HMRC recently reported that approximately 15%-20% of R&D claim submissions were submitted without the support of an R&D tax credit speciality firm, such as RDP Associates. More likely than not, it is a by-product of several large accounting firms promoting specialty services without any experienced staff within a given industry or what HMRC defines as competent professionals on staff.
As a result, these firms ask their clients “what is eligible”? or they request a “joint discussion” to confirm eligibility. If a company is hiring anyone to carry out these services, any legitimate R&D service provider’s responsibility is advising which projects and activities are eligible to claim and, can do so within one meeting.
During these uncertain and difficult times with the pandemic, it is reasonable for any company to lean toward not paying for these services, especially if the onus of the claim preparation is on a given company. In doing so, however, from our extensive experience in reviewing R&D claims carried out by companies internally or cases in which firms “claim” to be specialists, we have found that companies leave 30% to 40% of R&D expenditures on the table.
Anytime RDP works with a new client that has submitted a claim, we have identified incremental activities, projects and expenditures in which companies have not claimed anywhere from £30,000 – £500,000 in additional tax benefits. As a result, new R&D submissions are necessary to ensure their claims are maximised.
Many of our current clients that previously carried out this process internally also spent entirely too much time on their R&D claim preparation, which ultimately took their employees away from what they were actually hired to do. This is the best part of RDP’s services in which we ask for a few short meetings with the company’s staff, leaving their primary focus on the company.
During our 30 years’ experience as an R&D tax credit service provider, carrying out our services in five countries, we have seen R&D claim submissions with non-qualifying and / or routine projects. However, due to HMRC’s updated rules and regulations, a claimant including activities that are not eligible can, at a minimum, be subject to reduction in the value of their R&D tax credit claim, open them up for an HMRC compliance check, be subject to penalties and/or in some cases can include jail time.
The narrative and supplementary documentation being submitted to HMRC is also very important. Essentially, all of HMRC’s questions must be answered precisely, which is where RDP comes in.
Given our services are offered worldwide in countries that have more mature R&D tax credit programmes, in comparison to the UK we know where, the R&D programme in the UK is heading. Whereas companies claiming without assistance are not necessarily thinking about the future of the R&D programme.
In short, we are asking all taxpayers who complete their own R&D claims internally the following:
· Are you 100% confident you know all the rules and eligibility criteria?
· Are you documenting and capturing all your eligible R&D activities?
· Are you taking less than a few hours of time to complete your claims?
· If HMRC elects to look into your claim, do you have a plan to deal with it?
Get in touch with our assessment team at [email protected] for some free tips or if you would like RDP to review your prior claim to determine if you maximised it.