Ensure that you understand exactly what service Consultancies can provide and their Terms of Business. Not all consultancies are equal in capability, expertise or in the service they provide. In some cases, Consultancies will indicate that they do NOT give tax advice. Strange, but true. Some will not give you a copy the claim details for approval before submission to HMRC and some will not return fees paid if there is an HMRC request for money back, at some time in the future. Some will give very direct assistance with claim narratives and gathering costs, while some expect you to do all or most of the work yourselves. We are a “Full Service Provider” and will reduce fees if there is part of the service you do not require.

To what extent are different R&D Consultancies being genuinely “Fair and flexible on Fees”? Typical Percentage Fee rates of between 20% and 40% or more of benefit are charged by many leading Consultancies. We differ, and In the last year, our fees ranged from 1.75% to maximum 18% of client benefit. Often, we will charge a fixed fee based on the split of work being done on the clam by the client and by ourselves. We feel that the industry custom of quoting “percentage fees” rather than “fixed rates” based on share and amount of work can be unfair to clients, and is potentially NOT in the interests of other taxpayers. Where percentages are used, be careful, as some Consultancies quote percentage of benefit gained and other are quoting percentages of qualifying costs. There are many good reasons why our policy of being “Fair and Flexible on Fees” is in the best interests of clients.

Work with specialists who have good expertise in your industry sector, are represented on the HMRC R&D Tax Consultative Committee and operate to the very highest level of ethical standards. This will often mean that they must question you in detail to ensure compliance, which is much less arduous than facing later HMRC enquiries. In a recent case, after the scoping exercise involving a medium sized claim for an innovative technology company, the Finance Director commented “Your charge is one third of our previous provider, and yet they questioned NOTHING”.

Sales pitches such as “we will maximise your claim”, “we can make an uplift on the claim you have already made” or “We push the envelope on claims”, should be viewed with extreme caution. Clearly, claiming companies should receive everything they are entitled to claim. Make sure YOU understand the Guidelines and what you claim does not cause you any lack of sleep. Your chosen specialist should ensure that you understand the HMRC Guidelines and how they apply to your business. Overclaiming tax relief or tax credits is not a victimless crime. Money does not grow on trees.

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Terry Toms – RandDTax 01483 808301    terrytoms@randdtax.co.uk www.randdtax.co.uk