Manufacturing Companies – Choose your R&D Partner Wisely
The purpose of R&D Tax Credits is to encourage innovation and enable UK companies to compete globally. It allows companies to recoup substantial development costs as cash or credit for every year of qualifying R&D activities.
Although R&D Tax Credits have been around since 2000, its only been since 2010 that UK businesses have started to note the generous paybacks from the R&D tax relief initiative. 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.
In the 2018 Autumn Budget announcement Chancellor Philip Hammond made reference to greater scrutiny of the R&D Tax Credit system as HMRC had reported record numbers of fraud attempts on the SME R&D Tax Credit worth over £300m. HMRC recognise that as the number of claims have increased so to the number of these providers have entered the marketplace and this has prompted greater scrutiny of claims.
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 a company 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 Momentum knows 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 Credit 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 financial 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.
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 our 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:
ü Expert knowledge of the legislation
ü Technical expertise across a wide range of sectors
ü Proven methodologies and robust processes
ü Comprehensive systems that ensure the security of your data
ü Links to HMRC and insight into legislative changes
ü 100% success rate in claims submitted
ü Ethical standards and credibility
That said, it is worth either a second opinion on your current claim or look to speak with a manufacturing specialist firm such as Momentum to look at what you are currently doing for this purpose.