While it may seem logical to involve your accountant in an R&D claim, this approach isn’t always the most effective for your business. R&D tax credits can be highly valuable, but a successful claim lies in getting the detail right. Many businesses naturally turn to their accountant, yet there’s often misunderstanding in how the R&D tax credit scheme works.
On paper, it’s easy to assume that your accountant can handle your R&D tax credit claim. They already have access to your payroll, Profit & Loss, and balance sheets and they can see how the R&D claim impacts other tax liabilities or dividends. Accountants are often cheaper than specialists, which offers another compelling reason to use them.
Yet, using an accountant for your R&D claim is like using a GP for brain surgery. You wouldn’t use a generalist for something that requires specialist expertise. Accountants typically balance full claim benefit with enquiry risk as they lack the skillset to correctly identify all qualifying costs. Generalists also run the risk of being too cautious and fail to claim the full value on R&D activity. Accountants might worry about the extra scrutiny of claiming leading to audits or difficult questions.
Now nobody is going to say R&D tax credits advisers are brain surgeons but while accountants are skilled in areas like cashflow and invoices, it’s an adviser who can correctly identify qualifying activities in distinct fields.
Advantage of using a specialist
So why should you partner with a specialist adviser? Firstly, they’ll ensure your claim is maximised by correctly identifying costs such as utilities, software and consumables that are often missed by generalists. They’ll also take ownership of the technical process and write-ups allowing businesses to spend more time on running their company. Advisers also know that an eligible claim hinges on factors such as technical uncertainty and the advancement sought within R&D activity. HMRC stress that for work to be R&D, there must be a level of uncertainty. Your adviser should detail the uncertainties your project aimed to address, explaining why these challenges were significant and complex. Sure, your adviser isn’t adapting neural pathways but in the world of R&D tax credits, this is a crucial part of a successful claim, something which an accountant will be unlikely to have in their repertoire.
R&D advisers know their onions when it comes to the latest guidance, policy changes, and HMRC expectations. They specialise exclusively in R&D, meaning they have the time, resources, and expertise to stay up to date on these emerging trends, and create a strong R&D claim. They will also identify all relevant projects, not just the obvious one and claims will be designed to pre-empt HMRC enquiry questions from the outset. Not bad right?
Accountants on the other hand, are often spinning multiple plates; compliance, reporting and advisory work with R&D just one of many. R&D advisers however, have a single plate in motion, allowing complete focus on the claim at hand. You want a strong claim and no broken crockery? Choose an R&D adviser.
Of course, with the random enquiry programme, there’s no guarantee that HMRC won’t ask questions of your claim. But having a specialist fighting your corner significantly tips the scales in your favour. It’s highly unlikely an accountant has a standardised process for handling enquiries, but a competent adviser should have a dedicated enquiry team. With their expert industry knowledge, they can minimise business disruption and defend your claim as swiftly as possible.
In summary, a competent adviser will:
- Reduce the time and effort required from your internal team
- Design their reports from the outset to withstand HMRC scrutiny
- Have a deeper understanding of the latest HMRC legalisation
- Provide clarity on fees upfront
- Have a dedicated enquiry team to defend HMRC enquiries
Use your accountant wisely
That’s not to say your accountant shouldn’t be involved. They might identify clients that are eligible in the first place or they could provide and validate some of the financial data involved in a claim. Both R&D specialists and accountants can add more value to your business when working alongside each other, bridging the technical and financial aspects of your claim. Collaborating can ensure that the R&D report fits seamlessly into the accountant’s final tax return.
In an ideal world, businesses should look to partner with an accountant who has an internal, specialised R&D team. Everything from reports and documentation can be coordinated internally. For your business, this saves time with less back and forth from different advisers as well as reduces the overall risk of claiming.
The best of both services
While accountants play an important supporting role, they shouldn’t be leading the claim process. R&D claims are best led by a specialist, who is an expert in driving the entire process. Accountants are essential to the wider process, particularly for compliance, but it’s your R&D adviser who ensures the claim is compliant and offers a coherent technical narrative. Like any well-run project, bringing the right experts together under one roof saves both time and cost. When your adviser specialises in R&D and accounting, the process becomes far more efficient, helping businesses achieve their next stage of growth.
