David Philp, Head of Research & Development Tax Relief at Chiene + Tait, provides a step by step guide for businesses to use when approaching an Research & Development Tax adviser about whether a project qualifies for the relief.
Whilst there are a number of good, tax-focused, R&D advisers operating within the UK, there are also a number of ‘experts’ who resort to cold-calling, and wrongly advise that a company can quickly and easily qualify for relief.
HMRC can take their time opening enquiries into a company’s tax affairs and any erroneous R&D claim will be required to be repaid plus penalties/interest and can be a red mark in any due diligence process, should the company be sold in future.
With HMRC actively taking steps to combat fraudulent tax claims and the UK entered into a recession, access to cash is essential and therefore it is more important now than ever to pick the right R&D tax adviser to help with a claim.
Here are a couple of questions I would ask if I were a company looking to find the right supplier:
Are they accountable to a relevant professional body such as ICAS or CIOT?
There is currently no regulatory body for R&D tax specialists. There is, however, the recent Professional Conduct in Relation to Taxation (PCRT) guidance specifically created for R&D tax advice.
Any reputable R&D tax adviser worth their salt will already be a member of one of the PCRT bodies and adhere to the 5 fundamental principles:
- Professional competence
- Confidentiality and
- Professional behaviour
By choosing and advisor that is accountable to a relevant professional body, it will give you the assurance that the work completed is up to the minimum quality standard you should expect from an advisor.
Is the person preparing the claim a tax adviser?
An R&D claim is a tax incentive first and foremost. It forms part of a company’s tax return and is subject to tax legislation. It is important to find an adviser that understands HMRC language and the impact that a relief claim will have on the company’s overall tax position, compliance and strategy. This allows the adviser to identify eligible projects and costs under the scope of the legislation, maximising the available relief whilst minimising the risk of an enquiry.
What experience do they have of making a claim?
The tax legislation is constantly changing, particularly R&D tax with a number of consultations currently ongoing. Make sure that you pick an adviser that has lives and breathes in the legislation. An adviser dealing with a lower volume of claims may not be as knowledgeable in this specialist area where it helps to work day-in, day-out.
Do they charge extra to deal with an enquiry?
Enquiries are HMRCs way of asking for further information before making their decision. They can, however, take significant time and effort to resolve. The costs associated to an enquiry can therefore spiral.
Hopefully this has given you some good pointers to keep in mind. If you are unsure about whether you can make a claim for R&D, feel free to contact David and his team at Chiene + Tait at email@example.com or call 0131 558 5800.