Choose Your R&D Tax Partner Wisely

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Yolande Hanna

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Choose Your R&D Tax Partner Wisely

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Article taken from Plant and Civil September/ October 2018 addition 16.10.18

Interveiw with Momentum Group Managing Director Tom Verner

Research & Development is an integral part of the manufacturing, quarry, construction and plant machinery sectors and the R&D tax relief available is very generous. Indeed, R&D is actively encouraged and paid for by HMRC through the Government’s R&D Tax Credit initiative which is designed to stimulate innovation by encouraging companies to invest in research and development. R&D Tax Credits have been around for 18 years; and since 2010, the paybacks have become so generous that many UK businesses have started to take notice.

Like any marketplace that experiences a surge in demand for services, the number of companies providing ‘professional’ R&D Tax Credit advice has grown significantly. So called R&D Tax Credit specialists seem to be popping up at an alarming rate.

At a recent HMRC R&D Consultative Committee meeting in July 2018, HMRC recognised that a number of these providers have entered the marketplace and this has prompted greater scrutiny of claims. What’s worrying is the feedback that we are receiving from stakeholders on the quality and validity of the advice that is being given by many of these new ‘popup’ companies that range from one man in his garage to inexpert opportunists. We have been told that many people are being misinformed and mislead with assertions such as “everything you do qualifies” and “this will only take a few hours.” Specialists with knowledge and expertise of the guidelines and legislation for R&D Tax Credits will know that these statements are far from the truth.

Complex Process

R&D Tax Credits guidelines are complex and HMRC’s legislation and criteria for qualifying activities and expenditure is specific and definitive. So much so, that it requires an R&D Tax Credit specialist with technical expertise in the manufacturing, construction and plant sectors to truly understand the processes that an organisation goes through when carrying out projects. It is only those that possess a combination of technical expertise along with in-depth knowledge of the legislation that can recognise what does not quality whilst having the ability to uncover hidden activities and expenditures which does qualify. By its complex nature, the process takes time to prepare correctly. Through experience we know that it is not possible to create a fully optimised claim in a few hours or a single day.

Companies that claim to be able to do so simply aren’t carrying out the technical analysis and financial examination that is required to capture all costs. Your specialist R&D tax relief advisory firm should have a proven track record

and methodology that streamlines the process from start to finish. This process will involve input from R&D technical analysts, R&D finance experts and specialist business advisors to ensure that the claim is robust and that all technical supporting documentation is HMRC compliant. We guarantee this all takes a significant amount of time. Quick does not equal thorough when it comes to R&D Tax Credit claims.

Increased Scrutiny

Not surprisingly HMRC is responding to inaccurate claims with significantly increased scrutiny. Our advice is that companies must ensure that their R&D Tax Credit advisor has the knowledge and expertise to create accurate, robust and fully optimised claims. Claims that include activities that do not qualify will put the claim in jeopardy of further scrutiny, potentially fail or attract penalties.

When it comes to choosing your R&D Tax Credit partner make sure you carry out a level of due diligence of your own. Use the hallmarks below as a gauge to ensure that your advisor is credible.

A reputable R&D Tax Credit advisory firm should be able to evidence:

  • Expert knowledge of the legislation
  • Technical expertise across a
  • wide range of sectors
  • Proven methodologies and
  • robust processes
  • Comprehensive systems that
  • ensure the security of your data
  • Links to HMRC and insight
  • into legislative changes
  • 100% success rate in claims submitted
  • Ethical standards and credibility

That said it is worth either a second opinion on your current claim or look to speak with a specialist firm such as Momentum to look at what you are currently doing for this purpose.

My methodology is simple; I only use trusted and professional companies for my business, this has proven to work as I tend to avoid the cheap, sounds to good to be true type businesses!

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