Since the R&D schemes were launched in 2000, nationally over 300,000 claims have been made based on statistics to date for 2017-18, resulting in a fantastic £26.9 billion being awarded to innovative companies. The South West has produced approximately 3,700 of these during 2018 alone, resulting in an average saving for SMEs of over £54,000.
Over the past six years, our R&D team at Randall & Payne have helped to realise over £15.4m of savings for our clients but in our experience, there are still a number of concerns and myths that we hear about R&D tax relief that put some companies off exploring a claim. Here are a few of the most common myths, how we help to dispel them and, how we put minds at ease with our extensive experience of the relief.
“It sounds too good to be true. I don’t want to be at risk of a HMRC enquiry”.
With any Corporation Tax submission there is the risk of a HMRC enquiry and with an R&D claim there is naturally a similar risk.
HMRC want businesses who qualify for the relief to benefit from it and they introduced it in 2000 in order to allow those who are being innovative, and contributing to technological advancements, to further invest in their businesses, promote growth and increase wealth creation in the economy. Essentially, they have introduced the relief to further encourage investment in Research and Development not only to improve your business, but also the industry as a whole. With £26.9 billion already having been awarded, and this growing at a much faster rate than in previous years, HMRC encourage businesses to claim and as experienced practitioners, we ensure that the information provided is substantiated and accurate, as well as working on your behalf to bring any enquiry, should one arise, to a swift conclusion.
HMRC have a time limit of one year from the date of submission to enquire and for further reassurance the way we structure our claims means that for the first two year claim, we cover any time required to answer questions, should you be subject to an enquiry, and we fully support our clients through the process. In future years, we give you the choice to take up an R&D only tax investigation service for greater peace of mind. We also have a well-established format for collecting the evidence and providing it in such a manner that is accepted by HMRC on a consistent basis.
“The process is just too time consuming, I am busy running my business and simply don’t have time to gather the evidence.”
This is a particularly common concern raised in respect of claims and the work involved. The process is unknown to you at this stage and each business will be different, but we can find a way to turn around a claim in the most efficient manner to cause the least disruption to the day to day running of your business.
We dispel the myth of it being time consuming by providing as much support through the process as you need, removing the need for reams of paperwork and instead presenting it in small manageable steps.
Claire Maddox, Eurolink Ltd said:
“Both James and Gina are really helpful and will guide you to a worthwhile conclusion. You think you’re just doing your job but they see it in a different light and I would strongly advise you look into it. Gina was excellent, I was so busy at the time so she found the best way to work with me and I was really impressed”.
Despite being up against a tight deadline, we turned around a two year claim in a matter of weeks to achieve a considerable saving all whilst fitting it around our client’s busy schedule.
A number of our clients are happy to send across project information and costs for us to review and finalise. Others, however, prefer us to visit them at their premises, and whilst they talk about the innovative projects they have undertaken during the year, we write up the report there and then, later providing them with the final wording to review and approve. It is quite normal for this to happen even whilst the client continues to run and coordinate their production to prevent any downtime! We understand that business must come first.
“I have read the legislation, and I don’t think we qualify. We provide bespoke solutions but that’s just what we do as a business.”
On numerous occasions a potential client will say to us, “this is just what we do”. For them it is their daily job, therefore they sometimes fail to see the bespoke and innovative nature of what they are carrying out, and exactly what impact their work is having on their industry as a whole. The criteria for R&D tax relief are fairly broad, as the relief spans such a huge range of sectors. If you are attempting to resolve scientific or technical uncertainties, it is almost certain that your business qualifies. This can include developing new products, new processes or creating bespoke solutions for your customers. Additionally, a lot of businesses believe that a project has to be successful in order to qualify – but success is not a criteria! In fact, failure is even better to prove the existence of technical uncertainties.
With our extensive experience we can quickly identify non-qualifying projects and focus our time on simplifying the legislation and HMRC guidance to make it more understandable for you to identify the qualifying ones. This is easier than trying to apply projects directly to the letter of the law which can easily be misinterpreted or too cumbersome to understand, and we can then work with you to evidence why a project qualifies.
On average, our small and medium sized clients save around £20,000 per year using this valuable relief, so it really is worth a quick chat to see if you could qualify.
“I have a good long standing relationship with my accountant, and I don’t wish to move accountants to claim R&D Tax Relief.”
We understand that clients build up long standing relationships with their accountants, and would prefer not to move their services.
At Randall & Payne we are also happy to offer an R&D only service. We now work alongside a number of accountancy firms that do not specialise in the relief, but above all want to provide their clients with a top quality service, looking to add value where they can and providing them with opportunities to invest and grow their businesses. This means you can benefit from receiving specialist advice, but also maintain your good relationship with your existing advisor. This also makes the process of collating the relevant information that much smoother, and we now have very successful arrangements in place supporting a number of accountancy firms and their clients with a track record for very fast turnarounds. We have been known to assist firms to the extent of screen sharing with another advisor, and helping them to update their system to reflect the R&D adjustments which were completely new to them.
Smith Heath Chartered Accountants, Gloucester said:
“We are working alongside Randall & Payne as they act as the R&D advisor for our clients. James and Gina are professional, friendly and approachable and we are regularly recommending them to our clients. They work very efficiently, working recently on an urgent deadline job, turning it around in just over a week. They work on an open and collaborative basis, making every effort to ensure we are kept up to date and supporting us with updating our tax records and systems as required. They have also worked hard to help us to be able to identify potential claims for our clients, as well as keeping us involved in client meetings.”
You may wish to complete a claim yourself, and we do work with a small number of clients that wish to do this. We welcome this approach but what we can also offer, is a specialised review of the claim to ensure that you are maximising the relief available and exploring all avenues. On all of the occasions where we have carried out a review, we have found qualifying expenditure that would have otherwise been missed, thus increasing the relief received, in one case, increasing a client’s return eight fold. It is always worth obtaining a second opinion, just in case you’re missing out!
If you have had any of these concerns at all, or if you’re unsure if you qualify for R&D tax relief, please contact us today to discuss your options. All of our initial meetings are free and with no obligation. Likewise, if you are a firm of accountants who do not specialise in the relief but would like to offer the service to your clients, please contact us to discuss a referral arrangement.
Learn more about R&D Tax Relief here including the types of projects that qualify and a variety of our client testimonials. For more information or to talk through your individual circumstances contact Gina Gardner on 01242 776000 or firstname.lastname@example.org.