the UK. Around 50% are either shareholders or/and Directors so the people who work in the company own the company.
Our aim is to deliver maximum value with minimum risk for fair fees.
We can be contacted via our website www.randdtax.co.uk or on 01483 808301.