R&D tax credits offer a pathway for businesses to benefit from their innovations, but the complexity of claiming requires expert guidance. Just like the professional frameworks operating in other highly regulated industries, the Professional Conduct in Taxation (PCRT) guidance ensures you get competent, quality advice suited to your business needs.
What is the PCRT?
The PCRT provides a framework to ensure that tax guidance is delivered with the utmost professionalism. It outlines the professional standards expected of tax professionals. Essentially, the PCRT guides our industry to protect you with comprehensive quality standards.
Key principles of PCRT guidance
- Integrity and objectivity: Advisors must approach R&D tax credit claims honestly and impartially, avoiding conflicts of interest.
- Professional competence: Advisors need specific knowledge and experience in R&D tax relief, including an understanding of relevant legislation and HMRC’s interpretations.
- Confidentiality: Protecting client information is paramount.
- Professional behaviour: Ensuring that all actions taken in providing tax advice adhere to the law and professional standards.
How does PCRT impact R&D tax credits?
PCRT is continually updated to reflect high ethical standards at the core of the relationships between tax advisers, their clients, and the HMRC. In June 2020, this guidance was expanded specifically for companies like us advising on or managing R&D tax credit claims.
Prior to this expansion, some practitioners were operating in the Wild West, taking advantage of the system’s complexity to overcharge and underserve businesses seeking tax relief. Fortunately, the industry recognised the need for formal professional standards within our sector. The guidance was designed to provide targeted support in applying PCRT principles, focusing on regulatory expectations, behaviour, and competence, specifically in the context of R&D tax credit services.
This evolution marked a pivotal moment, addressing the challenges and complexities inherent in R&D tax credit claims and setting clear expectations for the quality and integrity of advice provided in this specialised area.
PCRT guides R&D tax professionals while reassuring businesses seeking R&D tax credits. This is why it’s important to consider PCRT guidance and your prospective advisor’s adherence to it before entering into a contract with them. Advisors who proactively operate by PCRT principles are committed to ensuring that claims are prepared accurately, ethically, and in a manner that upholds the profession’s integrity.
Choosing the right advisor
- Check for professional memberships: Advisors affiliated with professional bodies such as the Chartered Institute of Taxation (CIOT) or the Institute of Chartered Accountants in England and Wales (ICAEW) are bound by PCRT standards.
- Experience and expertise: Look for advisors with a proven track record in your industry and R&D tax credits.
- Ethical standing: Do your homework to ensure your advisor has a reputation for integrity and professionalism.
Why is the PCRT important?
In addition to maintaining professional standards and holding tax advisors to account, the PCRT is crucial for several reasons in the context of providing tax advice and services, including those related to R&D tax credits.
Ensures quality advice: Through its emphasis on competence and diligence, PCRT ensures that advisors in our industry provide advice that is accurate, relevant, and tailored to your needs. This is particularly important in areas like R&D tax credits which are famously complicated. The quality of an advisor’s expertise can significantly impact the outcome of your claim.
Protects you, the client: By requiring tax advisors to act with integrity and in the best interest of their clients, PCRT offers you a layer of protection when seeking tax advice. This enables you to have confidence that the advice they receive is not only competent but also ethically sound.
Promotes trust: Trust between tax advisors, clients, and the tax authorities is paramount – the system would not work without it. PCRT helps build and maintain this trust by ensuring that all parties adhere to shared ethical standards and behaviours.
Prevents tax avoidance: One of the core aims of PCRT is to prevent the facilitation and promotion of tax avoidance schemes. PCRT helps advisors distinguish between legitimate tax planning and aggressive tax avoidance strategies by setting clear boundaries on acceptable tax planning.
Supports compliance: Compliance with tax laws and regulations is non-negotiable. PCRT reinforces the importance of compliance by holding tax advisors to standards that align with legal and regulatory requirements, thereby supporting the overall legitimacy of the tax system.
Facilitates professional development: Continuous professional development is a cornerstone of PCRT. By encouraging tax advisors to keep their knowledge and skills up to date, PCRT ensures that the advice given to clients reflects the latest tax law, practice, and HMRC guidance.
How does a tax advisor’s adherence benefit your R&D claim?
The PCRT’s guidance isn’t just a mandate for accuracy, integrity, and professionalism; businesses seeking R&D tax credits who work with advisors who adhere to PCRT experience tangible benefits, including;
Accuracy and compliance: The PCRT mandates that tax advisors provide accurate information in their claims. This reduces the likelihood of errors that could lead to claims being rejected or adjusted downward by HMRC. Clients benefit from knowing their claims comply with the latest tax laws and guidelines, minimising the risk of penalties or additional scrutiny.
Maximisation of claims: By adhering to PCRT guidance, tax advisors are better equipped to identify all eligible R&D activities and expenses accurately. This ensures clients can legitimately maximise their claim potential without overstepping legal boundaries, optimising their financial benefits from R&D tax credit schemes.
Risk mitigation: Inaccurate or inflated claims can lead to investigations by HMRC, potentially resulting in financial penalties and damage to the company’s reputation. The PCRT guidance helps mitigate these risks by promoting integrity and diligence in preparing claims, offering clients peace of mind and protecting their interests.
Trust and confidence: You can trust advisors who adhere to PCRT guidance to act ethically and in your best interests. This builds confidence in the tax advisory service, ensuring a transparent and honest relationship between the advisor and the client.
Professional integrity: Advisors following the PCRT demonstrate a commitment to professional integrity and ethical standards. Clients benefit from working with professionals who are knowledgeable in R&D tax credits and prioritise ethical considerations in their advisory services.
Long-term relationships: The assurance of dealing with a compliant and ethical advisor fosters a strong, long-term relationship between businesses and their tax advisors. This continuity can be beneficial for future tax planning and other financial advisories.
Maximise your growth with Wilby Jones R&D Tax Consultants, a PCRT-compliant advisor
For businesses engaged in innovation, the journey through R&D tax credits doesn’t have to be navigated alone. By understanding R&D tax credit opportunities and the importance of PCRT guidance, you’re better equipped to find an advisor you can trust.
With potentially millions of pounds at stake, we never take your trust for granted. Speak to our team to learn more about your R&D tax credit potential today.
