Over thirty years ago I left EY with the goal of starting up my own accounting firm. By far the best way I found new clients was by offering R&D tax credit services. I found assisting clients with R&D tax credit claims to be a value-added service. As a chartered accountant, I never received a “thank you” for delivering financial statements but I certainly did when clients got their R&D tax credit cheques.
However, simply offering R&D tax credit services was not good enough for me. To offer a great service, I needed to partner with individuals who had technical backgrounds to help me identify projects that would be eligible for R&D tax credits. I found these individuals very effective and enjoyed working with them so much that I decided to hire them. So, I sold my accounting practice and founded RDP Associates. I believed that RDP could provide a valuable service to both accounting firms and their clients by working in the form of a partnership. And 30 years later, my faith in the value that such partnerships offer has proven invaluably right. Today, partnership with accounting firms has become an undeniable reality of our business practice.
With over 35,000 companies today making R&D tax credit claims each year, clients are expecting their accountants to have a deep knowledge of the subject. The most important aspect of any R&D tax claim is to identify all eligible R&D projects and activities, a task far from being easy.
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If one does not have these technical skills, a client can receive a substantially lower R&D tax credit claim. This leaves what I call ‘unclaimed funds on the table’. As the BIS Guidelines are broad, most firms that ask or liaise with their clients to identify all projects and activities, fail to identify a variety of such projects.
A seasoned R&D tax credit provider needs to understand specific technologies that impact a business ecosystem. He/she also needs to be armed with the right technical education and keep abreast of latest R&D rules and criteria. When we hire an engineer or software specialist at RDP, it takes two years of training before they can properly identify all R&D projects and activities.
If you are asking why, it is because the rules and criteria are subjective. The definition of technological uncertainty or advances can be read, but the trouble starts when you try to put them into practice.
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Our experience is that when a client’s engineers or software specialist prepares an R&D claim, they tend to interpret the rules on a very narrow basis. This leaves eligible projects out of the claim. In addition, those inexperienced with the programme can define an R&D project by the new product or processes being developed and not by technology. Moreover, this means projects that could otherwise be grouped into eligible projects can be left out. Generally, when we review an R&D tax credit submission prepared by a client, 95% of the time we end up re-doing the claim by starting from scratch.
Since 2006, we have prepared thousands of R&D tax credit claims and regularly met with HMRC to discuss the criteria and grey areas. By sheer experience in a wide range of business sectors we can quickly determine what qualifies for R&D tax relief.
Many accounting firms worry that by partnering with an R&D tax credit firm, they will lose business or credibility with their clientele. As an accountant, I fully understand their concerns. Having said that, my experience in developing long-lasting relationships with accounting firms is that the polar opposite is true. As a result, at RDP we have offered our partner accounting firms additional value, revenue, new clients, and improved credibility for R&D tax credit and grant funding services.
If you work with an experienced and professional R&D tax credit consultant, the situation should be win-win. Here are some examples of how RDP has assisted accounting firm through strategic alliances:
- When you are bidding on a new client and R&D tax credit assistance is a service that the client requires, having the ability to provide a deep technical service at this level will make your firm look more attractive to the prospective client. It will simply put you on par with the big four accounting firms;
- By providing a value-added service, marketing your firm with these expertise benefits the firm’s reputation;
- By being the agent of your client, whereby preparation of accounts and tax computations are completed annually, projects are managed and completed in a timely fashion and the client sees that you have their best interests in mind;
- From a marketing perspective, at RDP we provide up to date content material for your newsletters; present at seminars with you (R&D tax relief is a very good draw when you have a seminar), attend and participate in HMRC tax credit briefings for our mutual benefit, and promote your brand on social media channels that you have a presence on;
- With RDP as your R&D tax credit partner, you will be able to market your services to any applicable industry and to any company size. This includes showcasing them on your website with confidence.
In addition to the above examples, RDP has a variety of suggestions and action items for your clients, irrespective of their size, to ensure they claim without reviewing any key client financial documentation so that no client misses out on its two-year filing deadline requirement. These are just a few examples as to how we have helped our existing partners both in and outside of the top 100 accounting firms in the UK.
Contact the author to get more information about how RDP can assist your firm and develop a long-lasting partnership.
Brian Cookson is RDP’s Founder and Managing Director. He has over 30 years of experience in educating businesses on R&D tax credits. He can be contacted at:
+44 203 002 0089