The Power of No: De-Brief with Jen Badger

It’s not new news to say that when preparing R&D tax claims, the importance of diligence, integrity, and robust processes has never been greater.

The emphasis of “maximising” claims must be replaced with a focus on preparing claims that are not only compliant against the guidance, but also defensible under HMRC scrutiny.

Here, we revisit the key insights shared in our recent webinar, “The Power of No – Driving Compliance and Confidence in R&D Tax Claims” and explore how accountants and advisers can safeguard their clients, their reputation, and their time by embracing a more rigorous approach.

We also highlight how saying ‘no’ to a claim that does not meet HMRC’s criteria, while initially disappointing, can serve as a valuable learning opportunity for both parties when the reasons behind the decision are clearly demonstrated.

Mastering the fundamentals

Understanding the intricacies of HMRC’s R&D tax legislation is non-negotiable. Without a solid foundation in the scheme’s rules, advisers risk misinterpreting eligibility criteria or overlooking critical details.

Undertaking thorough training is essential to develop this expertise. It’s the cornerstone of preparing robust claims and identifying projects that truly meet HMRC’s requirements.

That being said, many advisers will admit being on a continual learning curve when it comes to applying the theory into practice, so paying attention to legislation changes, staying up to date with case studies, peer knowledge sharing and such like is very useful.

It is something that we see within the users of our own platform, who despite being exceptionally experienced R&D tax advisors, still rely on our support line and our community on WhatsApp to get answers to complex queries.

The “new normal”

The “new normal” of R&D tax claims includes a significantly higher enquiry rate – around 20 per cent, up from just 1-2 per cent pre-2022.

This shift underscores the need for meticulous claim preparation, assuming that every claim will face HMRC’s scrutiny.

Strong structures and processes are no longer optional but essential to de-risk your claims.

The importance of competent professionals

Eligibility is not always immediately apparent. Conversations with the competent professionals leading the projects are vital.

By diving deep into their activities and understanding why they meet the criteria, advisers can uncover nuances that might otherwise be missed.

However, this process often reveals that some activities, while impressive, do not qualify under the scheme. HMRC’s GfC3 guidance provides useful insights on this topic.

Leveraging technology for strategic decisions

Technology can play a pivotal role in helping advisers make informed decisions early in the process.

For instance, WhisperClaims’ software uses dynamic questions and feedback to streamline the R&D tax claim preparation process.

By automating the identification of eligible activities and performing real-time risk assessments, it ensures advisers can focus their efforts on compliant and defensible claims, saving time and reducing error rates.

By identifying whether a claim is viable, technology frees up time to explore alternative options for ineligible claims.

A structured platform like WhisperClaims enables advisers to stay organised, consistent, and efficient, ensuring that no key steps are overlooked.

Staying updated and vigilant

Keeping pace with changes in HMRC’s approach and the broader R&D tax landscape is critical.

For example, recent years have seen shifts in HMRC’s focus, from small claims and first-time claimants to targeted campaigns, enabled by the Additional Information Form (AIF) and pre-notification requirements. Advisers must stay vigilant about these risk factors and adapt their strategies accordingly.

The role of compliance checks

Historically, low levels of compliance checks left even ethical advisers operating in a vacuum, relying on personal interpretations of HMRC’s guidance.

Now, with more frequent enquiries, learning why a claim is ineligible is as valuable as understanding why it is.

This proactive feedback helps advisers refine their processes and avoid similar pitfalls in the future.

Moving from maximising to robustness

The outdated (and unethical) concept of “maximising claims” has given way to a focus on defensibility and compliance.

Fixed-fee models are increasingly replacing contingent fees, shifting the emphasis from the reward of the claim outcome to a fair and reasonable price that comes with assurances that a claim is robust and compliant.

This approach not only aligns with HMRC’s expectations but also ensures that advisers and their clients can confidently stand behind their claims.

Ultimately, what you buy with this approach is peace of mind, which really can’t be underestimated – as some may know, if they have been the subject of an HMRC enquiry.

Balancing ethics and practicality

Advisers face a delicate balance between helping clients access available benefits and maintaining ethical practices.

Small claims, in particular, can present challenges, with some providers setting minimum thresholds for eligibility. Implementing good structures and processes is critical to navigating these complexities while delivering high-quality services efficiently.

The role of AI and technology

While technology offers numerous benefits – streamlining tasks, enabling collaboration, and supporting growth – it must be used responsibly.

Here at WhisperClaims, we feel a huge responsibility to ensure we are upholding the ethics and spirit of the scheme – that’s why we’ve chosen to license our software exclusively to accountants and qualified advisers only.

No one could have failed to notice the explosion of AI in many aspects of our lives, and it is now being widely adopted in numerous aspects of accounting.

We remain cautiously optimistic about its presence in the R&D tax space, but is it a double-edged sword? Efficiency vs risk if used without necessary expertise? Whatever the future holds, one thing we feel certain of is that human expertise will continue to be crucial in the preparation of R&D tax claims.

Final thoughts

In today’s R&D tax landscape, saying “no” to risky claims is a sign of strength, not weakness.

By mastering the fundamentals, adopting robust processes, leveraging technology, and staying vigilant, advisers can deliver exceptional value to their clients while protecting their own reputations.

Want to learn more about identifying eligible clients and strengthening your R&D tax services? Download our free ebook, Your Guide to Identifying Eligible Clients, for actionable insights and guidance.

If you’re ready to see how WhisperClaims can support your practice, why not book a demo?

Discover how our software can help you prepare compliant, defensible claims with confidence. Book a demo now!