Choosing an R&D tax advisor is like entering into any relationship, there has to be trust. But being that you aren’t about to go on a string of dinner dates or awkwardly fall back into their arms while they catch you, a bit of due diligence can tell you everything you need to know about your R&D tax advisor or advisor to be.
7 Questions to ask when considering an R&D tax advisor
Is your R&D tax adviser transparent with your claim?
What industry experience do they have?
What will your overall time investment be?
Compare the terms of engagement
How do they handle HMRC enquiries?
What is their scope and terms of engagement?
What’s their Client Retention Rate?
Is your R&D tax adviser transparent with your claim?
Say you already have a tax advisor; You’ve had the relationship for a couple of years. You’re comfortable, it’s fine, but they’re not setting your world alight (we’ve all been there, right?), it’s probably time to ask yourself what you’re getting from this relationship and if someone else is better equipped to help you meet your business goals.
Of course, the grass isn’t always greener. Your advisor’s transparency (or lack thereof) can tell you a lot about how they do business. If they aren’t willing to share crucial documents or spare the time to answer your questions, that’s a big red flag.
Your R&D claim isn’t just a formality; it’s an integral part of your company’s self-assessment return. HMRC expects you to understand what’s been submitted and why, particularly during compliance checks. Just as you’d meticulously review your tax return or accounts, you should demand the same level of scrutiny for your R&D claim. Your adviser should work hand-in-hand with you to eliminate any surprises.
If your advisor touts spreadsheets and reports as their intellectual property (IP), you should be concerned. Not only does this information pertain to your business operations, but the responsibility will likely fall on your shoulders if issues arise and an audit is requested.
There’s no doubt past performance can be indicative of future success. But if you don’t know the nuts and bolts of what’s being said about your business to HMRC, your advisor is exposing you to unnecessary risk. By fostering transparency and open communication, you can ensure your claim accurately reflects your efforts and meets HMRC standards. Partnering with an experienced R&D tax adviser maximises potential benefits and streamlines the process, saving time, effort and resources.
What industry experience do they have?
What role does your R&D tax advisor industry experience have on your claim’s potential success? Well, put it this way: a dermatologist is a doctor but they’re not much good to you if you have a broken leg.
R&D tax incentives require a deep understanding of tax legislation and specific industries to accurately determine which projects qualify as R&D. Professionals well-versed in your industry who can understand and communicate the value of your work are indispensable. The closer their industry experience mirrors your sector, the more adept they’ll be at offering tailored advice on applying the R&D definition to your business.
Obviously, not every R&D project requires an advisor cum rocket scientist, but it’s worth exploring if they have technical experts within their wider advisory team. Operating within niche industries, including architecture, engineering or software development, often involves intricate, technical jargon. Advisers who can seamlessly navigate and discuss these concepts will significantly enrich the quality of R&D tax relief advice you receive.
Imagine the classic Brit abroad who will quickly give up butchering the local lingo to mime and shout at the waiter. It’s awkward to watch and frustrating for all parties. In the world of R&D tax, if you speak the same language, the whole process will be way more efficient: quicker meetings, fewer revisions, better results and generally less frustration!
What will your overall time investment be?
When contemplating outsourcing your R&D tax credit claim, it’s important to understand the varying levels of service offered by different advisers. Some will dedicate substantial time to understanding your business, crafting detailed reports to bolster your claim, and managing the submission process independently or in collaboration with your accountant. Some will do enough to get by.
One of the many benefits of outsourcing your R&D tax claim to a specialist is that it alleviates pressure on your team. While some advisers shoulder most of the workload, remaining engaged throughout the process is essential. Collaboration with a reputable adviser who has a strong risk management agenda ensures your claim withstands HMRC scrutiny – and if it does get questioned, they should also have the confidence to back their submission.
Like everything, whether it’s a pair of boots or an R&D tax service, you get the quality you pay for. Some advisers streamline their workload by shifting more responsibility onto you. While services with extensive forms or templates may appear cost-effective initially, hidden costs often lurk beneath the surface.
Striking the right balance between your time investment and adviser assistance empowers you both to do what you do best. So, ask the question and clarify how you want the relationship to work. This will get the partnership off to a strong start, increasing your likelihood of a successful R&D tax credit claim down the line.
Compare the terms of engagement
While it’s no Jack Reacher novel, you still have to get your reading specs out to thoroughly review your advisor-to-be T&Cs. The engagement terms associated with R&D tax credit advisers can vary significantly, influencing the level of service and financial commitment required from your end. Carefully evaluate these terms to ensure they align with your business needs and preferences.
Be wary of advisers who pressure you into signing long-term contracts. Why insist on a lengthy agreement if they’re confident in the service they deliver? Ideally, your satisfaction should drive your decision to continue working with them. While short-term contracts are customary once you’ve selected an adviser, ensure they offer an easy exit strategy after the first year. This will enable you to avoid feeling trapped if they don’t live up to the hype.
When reading the small print, be vigilant in spotting hidden fees or charges. Often, what appears to be an enticing headline offer may conceal hidden fees, charges, and additional expenses. A common practice is charging for managing HMRC queries or investigations, which can rapidly escalate costs – and your blood pressure.
Again, it comes back to that transparency point. Look for advisers who offer transparent pricing and prioritise customer service. Clear and upfront pricing structures demonstrate integrity and help you budget effectively.
Opt for an R&D tax advisors who prioritises your happiness. You want a partner who is committed to delivering exceptional service throughout the entirety of the process – not just when they’re coaxing you to sign the dotted line. Ask them to share some case study examples of customers in your industry, or contact one of their customers directly for an honest appraisal of their service. R&D tax advisors who won’t, or more likely can’t, point you in the direction of a happy customer, should be avoided like the plague.
How do they handle HMRC enquiries?
Gauging an R&D advisor’s willingness and proficiency in handling potential enquiries is a good way to see if they’re someone you want to do business with.
You may have seen in the headlines that the HMRC is ramping up their attention in tackling fraudulent R&D claims. This means there’s increasingly more scrutiny on all R&D tax submissions. The enquiry rate currently hovers around 1-2% (think it might be higher than this across the industry?) which is projected to surge as more businesses aim to leverage the incentive. So, when selecting an advisor, pick someone who demonstrates they not only have what it takes to secure big returns, but also defend them should the going get tough.
R&D tax enquiries can occur for various reasons, primarily to ensure that claims for tax relief comply with the relevant legislation and guidelines. Whether your submission gets flagged because of the sum amount, the complexity of your claim, or, more worryingly, inconsistencies or a lack of evidence, an accountable advisor will stand by their work. Unfortunately, this is not always the case.
It’ll be no surprise that HMRC is a real stickler for dotting the i’s and crossing the t’s, so success relies on how robust your advisor’s methodology is. Good R&D tax advisors will put the work in upfront, meticulously gathering all necessary information and evidence to support the claim, documenting all eligible R&D activities and associated costs. Should HMRC raise any questions, your advisor is well-positioned to deliver a prompt and comprehensive response, minimising any disruption, inconvenience and stress for you.
What is their scope and terms of engagement?
Just like a suit, the R&D service that fits your business best is tailored to you. Understanding what different R&D tax services advisors offer will avoid crossed wires further into the submission process as you’ll know precisely what tasks they will undertake on your behalf.
For example, some advisors only assist with preparing the R&D tax credit claim itself. Others offer a fully managed service that covers the end-to-end process including identifying eligible R&D activities, compiling supporting documentation, and managing any HMRC enquiries. Knowing the extent of their involvement allows you to make an informed decision based on your specific needs.
By clearly defining the advisor’s responsibilities upfront, both parties can ensure alignment on deliverables, timelines, and fees. This clarity manages expectations, enhances communication and minimises the risk of misunderstandings which could damage your claims chances.
Considering the scope of their service also helps in assessing their expertise and capabilities. A firm that offers a broader range of services may have a deeper understanding of R&D tax relief regulations and be better equipped to handle complex claims. On the other hand, if your needs are straightforward, you may prefer a more streamlined service that focuses solely on claim preparation.
Like the people who run them, every business is different. It’s about finding an R&D tax advisor who aligns with your business needs.
What’s their Client Retention Rate?
As a business owner, you’ll know all about churn – and when it comes to customers it ain’t good.
If you’re looking for reassurance your advisor can deliver, working with someone with high levels of client retention is it. Asking for this metric can help inform your decision-making, allowing you to assess their reputation and reliability.
Client retention rates indicate the level of value they deliver, and their ability to maintain positive relationships over time. Conversely, a low retention rate shines a light on unhappy customers, whether that’s with their results, service, or both.
Positive client retention also suggests they have a strong track record of success beyond their marketing spiel. Clients are more likely to continue working with an advisor who consistently delivers results and exceeds their expectations. It suggests they’ll be responsive in their communication and proactive in support; a key ingredient to a successful partnership.
Partner with Wilby Jones R&D Consultants
Driven by the desire to do things differently, we tailor our service to the needs of each client because one size doesn’t fit all when you think outside the box. We work with the best of British business, helping entrepreneurs, innovators and pioneers communicate the impact of their R&D to unlock the maximum funds you’re entitled to.
If you would like to know more about what we do, the way we do it, and why Wilby Jones might be the right partner for you, contact us today.
