We know that some of you will be turning off your laptops and starting the festivities very soon, so we’d like to wish you a merry and peaceful Christmas and a happy New Year.
Over the festive period, there will be some changes to our usual contact times.
For customer support:
The only days we won’t be contactable will be the 25th – 26th December and the 1st – 2nd of January. Otherwise, please don’t hesitate to get in touch!
For sales enquiries:
We’ll be taking a short break from the 25th December – 4th January. Demo bookings can still be requested by email or via the website and we’ll get back to on our return to the office in January.
As we wrap up for our festive break, Mike Dean reflects on some of the key highlights from 2020 and what’s ahead for 2021.
Thanks to everyone who joined us at our Identifying Eligible Clients webinar on Wednesday 18th November. This time we kicked off the session with a deep dive into eligibility within three sectors – construction, hospitality and textiles – which led to some great questions being asked by our attendees. We’ve answered those below.
If you’d like to attend future webinars run by WhisperClaims please subscribe to our mailing list at the bottom of this article for notifications on when we’ll be running our next events and where to register.
For those who joined us on the 18th November, here’s the answers to your questions:
These three questions are very closely related, so it seems sensible to consider them together! To take the first question first, the rules around subcontracted R&D are designed to prevent two companies claiming for the same costs within a single R&D project. So, if the specialist subcontractor wants to claim, they’d have to prove that the work they did was not subcontracted R&D, rather work that they did at their own risk and cost to deliver a product to a customer. This usually comes down to how the contract is arranged, which brings us to the other two questions posed here.
The attendee here who asked about fixed price vs. time and material contracts has hit it squarely on the head! A subcontracted R&D contract, where the claim would sit with the contractor rather than the specialist subcontractor, is usually a time and materials-type contract, and often states clearly that there is a need for research or development or both. Work that is likely to sit with the specialist subcontractor, on the other hand, is often the result of agreeing a fixed-price contract to deliver a product, and then realising that that product cannot be delivered using standard methods or processes! This leads to the specialist subcontractors initiating projects at their own cost to resolve technical challenges and gaining knowledge that they can use to deliver contracts in the future.
Following on from the above, this seems like a classic case of subcontracted R&D – the specialist subcontractor is being paid by companies to do their R&D, and is taking no commercial or financial risk. In this case the claim would lie squarely with the contracting company, assuming the work met the criteria for eligible R&D.
We’ve grouped these two questions together because the answer to the first one is almost certainly, depending on the scale of production!
You can read more details about eligibility in food and drink and hospitality in previous blogs, but you will almost always find eligible work where companies are trying to produce, at commercial scale, vegan or gluten-free alternatives to common products. For example, trying to produce an acceptable vegan cheese is fraught with difficulty, and demands a great deal of R&D.
When we say ‘at commercial scale’, what we’re really saying is not at the level of a domestic kitchen or even a larger restaurant kitchen. In those types of environment, it’s very unlikely work will be taking place that advances science or technology, or even the food production industry as a whole.
Almost certainly not. This seems like standard recipe development using tried and tested techniques. The storage and delivery of high-end foods have also become very standard recently, and there’s plenty of information in the public domain about how to do this.
Again, this doesn’t sound like it would have much eligibility. It does sound commercially innovative (and a lot of fun!) but it wouldn’t require the makers to advance science or technology in any way, so wouldn’t be eligible for R&D tax relief.
Similar to the question above, it’s unlikely that a manufacturer would have to advance science or technology in the design or production of a new board game. There’s a slight chance that there’d be some eligibility if the games involved some serious tech, for example facial recognition or AI to predict a player’s next move, but these types of games are few and far between.
It’s hard to say without knowing more about the technical challenges involved, but on the surface it seems unlikely. Spreadsheets, SQL and Power BI databases are all tried and tested technologies, and while it appears that they are being put to good use, this is likely to be a project that is commercially rather than technologically innovative.
Quite possibly, yes – it depends on how the developers are trying to make those apps better, what ‘better’ means in terms of technology, and the nature of the technological challenges that they were faced with. Fine-tuning or optimisation of an app is unlikely to qualify, but a complete redesign to make it far more efficient in terms of data processing could be.
The short answer to this question is no. Scaffolding is a well-established non-technical industry that is unlikely to come across difficulties that cannot be solved using standard methods and techniques.
In this situation we’d say yes, there’s a chance that they would be doing eligible R&D. What we’d look for is work that requires not only the development of methods that are new to the industry, but where these new processes or methods incorporate an advance in science or technology, be that in engineering or even biology if soil remediation was required.
The manufacture of technical or performance clothing tends to be more eligible than the production of fashion clothing, due to the need to do work in the areas of chemistry, electronics and materials science to achieve the required performance. In this particular scenario, I’d expect to find some eligible work – improving battery performance or flexibility of heated clothing, for example, would be likely to require advances to be made in science or technology.
As with the manufacture of fashion clothing, makers of wedding clothes are under pressure to produce new designs and products for every year and seasons. However, it’s unlikely that this product development work involves any eligible R&D – they will be using established techniques and off-the-shelf materials to produce these designs. The only area that might have some eligibility would be the production of specialist textiles for the wedding industry. For example, if a textiles manufacturer attempted to make a fabric with the look and feel of silk but half the weight, and had to make advances in engineering to do this, they might have an eligible claim.
In general, work done to improve distribution processes, no matter the industry, is unlikely to be eligible for R&D tax relief. We’d also say that, in the food production industry, improvements to cleaning methods is also unlikely to contain any eligibility.
In the context of storage enhancements, it would depend on what this work involved. If, for example, the wholesale butcher working closely with a specialist refrigeration company to make advances in the technology underlying flash freezing, they might have a claim. However, if it involved a logistical study of their cold chain in order to ensure that the products remained at optimal temperatures throughout the delivery process, this wouldn’t qualify for R&D tax relief.
We’d say that having obtained a patent makes a strong-er, but not always strong, case for an R&D claim! While it is likely that a company will have done R&D to be able to apply for a patent, it’s not always the case that this will be eligible R&D by HMRC’s definition. To be able to get a patent, a company’s idea has to be ‘something that can be made or used’ and ‘inventive’. From this you can see that a patent could be granted for something that uses existing technologies in innovative ways, which wouldn’t necessarily qualify for R&D tax relief. Having said all of that, looking at your clients that have applied for or been granted patents can be a good way to identify companies that are doing innovative things, which is a good start!
If you would like to join us at our next webinar, please subscribe to our mailing list and we’ll keep you posted on future dates.
Thanks to everyone who joined us at our Ask Me Anything webinar on Tuesday 10th November. This is a brand new webinar series designed exclusively for WhisperClaims customers with one simple objective – to help build your confidence in delivering an effective R&D service for your clients. This week we kicked off the session with a deep dive into a common area of confusion, how to deal with subcontractors on R&D projects, which led to some great questions being asked by our attendees. We’ve answered those below.
If you have any feedback on our advice or how the webinar went please get in touch – we’d love to hear from you!
Question 1: If you spend £100k with a subcontractor, you would take £65k as eligible? Seems odd, is that designed to avoid contributing to the subcontractor’s general overheads and margin?
Yes, assuming that subcontractor was 100% focused on work that’s trying to make an advance in technology, you could claim £100k x 65% = £65k as eligible expenditure. That 65% apportionment is mandatory and is just one of the rules of the scheme. It’s effectively assuming that the cost of using subcontractors will be greater using employees, and attempting to balance that by removing some of the mark-up.
Question 2: Subcontractor costs can be claimed at 65%. But what if the subcontractor was connected i.e. a subsidiary in another country. Is that different at all?
Yes, there are different rules for connected subcontractors (broadly those that are controlled by the same person or group of people). If you used a connected subcontractor, it doesn’t matter where they are located in the world, but you can claim only the lower of:
a) The payment made to that connected subcontractor; or
b) The ‘relevant expenditure’ of that connected subcontractor, namely staffing costs, externally provided workers (i.e. agency workers), utilities and materials that have been transformed or consumed in the process of the R&D. It does NOT include expenditure on other subcontractors!
Question 3: Can you claim R&D credit at different stages of the project? Or on part of the work done?
A claim for R&D tax relief is made through the company’s tax return, so if the project spanned multiple years, you would expect to submit a claim for each year in which the R&D project was active. However, you can’t make multiple claims for relief within a claim period – for example, if Stages 1, 2 and 3 of the project were all active in the year, you would only be able to make one claim at the end of the year.
Question 4: We are coming across a lot of software development work in getting ‘off the shelf’ systems to talk to each other and reprograming them to interact. The work has been done in house by industry experts that have been employed by the company. Could this be R&D?
Potentially; it depends on the nature and significance of the technical challenges arising in that integration work. If the systems have been designed to work together, it would be difficult to argue that work qualified. However, if you can point to novel technical challenges and explain credibly why those were difficult to resolve, yes, there could be eligibility there.
Question 5: Is there a way of getting work done prior to the formation of the company? It was 100% R&D and done by a connected subcontractor.
No, you can only claim for expenditure incurred after a company has been incorporated. However, the company does not need to be trading for the expenditure to be claimable. For example, say the company incurred £50k of expenditure on R&D in a period in which it was not yet trading. The company has a choice to:
a) Apply for a cash credit for the pre-trading period; or
b) Treat the expenditure as if it were incurred on the first day of trading (which is the default position).
On the second part of this question, if a company has used a connected subcontractor the answer to Question 2 above applies.
Question 6: What do you think is the best way to get authorised with HMRC for R&D only (i.e. without taking the agency away from the client’s accountant)? What’s the best way to submit that authorisation to HMRC?
We’d suggest that the simplest option is for you to ask your client to sign a mandate letter. This authorises HMRC to speak to you about their R&D claim, but makes clear that you are not dealing with other aspects of their affairs. This mandate letter would typically be provided alongside the CT600 and technical report supporting their claim.
If you are a WhisperClaims customers and would like to join us at our next Ask Me Anything webinar, please subscribe to our mailing list and we’ll keep you posted on future dates.
Get your R&D tax questions answered live on the spot at our exclusive new event for WhisperClaims customers! Registration is now open.
‘Ask Me Anything: Dealing With Subcontractors’
Tuesday 10th November
12.30 – 1.15pm.
To kick off the session, this month we’ll be looking at the following scenario and question, submitted by a WhisperClaims user:
The scenario: A tech startup hires a company to develop an app to their specifications.
The question: Overall the work is a technical advance but what determines which party can claim?
To help unravel this, Richard Edwards will be walking us through different scenarios and explaining when each would be applicable.
The floor will then be opened for further questions, either related to this question or to any other matter related to R&D.
If you’re a current WhisperClaims customer with R&D tax questions to ask, don’t miss out, limited places are available so book your place now!
Partners in the firms we talk to are generally looking to develop their practice through two primary means:
Most users have either previously dabbled in the R&D tax market themselves (perhaps finding the legislation too difficult or time consuming to address) or have clients who are working with third party consultants.
In both cases, what they are looking to do is to find a way to take control of this service delivery and build an in-house, own-brand service.
Who can blame them? This is an expanding market, with government investment in R&D soaring to over £22 billion p.a. and the number of SME applicants to the R&D tax market has consistently risen by around 20% p.a. over the last few years.
Whilst it’s true that the documentation on the scheme is quite a read with over 500 pages of guidance, the fundamentals can be easy to get your head around with the right support.
This year we launched a series of webinars covering the ins and outs of the R&D tax scheme; from advice on how to identify eligibility delivered by our in-house R&D tax experts, to panel discussions with members of the WhisperClaims accounting community on how to successfully launch your in-house service.
We deliver a lot of demos of our technology to accountants every month, but we’ve also found that many firms take a slightly more considered approach—preferring to join our R&D tax scheme webinars before delving any deeper.
On the 22nd October, Mike Dean and Gillian Carmichael of WhisperClaims were joined by Phil Ellerby from Northern Accountants and Alan Woods from Wood Squared to discuss tactics for delivering an effective in-house service.
Listening to the stories of Phil and Alan will give you the inside scoop on how to optimise your claims process and build a profitable service for your firm.
To access this recording and to be notified of future webinar events, simply complete the form below.
We’re delighted to have Phil Ellerby from Northern Accountants on the blog today to talk about his firm’s expansion into R&D tax relief consultancy using WhisperClaims technology, and how they claimed over £400,000 of tax benefit for their clients within the past year.
Phil is also one of the three speakers at the WhisperClaims ‘Building an in-house R&D tax service’ webinar.
We’re a general accountancy practice. We do all the sorts of stuff you would expect like accounts, tax, bookkeeping on a sort of basic level. We don’t have a tax team or a tax partner, so our tax knowledge is sufficient but not advanced. Fortunately, we don’t have any complicated clients so there’s no need to be more advanced.
We outsourced claims to a R&D specialist firm. If any of our clients mentioned R&D it was a case of: “Oh, right. Well, we’ll pass it their way and they can deal with it.”
What we ended up finding was that you get dragged into the conversations anyway. Yes, there’s a pay-away, and, yes, you get a cut in, but there’s still a lot of work to do. We seemed to be doing the bulk of the work, managing the client and managing the partner. So when WhisperClaims came along, it gave us a template and a structure to allow us to manage the process ourselves.
Yeah, about the same. The first one was a bit longer because we were learning how to use the software – we spent an hour and a half with the client inputting information into the system followed by some set up time to synchronise the data with our accounting system, nothing major.
When the claim came through the client was over the moon – he received £15,000.
In the first three months we started putting claims through for 9 clients and the tax benefit came in at over £250,000, which is a substantial amount. Since then we’ve claimed for over £400,000 of tax benefit using WhisperClaims technology.
I’m part of a Mastermind group with other accountants from different firms. One thing we do is share wins that we’ve had and someone was talking about the successes he’d had with WhisperClaims and R&D.
We contacted WhisperClaims and set up a demonstration. They showed me around the system about a year ago. We said we’d start in January once some claims had backed up…and we did!
We liked the simplicity of it. It plugged a specialist tax knowledge gap that we didn’t have within the team.
Moving consultancy in-house and using WhisperClaims technology meant that we were able to claim tax benefit for our clients within 28 days from submission to HMRC. It was closer to 45 days when we were outsourcing the work to R&D tax specialists.
What always held the R&D specialists up was the extraction of the financial information. The client wouldn’t know what to do so they’d get us involved. The back and forth was time consuming, so it’s much quicker just to do the work ourselves.
R&D wasn’t on our radar as a primary sort of consideration. That meant that R&D didn’t get talked about with our clients enough.
We’ve now got 15 clients who we are doing R&D with. We have an equipment company that has built a massive CRM; a software development company; a property agent that’s built their own software platform; a food manufacturer; an IT company; a tripe reseller and so on. That’s 15 sets of clients who hadn’t been claiming R&D and potentially could have been.
You could argue that before we were doing R&D, we were letting our clients down to a degree. We’re now able to talk to them about claiming and can put that opportunity in front of people.
Our clients give us lot of appreciation for this and they tell their friends about us: “My accountant got me £15k back from an R&D claim”. All of a sudden, someone’s mate wants to get involved. Somebody rang us the other day and asked us if we’d do an R&D claim for his mate because his current accountant wouldn’t do it.
I think we can build quite a good referral network off our existing client base and, potentially, smaller accountants. With smaller firms, technically, we could go and say: “Look, we’ll partner up with you. We’re no threat to your company. We’ll do your R&D if you’ve got any clients who want this” and they become introducers to us.
I also want to do more to educate our client managers on how to find new business. We met with a food manufacturer yesterday who are trying to do some really innovative stuff with infused sausage rolls. It’s funny but we need to find those types of projects.
It’s crazy, I’d say over a quarter of a million in total. If not more.
If we weren’t offering R&D consultancy that money wouldn’t have been recovered. It would have been lost.
It has created a bit of a buzz about the office. When we landed our first claim – I think it was a £22,000 claim – there was quite a big buzz about it. As daft and boring as that sounds, the team were quite buoyed by that. Lots more claims are being made by other members of the team outside of me. They’re now starting to think: “We can do a decent thing here. We can help with that.”
Before we started using WhisperClaims and doing consultancy in-house, our team knew about R&D because they’re all accountants. They understood it and the concept of it, but it’s one of those topics that you cover and then never really touch on again. Whereas, I think now, our ability to service clients is much better.
100%. I mean, we’re very fortunate in our team that they do care about the clients they’re working with. When we told Sean, our client manager, that we were dropping £15k into his client’s bank account, he was over the moon for his client. It’s one of those nice feelings rather than just: “There’s your tax bill of £15k“.
We’re changing the structure of our organisation because, historically, our client managers purely just did compliance. Now they’re having R&D conversations with people so our team will have to familiarise themselves with the software. That means there’s an upskill area that we’ll need to work on. The guys at WhisperClaims are helping us with some of that through educational tutorials and written guidelines.
We’re also really committed to technology. Our team have got trust in our view on that. If we say it’s good, it’s going to be good. We’ve demonstrated that with Xeros, Receipt Banks, Chasers … all of that. We’ve demonstrated how technology can help them in their day-to-day job.
It gives us, as the accountants, control and it rewards us appropriately for the work that we do. So by having complete control over a claim, and being rewarded appropriately for it, it gets the due care and attention that it should. It also gives the firm a focus to deliver the claim because the return is big, especially with the WhisperClaims subscription and reporting fee being so reasonable.
It brings a cash injection into your business and gives you so many opportunities to do other things that you might not have been able to do before. From my point view, most opportunities are missed because people don’t have cash reserves. Growth needs investment. So this helps put cash into the accountancy practice to help us grow in other areas.
Technology makes you more efficient, saves you more time, and makes you more money.
Looking to follow in Phil’s footsteps?
Phil is speaking at our free webinar ‘Building an in-house R&D tax service’ on the 22nd of October 2020.
Join us to get the inside scoop on how Phil, and accountants like him, are moving their R&D tax relief services in-house, adopting technology and finding eligibility within their client base.
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
This week, we’re pleased to welcome Alan Woods of Woods Squared to the WhisperClaims blog. Alan tells us about his firm’s aspirations to create a streamlined R&D service, why they moved away from outsourcing work and where WhisperClaims technology has been used to create an HMRC-friendly claims process.
Alan is also one of the three speakers at the WhisperClaims ‘Building an R&D tax service’ Webinar, which you can find a link to at the end of this article.
Hi I’m Alan Woods, director of Woods Squared. We are an accountancy firm based in the North West of England near Liverpool. We offer financial advice to around 50 business clients across the UK from retail and eCommerce to construction and IT service based companies.
We do all the usual jobs you’d expect an accountant to do, including filing accounts, preparing financial statements and lodging tax returns, but we don’t just stop there. We’re experts in multiple accounting software platforms and we create funding opportunities for clients through Capitalise and our R&D tax relief service.
In the past two years our R&D service has gone from strength to strength. We’re now able to support businesses of all sizes to take advantage of the R&D tax relief scheme. We’ve been on quite a journey to achieve this and have a lot of learnings that we can share with firms looking to do the same.
Yes – we’ve been doing R&D claims for a couple of years now. Originally we were outsourcing the work to an R&D consultant but we found the process to be a bit disconnected with how we wanted clients to be managed. There was often a delay between us having a conversation with our clients and the consultants progressing the claim. We were keen to speed this process up so that clients could benefit from their tax relief sooner.
We also found that the size of the claim could be an issue for the consultant. The complexities of the scheme often meant that the time and effort required to pull a claim together made it economically difficult for our consultant to offer advice to our smallest claimants (who were usually the ones in need of the £). This affected a significant proportion of our clients so we had to find a way to lift this barrier.
We moved our service to a local accountancy firm which initially worked out well. They were able to come into our office to speak to clients directly which aligned with our approach and helped resolve the client management issue we had experienced with the consultant.
However we eventually hit some issues. Some claims that were submitted by this new supplier started to raise red flags with HMRC. Most of these were resolvable but it wasn’t the robust claims process we had promised our clients. We realised that our new supplier was not quite as proficient at their claims as they lead us to believe, so again we started to look around for other ways to do it.
We started to speak to Richard Edwards and his team at WhisperClaims and they helped us to deal with the enquiries. This support has been priceless! It really helped us to look after those businesses who had been affected. I doubt we would have been able to deal with them on our own, so it was really great to have that technical support from the guys at WhisperClaims.
Since then we’ve adopted their technology and started preparing claims in-house. We’ve continued to use WhisperClaims for new claims and we’ve had no issues raised by HMRC.
Those enquiries got us really nervous. We started to doubt what was or wasn’t a claim and the best way to approach things. Now, whenever we have a claim that’s borderline, we float it past Richard and Jen. They’ve been able to say yeah that’s got R&D activity and this is where we think the emphasis should be. That’s been a great steer for us in terms of moving things forward. Getting support to review claims before they are submitted gives you that reassurance you sometimes need when you are preparing claims in-house.
We’ve now been able to take R&D claims preparation in-house because, with WhisperClaims support, we’ve learnt how to identify eligibility better. We know the reasoning behind why some claims aren’t eligible and what is actually being written and prepared from a technical report perspective. This was the key learning point for us. The technical report that WhisperClaims produces is great and we’ve had no issues whatsoever with HMRC.
We were unfortunate with the HMRC enquiries from our previous supplier, but in some ways, working with Jen and Richard to resolve these has led to conversations with clients that has just added more knowledge to our team. We can identify work that qualifies for R&D tax relief and we’ve also been doing more reading around the subject of what is or isn’t eligible just to reinforce our own understanding.
Yes – it’s a simple step by step process. WhisperClaims software enables you to get the relevant information you need from the client and it tells you when there isn’t a claim – it’s a sense checker. You can very quickly pre-qualify claims directly with the client. I really like the systematic approach.
A lot of businesses have R&D activities that they aren’t aware of. For some businesses a claim might only make a few thousand pounds of financial difference to them, but for small businesses that’s a significant sum of money. It’s great to be able to get money back in the bank for them or get a reduction on their corporate tax liability as a result of doing something that they didn’t think was eligible. That’s what I really like about the WhisperClaims software. It allows us to look at claims of all sizes.
If you keep delving into client work there’s often R&D there. You just have to keep asking. In retail we’ve found claims with businesses who have created software based solutions, for example, a jeweler who manufactured a repair system to fix jewellery rather than just selling new stuff. Often retailers have got a manufacturing process that comes before the product goes to market. You have to look at the whole supply chain to see how that company works. Within those businesses it tends to be the owners overseeing the project, but there will often be a manufacturing team that has a lot more information around the process. You need to dig into this. It’s usually this team that’s doing the actual R&D work.
We’re looking to reset since COVID-19 and not fall back into old habits. We’ll be taking advantage of the new ways of doing things, like working remotely and using Zoom to stay in touch with clients. From an R&D perspective we’re looking to take on more clients and provide more support, so that as many businesses as possible can thrive in what is currently a very challenging climate.
Looking to follow in Alan’s footsteps?
Alan is speaking at our free webinar ‘Building an in-house R&D tax service’ on the 22nd of October 2020.
Join us to get the inside scoop on how Alan, and accountants like him, are moving their R&D tax relief services in-house, adopting technology and finding eligibility within their client base.
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
WhisperClaims 2.0 is here! In response to client feedback, our tech team has been working hard on some fab new features that will further enhance your experience of preparing claims through the WhisperClaims system, including a brand new look and feel and a better way to manage collaborators.
We’ve prepared a video to take you through the changes in detail.
Subtitles are embedded, and there is a transcript available at the end of this blog post for all who need it.
Our new homepage will offer instant access to your most recently worked on clients and claims, and serves as a central gateway page for all your important information. It also includes links to the latest news and resources directly from the WhisperClaims team so you can stay up to date on what’s going on.
Our interface has been given a fresh lick of paint, improved sign-posting and a cleaner more intuitive design. Our fonts and colours will be fully aligned with accessibility standards and our forms have been simplified to ensure that our content is easy on the eye.
You told us that adding collaborators in the question set could be simplified, so we’ve pulled that functionality out of the question flow and given you a separate collaborators tab. This allows you to easily view and add collaborators at any point during the preparation of a claim.
A new collaborators management page makes it clearer which claims have collaborators, what they are working on and offers functionality to add/remove individuals from the list. You’ll also be able to track the status of claims as they work through the process and control their cost access.
We’ve drafted a few Q&As to help prepare you for this switch.
How does this affect current users?
If you are a fan of WhisperClaims 1.0, our current interface, don’t worry! We’ve kept all the things that you’ve told us you like, and the process of preparing and downloading a claim hasn’t changed.
From today, after logging into the app, you’ll see a little widget asking you to “Switch to WhisperClaims 2.0”. When you click this you’ll be moved over to our new interface.Users who do not switch will remain on the WhisperClaims 1.0 interface version for three months. At the three month point we’ll move everyone on to the WhisperClaims 2.0 interface. This will happen automatically and you won’t have to do anything..
How does this affect users who sign up to a license after today?
New users who sign up to WhisperClaims after the launch will automatically be given access to the WhisperClaims 2.0 interface.
What version will collaborators see?
Collaborators on claims will see the WhisperClaims 1.0 interface, regardless of whether you are still using this or the 2.0 version. So for them nothing will have changed. However, we’ve planned a collaborator interface changeover after this initial launch. We’ll keep you updated on that as soon as it’s ready.
The changes will be very minor and shouldn’t majorly affect how you prepare claims, however we are running group webinars for anyone who requires a bit more guidance on these enhancements.
Click on your preferred date for an Eventbrite link and to receive some more information:
For more information on ‘WhisperClaims 2.0’ or any other inquiries, please feel free to contact us at email@example.com.
Here at WhisperClaims we’re really excited to be announcing the release of WhisperClaims 2.0. What we’ve done is we’ve taken some feedback from you, and we’ve built a less cluttered and more intuitive interface for everyone to use.
Change #1: Homepage
Now the first thing you’ll see that’s really new is the homepage. You’ve now got links to your most recent claims and clients making it easier for you to pick up where you left off last time you signed in, and we’ve give you links to our latest blogs so you can see what exciting content and pieces we’ve released recently.
Change #2: Clients & Claims
We’ve clarified and simplified both the Claims and Clients views, to make it easier than ever to manage your workload, and we’ve added a nice bonus feature: a widget that automatically pulls in the company’s number when you enter the company’s name, just saving you that extra bit of time in looking things up.
Change #3: Collaborators
Now despite this massive change in how everything looks, the app’s questions and the question flow have remained exactly the same as before. What is different is the Collaborators’ section. So, what we’ve done is taken that out of the question flow to make it a lot easier for you to manage.
We’ve grouped all the questions about collaborators, and we’ve put them in their own tab, and it allows you to quickly jump in to that section from any point in the question set and add collaborators and invite them.
You can also control whether they have access to the costs from this section.
We’ve also built a new Collaborators’ view and grouped collaborators based on the claim they’re attached to, just making it much, much easier to see which collaborators you’re working with, and what their status is.
So we’re really happy with our new look, and we hope you will be too. But please: any feedback, any questions, anything like that, just shout out, and we’ll be happy to respond.
This week, we’re pleased to have Lawrence Evans of Caldwell Penn sharing his views on how advances in digital technology feed into the evolution of the R&D service process, and what this optimisation means for both accountants and clients.
Hi—I’m Lawrence, Director of Business Development at Caldwell Penn. We are a medium size accountancy practice operating across Surrey, London and the south of England. We position ourselves as an advisory based firm with a full suite of specialised services designed to proactively support our clients in building profitable businesses in the most tax efficient way. We’ve been operating for 28 years with 21 members of staff and we have over 800 clients.
Digital technology is now a critical component of our practice and wider business strategy. By integrating the latest technology into our services and operations we can respond quickly to the needs of our clients and offer real-time, proactive advice.
Yes, R&D tax is a big focus for us both with new and existing clients. We have launched a new website that we hope will raise awareness of our R&D service. There is a big focus on identifying claims within our existing client base as well as bringing new business into our practice. From a marketing perspective we use PPC and SEO to drive prospects to our website, particularly in the local area. We also have Client Relationship Managers who proactively engage with our clients to identify projects which may qualify for R&D. They have lead questions that they use to identify whether or not a client might have R&D projects on the go. Equally all of our staff have been briefed to spot the triggers as to what R&D activities might look like. For example, if a client has recently employed another member of staff for a research project we’ll look at whether there is an opportunity to make a qualifying claim.
Yes. We regularly train our Client Relationship Managers to understand the qualifying criteria for R&D and to identify potential R&D tax saving opportunities. This will include reviewing the latest management accounts for costs which may relate to R&D projects and discussing latest activities during regular catch-up calls.
We also train our Bookkeeping team on the R&D relief schemes and the types of costs which may indicate a qualifying claim is potentially available. The team are then encouraged to discuss anything they spot with the Client Relationship Manager for further review.
In-house we were experiencing inefficiencies in the consistency of our claims processes, while externally, when we out-sourced some claims to specialists, we had frustrations dealing with them because we felt we were answering to someone else and had no control over the service they were offering our clients.
We decided to review our in-house processes as a priority and take a more holistic look at how we could be providing our services, which led us to WhisperClaims.
We onboarded WhisperClaims which answered a lot of our questions around scalability, consistency and being able to roll out a robust service across the team. A drawback to our previous approach was that all of the reports would look completely different if we had an external advisor and an internal advisor preparing claims. We’ve removed that issue by creating uniformed templates using WhisperClaims.
We’ve seen a positive impact on our clients as the new approach aligns perfectly with our strategy of embracing digital technology to offer proactive advice in a seamless way.
We’ve done a lot of collaboration with our clients using WhisperClaims, which initially we were quite apprehensive about in case they felt that they were having to do all the work themselves, but actually I’ve had nothing but good feedback. From a client perspective, all they do is move some sliders and tick some boxes. It’s about a 10-15 minute job for them and a really smooth journey to input the information we need.
We took on a new client last year who was frustrated with their previous provider. We used WhisperClaims to do their claim remotely, following the question-sets through to completion and then submitting the report to HMRC along with the client’s CT600. He was really complementary about the process because it cut out the paperwork for him. We got a good fee as a result and the client walked away happy. That’s the moment when I realised what WhisperClaims could do for us when effectively aligned to other newly implemented procedures.
The main goal is to grow our R&D client pipeline from new clients. To facilitate the increased workloads and we are currently building out a specialist R&D team.
We see WhisperClaims as a key component of being able to deliver this in a scalable way. It provides us with a controlled process, so as we grow and more people begin putting claims through, the reports will look exactly the same. WhisperClaims is helping to facilitate our growth. It pays for itself.
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
This month we caught up with chartered accountants, Ammu, to find out what they are doing to grow their in-house R&D service using WhisperClaims technology and why R&D tax relief is creating a positive cycle of investment for both them and their clients.
R&D tax credit is a stream of funding that has been somewhat overlooked by accountants in the past, not least due to unfounded myth and misunderstanding of the scheme. Government statistics suggest that only 10-20% of eligible SME’s have claimed R&D tax credits. A few years ago, I started to look at how I could grow our business and push it a bit further. We got in touch with an R&D specialist who convinced us that R&D consultancy was an opportunity for us and our clients. So we joined forces with them to offer an R&D service to our clients.
After about three years I had built up a bit of confidence to grow our R&D business. I felt that there were some weaknesses in how the R&D specialists were operating. They were overestimating the valuations of claims and charging a very high percentage fee. I questioned the professionalism of this given the purpose of the scheme and started to look around at alternative ways to run our service. I began to look for other specialists to pair up with until I discovered WhisperClaims.
Having an in-house R&D service enables us to grow. We can go to companies, offer them our service and then ultimately, as they grow, they remain as clients with us and the whole chain of events continues.
I look for clients who are like-minded and forward-thinking. I tend to click with these people and enjoy seeing them get money back that they can reinvest into their businesses. They go on to hire people, they buy capital equipment and they move their businesses forward.
I like the structure and the compliance of it. We are already using software for corporation tax and personal tax so I could see clearly how this system could be rolled out. It’s also quick and efficient. We use it to collaborate with clients which enables them to understand the claims process better and gives them confidence.
I hired a development manager last May with a view to running an in-house R&D service. Our goal was to get more clients coming to us for R&D claims so that they could invest the tax benefit into machinery, people and further R&D activities. As they grow through innovation, we do too.
We use various platforms including webinars, blogs and videos to engage with our clients and to identify funding opportunities on an ongoing basis. We’ve already put through 30 claims doing that and we’ve got another 15 on the go at the moment. We’re just about to do a big marketing campaign where we’ll be approaching over 2,000 innovative companies. If accountants like us looked, they’d probably find about 20% of their clients could potentially have R&D claims.
We’re focussing a lot on food and engineering because these are the areas that are not claiming R&D tax relief. We’ve created educational content specifically for them and that has driven clients towards us from these sectors. We have an Indian food company that supplies quite a lot of products to supermarkets. It’s all-natural products, there’s no preservatives or anything like that and they’re on to their second round of investment. There’s an engineering firm that wanted to buy a £200,000 crane. We made a claim for them and this massive crane was purchased with the tax benefit that came back.
Yes. There’s a lot of players out there who are inflating claims and giving the R&D sector a bad reputation. They don’t always have the best interests of the clients at heart. Accountancy firms are different, we’re not a separate brand just dealing with R&D. We’re there with you, all the way through. There’s a professional assurance that no matter what happens, we’re going to be there.
WhisperClaims helps build trust because when you collaborate with a client to prepare a claim they become familiar with the criteria. It unfolds in their minds – they get to see a little picture of what’s allowed and what’s not allowed. We reach a depth of understanding that I think others wouldn’t bother to go into. We do the smaller claims too, because we can, because the software allows us to do it in such an efficient manner.
In order to keep R&D consultancy going, I think you need fresh contacts and fresh partners in place. During the financial crisis of 2008 there were a lot of accountants who were going to retire but instead held on. So I think in 2020 there will be a lot of acquisitions available. We’re also interested in working with more accountancy firms to undertake R&D claims for their clients. This would enable R&D tax to become an integrated service within their practice. The main objective for us is to help more businesses with tax relief in order to create a positive cycle of investment.
Ammu is a team of chartered accountants and chartered management accountants based in Central and South West Scotland. They offer a diverse range of services including consultancy on digital systems, tax, compliance, funding, company vision and R&D tax relief. They use cutting edge technology, including WhisperClaims software, to support their clients and enable them to make better business choices.
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
Thank you to everyone who joined our ‘Get Started: Identifying Eligible Clients’ webinar today to discuss innovation within borderline cases and unusual sectors. We had over 70 WhisperClaims users and members of the industry tuning in and some fantastic questions posed!
If you’re interested in joining our “Get Started” webinar series, please subscribe to our newsletter to be the first to hear about future dates and topics. We’ve got some great themes coming up that will help build your confidence on the scheme and running an in-house R&D service. You’ll find a subscribe button at the bottom of this blog post.
For those who joined us on the 20th August, here’s the answers to your questions.
In that specific example, the identification of more affordable processes and factories would not be eligible – it’s more of a logistical advance than a technical advance. That’s not to say that clothing manufacturers can’t be eligible – we’ve seen companies, for example, developing advanced RFI tags and tracking software to increase efficiency of clothing manufacture and delivery. In addition, the development of new manufacturing techniques, for example using laser joining in place of stitching, could have some eligibility, as long as the company are seeking to make a technological or scientific advance.
There’s no minimum turnover threshold for a company to claim R&D tax relief. Many start-ups, in fact, make their first claim before they start trading!
There is an upper turnover threshold to be able to claim under the SME scheme. If a company has a turnover over more than €100 million and balance sheet assets of more than €86 million has to claim through the RDEC scheme, no matter how many staff they have.
There can be a fair amount of eligible R&D in breweries and distilleries. The key things to look for are that they are producing their products in new and technologically advanced ways, or have developed entirely new, technologically advanced ways of brewing or distilling. Projects that tend not to have much eligibility are the more recipe/new product development-type projects, where the advance is more commercial than technical.
The case of biomass energy generation is an interesting one. Ten to fifteen years ago, this was really cutting edge, but these days the science of how to do this is fairly well established. This means that if your client is using off-the-shelf machinery and standard processes, they probably couldn’t have a claim. However, if, for example, they are working on producing energy from different types or classes of household waste and are having to advance the underlying science or technology to achieve this, then they could have a claim.
Generally, the installation and commissioning of new machinery doesn’t entail any eligible R&D. HMRC’s take is that once the technological challenges have been resolved, the R&D ends. Subsequent work to install the machinery therefore wouldn’t be eligible, unless the installation failed for technical reasons and required the resolution of further technical uncertainties.
Almost certainly not. This is a case where the project has unknowns rather than uncertainties – the company doesn’t know all the details of the plot, but they know how to find out, and they don’t need to make any advances in science or technology to get there.
It’s difficult to give a definite answer to this one without knowing more details! HMRC would not view the development of a new process as eligible, so if they took an off-the-shelf cleaning product and found a better way to use it, there wouldn’t be a claim. However, if they had to develop a new cleaning fluid, for example, or process the gearbox in a way that it wasn’t intended to be used, then they might have a claim.
In terms of talking to your client and assessing their eligibility, it’s best to go into a fair amount of detail, so that you can be sure that the client’s projects are definitely eligible. In terms of how much information to provide to HMRC, it’s always best to give them just enough information to make an informed assessment. So, in the example above, you wouldn’t need to exhaustively detail every single trial carried out, but it is good to let HMRC know what the uncertainties were, that trials were carried out and what they tested, and the outcome of the work.
Absolutely not, I’m afraid. There’s no advance in science or technology in the creation of recipes or the putting together of menus and drinks, so they wouldn’t have an eligible claim.
Again, it depends! It sounds more of a logistical challenge in trying to erect scaffolding in tight spaces and more quietly. If that’s the case, they wouldn’t have a claim. However, if they have to do work and make advances in the area of, for example, mechanical engineering to produce a scaffolding system that works in tight spaces and is significantly quieter to erect, then they might have a claim.
In general, little eligible work is done in by the professional services sector. In the example here, applying knowledge to help businesses grow would be seen as social science rather than the physical sciences, and as such would not be eligible for R&D tax relief.
In situations like this, we’d expect the lubricants manufacturer to have an excellent understanding of the functional requirements of the system that they’re trying to build. (By ‘functional requirements’, we mean the features of the software, its defined inputs and deliverables, and how it supports its users.) However, we wouldn’t expect them to be experts in IT/telecomms, especially since they’re contracting in that expertise.
To assess eligibility, we’d be trying to assess what specifically is the advance, and what field does it lie within? A general observation we’d make is that when companies who are experts in one sector are trying to claim for an advance in another (such as IT/comms/software), the claim is much more open to challenge than if they were claiming for an advance in lubrication technology (and coordinating the activities of subcontractors in order to make that advance).While it depends on the specifics of the case, I’d suspect that this company’s claim might not stand up to a detailed enquiry.
Scenario 1 – The bakery pulls together a specification of a system to automate its workflows and make communication easier between its various personnel. There is nothing particular challenging about that from a software engineering perspective; after all, web-based, database systems have been commonplace for a while. Despite the fact that the system’s functionality is specifically designed for the bakery, there’s no R&D (as defined by HMRC).
Scenario 2 – The bakery wants some software to control some machinery that can place cherries on the top of products with the precision of a human (sounds easy, but isn’t!). This needs fine motor control, perhaps some machine learning, and a lot of image recognition and processing. The requirement for R&D is obvious, by virtue of the fact that the system required is so far beyond what’s available. This situation, in which the requirement for R&D is clear at the outset, is likely to be accepted by HMRC as subcontracted R&D. The bakery in this case would be claiming for the subcontractor’s costs.
In all cases, whether the company or its subcontractor should claim typically comes down to the specifics of: What has the subcontractor been asked to do? Was the need for R&D obvious at the outset? In which area of technology is the advance being made? Who employs the competent professionals in that field? Which company is taking the technical risk? In short, the facts are rarely cut and dried, and judgement must be used to ascertain on which side the eligibility lies.
Running an R&D tax service in-house helps you move away from risky outsourcing strategies, win new business and drive growth for your practice.
Tune in to our webinar on the 20th August at 12.30pm to join Richard Edwards and Jen Badger from WhisperClaims where we’ll be discussing client eligibility.
Identifying eligible clients is the first step towards running a successful in-house R&D service. Learn how to spot innovation within your client base and across some of the most unlikely sectors in the UK.
Running: 20th August at 12.30pm
To book your place please visit our EventBrite page.
For more details on the panel click here.
Here at WhisperClaims, we’re always trying to think of ways to enhance our app for our customers. One of these enhancements relates to our User Experience / User Interface (UX/UI), which very broadly translates into “is our app nice to use and does it look good?”
Our exciting news is that we’ll soon be launching the next version of our User Interface, which will look simpler and cleaner. Almost all of the functionality will remain the same (so you don’t need to worry about re-training!) but we’ve taken the opportunity to make the Collaboration section even more intuitive.
We’ll be rolling out the new interface within the next 2 months, but in the meantime we wanted to give you a quick sneak peek at what’s coming. We hope you agree it looks nicer, and can’t wait for you to see the real thing!
Thanks to everyone who joined our Webinar on the 23rd July to discuss the ins and outs of running an R&D tax service in-house. As promised, here’s a summary of the questions asked and our responses. For any further enquiries please contact us at firstname.lastname@example.org.
a) HMRC’s initial approach is usually to seek to engage with you or your client on an informal basis. They might call with a few questions, or send you a list by email. Many informal enquiries can usually be resolved relatively quickly by a responsive advisor. Should HMRC not get the information it’s looking for quickly, it may open a formal enquiry – this entails deadlines and the potential for penalties.
b) We’ve seen a number of enquiries over the years, but assess the enquiry rate to be very low (perhaps 1-2%) given the large number of claims and HMRC’s limited resources. In an enquiry, however, the standard they apply is demanding; expect hair-splitting!
c) In our experience, claims with a tax benefit of more than £50,000 are likely to attract greater scrutiny (although not necessarily an enquiry).
I think the opposite appears to have happened – HMRC have accelerated the processing of claims in an effort to rush support to SMEs at a time of national crisis.
Going into an enquiry, HMRC tend to be more focused on the company’s level of understanding of the guidance and how it’s been applied to their projects and activities. They want to get a feel for how close the company’s definition of R&D is to their own. Once that’s been established, they’ll look at how the costs have been collected. They don’t necessarily expect a first-time claimant to be capturing costs perfectly, but will expect them to improve their process over time to become more accurate.
The ebook is available through the Guides section of our website.
You can do so, but this might not work as well as you hope. HMRC might take the view that if your client (Company A) has given the specialist IT company (Company B) a contract, it’s up to Company B to determine how to implement that contract. If Company B is able to do so simply by using existing tools, techniques and knowledge, then science hasn’t been advanced and there won’t be a claim for R&D tax relief at all, by any party. Conversely, if Company B has conducted its own side-project to develop new-to-the-industry knowledge which it has chosen to employ in the satisfaction of the contract from Company A, it’s likely that HMRC would deem eligibility to lie with Company B.
Yes, but all the same rules apply. You’d be looking for competent professionals (i.e. software developers, or in larger projects, software engineers) who are able to articulate:
a) The limitations of existing technologies and platforms.
b) What they seek to improve and why that’s considered to be an appreciable improvement over those existing technologies.
c) Details of the technical challenges making that advance difficult to achieve.
If agreement can’t be reached, then the next step is a Tribunal. However, these appear to be extremely rare.
IP is more an indicator of where eligibility lies, rather than a hard and fast rule. For example, most companies commissioning the development of a software system will specify that they own the IP. However, it’s possible (and indeed common) for a company to own the IP to a system without having detailed knowledge about how their system has been implemented from a technical perspective. This technical ‘know how’ tends to reside within the software development company irrespective of what is specified in commercial contracts.
Great, thanks for booking! This course focuses on the R&D scheme itself, covering a wide variety of topics and what we regard as the most important areas. This will certainly make you a lot more confident in taking this service to your clients, but it doesn’t touch on commercial aspects, such as what to charge your clients or how to market to them. (Please contact email@example.com if you are interested in this type of help.)
If you represent both parties, our recommendation for that is to choose a side by deciding where eligibility lies. For example, if the commissioning company is well aware that R&D (as defined by HMRC, rather than the more general accounting definition) needs to take place, and the contract clearly specifies that, then the claim would probably belong to the company paying for the work. Conversely, if the commissioning company was merely creating a specification and it was up to the specialist contractor to decide how to implement it, then the R&D – if there was any – could be argued to lie with them. You definitely don’t want to be in the position of arguing that both parties can claim. This issue is probably most uncomfortable if you are the accountant to both the commissioning company and the subcontractor!
Otherwise I’d say just focus on doing the ethical thing for your client and let the other side worry about their claim.
We don’t have plans to record those at present, as those courses are premium content and only available on a live basis.
Yes, to get R&D tax relief, the company must be seeking to make an advance relative to a baseline level of technology (as opposed to its own state or understanding). What this means in practice is that companies should say: “Here’s what’s commonly done in our industry, and here are the drawbacks and limitations of those approaches. In contrast, here’s what we’re trying to do, and this is why it’s better than those existing methods / techniques / knowledge etc.”. Companies don’t get tax relief for falling into line with what is already accepted to be common practice e.g. by modernising operations by buying new machinery to catch up with competitors.
Your advance doesn’t need to be made available to the industry (and in practice all companies will seek to closely guard their new technical developments). For that reason, it can be hard to know what knowledge or capabilities other companies have, because it’s hidden knowledge. Conversely, in most industries, there are a number of commonly accepted and well-established ways of solving problems, and this would be the technological baseline. The key here is that to the best of its knowledge, the company regards what it’s doing as an advance relative to its competitors.
When talking to HMRC about baselines, it’s usually sufficient to say that the company has checked what’s in the public domain and made best possible use of existing knowledge prior to their R&D commencing. (Finally, HMRC’s guidance is clear that companies can apply for relief even if it’s known that competitors have made a particular advance, but it’s not clear how.)
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
Our sell-out ‘The fundamentals of the R&D tax relief scheme’ training course is running throughout 2020!
To book yourself a place on our course and to see a list of future dates, please visit our Eventbrite page.
Designed for accountants and consultants looking to create a robust R&D consultancy service for their clients by learning the ins and outs of the scheme.
We’ll share our insights on the scheme and bring you up to speed on the fundamentals to help drive your R&D consultancy forward.
Reserve a spot and learn the ropes in a small group of like-minded peers. Groups are kept small so that everyone gets the full attention of our industry experts.
For a list of course dates and to book a place please visit our Eventbrite page.
Receive information about future course dates by subscribing to our WhisperClaims newsletter.
Interested in a closed session to focus on your business? No problem—book a private course to have your team’s needs directly addressed and satisfied.
£1000 + VAT
Obviously, in our line of work, we’re keen to see as many eligible companies claim for R&D tax credits as possible! However, there are always times when it’s best to pause and work out if it’s better for your client not to claim. Here’s our guide to when it might be best to advise your client against claiming.
Easy one first – if the organisation or its projects don’t meet the eligibility criteria, then it shouldn’t be making a claim for R&D tax relief. This could be because it’s not a limited company, or is doing research into non-eligible areas, such as social science. It might also be that it does do work in an area of science or technology, but everything it does is routine.
We occasionally talk to companies who have been pressured in to making a claim. They’re often manufacturing companies that know they don’t do eligible work, but have been told by unscrupulous advisors that they can ‘find’ eligibility and put in a claim. In these cases, submitting the claim risks an enquiry for your client and damage to your reputation with both your client and HMRC – it’s just not worth it!
Your client sends you claim documents prepared by a third-party provider, and you can immediately see that the claim isn’t right. It might be that you can see glaring discrepancies between the accounts you prepared and the claim, or that the work described in the documents doesn’t line up with what you know of your client’s activities, but you find yourself in a difficult position – either submit the claim and risk an enquiry, or refuse to submit and risk an upset client. It’s tricky, but we’d always advise against submitting a claim that you’re not 100% comfortable with, so it’s definitely worth taking the time to double check everything.
Companies in the creative industries have other options for tax relief that might turn out be easier, more appropriate or have a better rate of return for them. For clients working in the areas of filmmaking, animation or video games especially, it’s always worth checking which tax reliefs they’re eligible for. You can only claim one tax relief on each set of costs, so making an informed choice as to which to go for is key.
According to State Aid rules, only one State Aid can be applied to only one project. This means that not only can a company not claim SME tax relief on a project that has received a state aid grant, you also can’t claim State Aid grant funding for a project that has already received SME tax relief. It’s an unlikely scenario – most grant bodies won’t fund a project that has already started – but it’s worth bearing in mind.
Ownership of an R&D project can occasionally be a bit murky, especially in group companies or when subcontractors are involved. In the former case, it can be the case that the R&D is carried out on Company B’s premises, but all of the costs of the R&D are borne by Company A, usually the holding company. In this case, unless Company B reimburses Company A for the R&D costs, they wouldn’t be able to make a claim.
Companies that bring in subcontractors to do R&D on their behalf can also have difficulty working out who can make the claim, and it often requires analysis of the contractual arrangements to resolve.
There are several situations where the work involved in preparing an R&D claim is more than the R&D claim is worth. For example, start-ups with no staff and directors only paid in dividend aren’t likely to have significant costs. It can also be a problem for companies that do a lot of subcontracted R&D for large companies or that have received a lot of grant finding and therefore have to claim through the RDEC scheme, which can often make small claims economically unfeasible. We’d always advise taking a little time at the outset to ballpark the R&D expenditure before starting in earnest to prepare the claim.
Streamline your claims processes and get expert advice on the R&D tax relief scheme.
At WhisperClaims, we aim to always walk the walk as much as we talk the talk, and it’s no different when it comes around to preparing our R&D claim. We’ve prepared three claims so far using our own software, and enjoyed every one!
But why do an R&D claim in the first place?
We’re a successful business with a growing client base and a robust product, so we don’t technically need to claim. However, there are two really good reasons for doing so. Firstly, it’s money that we’re entitled to, based on the eligible work we do developing our system, and what company would pass that up?
Secondly, and probably more importantly, it gives me an annual opportunity to do a real live test of the app. Now, of course I know our app well, in fact probably better than anyone else. However, I still like to use preparing our claim as an opportunity to put the myself into the shoes of our clients and to see it through their eyes. This gives me incredibly valuable insight into our user experience.
These two factors (a cash injection and insight into how the app works in the real world) plus all of the feedback and research we get from our customers, helps us invest in continuing improvements to our app.
In our development pipeline we have a host of changes and features we’re planning to build. Some are small, like tweaking the background calculations to adjust for the new rules around employment allowance, and some are a whole lot bigger.
For example, over the past few months we’ve done a lot of research into how we can improve the look and feel of the app to make sure our users get the best possible experience. This has led to a whole heap of changes to be made to all areas of the app, and we’ll be starting work on that over the next few weeks.
In addition, in response to the current circumstances, we’re kicking off a project to improve the collaboration side of the app. We want to make sure that this works seamlessly for all of our users, no matter how they prefer to engage with their clients.
All of this work involves, to some degree, making an advance in the software development science.
We’re pushing the boundaries of the technologies we use to make sure that our app is performant and robust, which will enable us to claim again next year for salary costs, some of our consumables and the consultants that help us with our R&D. I’ll be looking forward to preparing a claim for that work, and anything else we decide to do over the next year!
Sole Associates is an award winning firm of Accountants based in West Byfleet, Surrey, founded by Joe Sole. We recently caught up with Joe to find out how he’s reshaped his R&D service by implementing software. WhisperClaims technology has enabled Joe and his team to put robust checks in place and to easily identify eligible SMEs within their client portfolio.
Prior to setting up the firm, I had spent a number of years as a partner within a traditional firm of accountants, who at the time were delivering a compliance service. I set up Sole Associates because I wanted to offer something unique. At Sole Associates we’ve found that SMEs want business advice that enables them to look forward rather than just looking back. So we focus on finding new opportunities for them. We’re a team of 9 and have been going for ten years now, as of 1st April.
We had limited knowledge at first, so we partnered with an R&D tax specialist to help us prepare claims for our clients. However, once we got to know the process and the work involved we realised it wasn’t that difficult and we could do the claims ourselves.
Before we moved our service in-house we did some training and read up on the guidance. We started using templated reports, but I always felt we needed something more than that to check if the client was eligible.
We now use the WhisperClaims platform because it gives us structure. It looks professional and we do it as a matter of course on every claim.
When you are doing claims in-house it needs to be robust, to be compliant and easy to put together. You don’t want to reinvent the wheel if someone has a solution already.
Often clients think they aren’t eligible, but once we start talking to them about what constitutes R&D we quite often find that there is a claim there.
We also place a lot of focus on being proactive with our clients. We have two meetings with them across the year – one before and one after the financial year-end. The midpoint meeting enables us to spot opportunities early, like identifying if projects could be eligible.
Our clients range from SMEs who have claimed before and those who haven’t. We have an orthodontist lab that does a lot of R&D. They present seminars to dentists and do lots of research and testing. In that space we also have a dentist who is developing an LED gum disease treatment.
We have a road bike manufacturer. They improve carbon tech. A carbon advisor who does projects for McLaren in Formula 1. They conduct research to understand the characteristics of materials used in manufacturing cars.
There are clients who you wouldn’t expect to have a project but there is innovation that goes on all the time.
Leveraging technology has helped us to do more work without having to take on extra resources. It gives our client managers space to focus on our added value services rather than just compliance.
WhisperClaims is up to date with the rules and regulations, it’s robust and you can’t miss something. There are checks to see if a client is eligible and if the project qualifies, it keeps your service in-house rather than using someone external and it gives you control over the process. It’s not a big cost to have that comfort and it puts structure in place.
We’ve had no enquiries from HMRC and we’ve had all the tax back. For clients who haven’t made a claim before, we’ve found a claim. It’s had a big impact on some, probably more the smaller clients because the financial impact on them is larger.
It has helped us grow the firm because we’ve been able to take new clients on. It creates good will with your clients because if you are bringing a claim opportunity to them they’ll talk about it with their friends and family. It generates good PR for your firm.
We are a small firm so when you are getting a £6-12k fee for R&D it makes a big difference.
2019 was a good year and we want to better that. We are much more in tune with R&D and where there might be a claim. One lesson we’ve learnt is not to prejudge where you think a client might have an R&D claim. Even if the client says “no I don’t think we are doing any of that”, probe them. Don’t take the initial answer for granted, ask more specific questions because sometimes you’ll be surprised.
Sole Associates is an award winning firm of Accountants based in West Byfleet, Surrey. They offer leading edge business advisory and compliance services to businesses and individuals. Established in 2010 with the aim of being at the forefront of a new generation of Accountants, Sole Associates is already one of only 40 firms nationally to be included in Steve Pipe’s book, ‘The UK’s Best Accountancy Practices’.
One question we get asked surprisingly often is how does HMRC define the start and end of an R&D project for R&D tax relief purposes. No wonder – HMRC’s definition is much narrower than you’d expect, and doesn’t line up with when a company would define the kick-off or end of an R&D project.
The HMRC guidance states that ‘R&D begins when work to resolve the scientific or technological uncertainty starts, and ends when that uncertainty is resolved or work to resolve it ceases.’ But what does this mean to a claimant, and how does it line up with the normal phases of a project?
In general, an R&D project goes through several phases – planning, research, development, testing, marketing and product release. Of course, there are often several cycles of research, development and testing before the project succeeds (or fails!). Different companies will call these phases different things, but in general the shape of an R&D project is pretty consistent.
How do these phases line up with HMRC’s guidance? Well, you can immediately discount the marketing and release phase – marketing spending is specifically excluded from the scheme. The R&D by HMRC’s definition must therefore end before this stage.
From here it’s a little more complicated, and hangs on the definition of a ‘technical uncertainty’. According to the guidance, ‘Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.’
This means that it’s not enough for the technical staff not to know how they’ll achieve the project outcome, but also whether it is even possible using established knowledge and techniques.
Looking again at the project phases, it can therefore be seen that the start of a project can be a little fuzzy! It’s easiest to think of it as when the professionals working on the project have dismissed all of the standard ways of doing things and are embarking on work that will generate new knowledge. This might be during the planning phase, if the technical uncertainties are known from the beginning, or it might be during the research or development phases, once all of the established ways have been tested and shown not to work.
Once you understand what your technical uncertainties are, the end of a project becomes a lot clearer. The project ends when these technical uncertainties have been resolved, so at the point where, for example, a working prototype has been produced or the process shown to produce the required outcome. You can’t claim for spending to, for example, make the prototype look nice once you’ve worked out how to make it work.
The last thing to bear in mind is that the end isn’t always the end! A company might develop something and resolve all of their technical uncertainties, only to find that the final product doesn’t quite meet specification. If the redesign or rework throw up more technical uncertainties, the R&D starts again!
A question we’ve been asked several times recently is, ‘how will taking up any of the current coronavirus business support funding affect a company’s ability to claim for R&D tax relief in future?’.
The short answer is that it depends on the funding. For example, the the ability to defer VAT payments won’t affect R&D claims. However, for the grant-based support schemes and the Coronavirus Business Interruption Loan Scheme it’s a little more complicated.
The long answer starts with a quick round-up of the rules around State Aid. Essentially, under EU rules, which we are bound by until at least the 31st December 2020, most State Aid is illegal because it distorts competition. However, the European Commission acknowledges that this is not always the case, and ‘good’ aid can be allowed as long as it uses certain mechanisms and is approved by the Commission.
So, it’s likely that most, if not all, of the grant-based support currently offered by the UK government to support businesses through the disruption caused by coronavirus will be classed as State Aid. The big problem is that these schemes have been fast-tracked, and therefore most haven’t been fully assessed or approved by the European commission. We do know that the Coronavirus Business Interruption Loan Scheme will be classed as notified State Aid.
The other factor to consider is the definition of ‘de minimis’ aid. For funding to be classed as ‘de minimis’ it cannot exceed €200,000 over a rolling three-year period. This could mean, for example, that the £10,000 and £25,000 grants to small businesses in receipt of rates relief would be classed as ‘de minimis’, whereas the larger grants, for example the Coronavirus Job Retention Scheme, may be notified State Aid.
As you know from our previous blogs (‘Is it better to take a grant or rely on R&D tax relief to help fund research and development‘ and ‘Don’t get bamboozled by grants’), the SME R&D tax relief scheme in the UK is classed as State Aid. Therefore, taking State Aid in the form of grants prevents a company claiming for all of their eligible R&D expenditure under the SME scheme.
How badly a company’s claim for R&D tax relief is affected by the coronavirus grant funding will depend on two things: what type of state aid the funding is deemed to be, and whether the funding is used to pay for R&D. In the current circumstance, the latter point will be difficult to argue, unless the company has suspended its R&D activities for the duration of the crisis.
This means that it’s really important for companies to note which R&D projects were live at the point of receiving any of the government funding. Any projects that are not live during the crisis or start after the funding is received should not be affected.
For the remaining projects, it’ll then come down to whether the funding is ‘de minimis’. If it is, only the amount of the grant will have to be claimed through the RDEC scheme. If it turns out to be notified State Aid, then the full eligible costs of whatever project it is used to support would have to be claimed through RDEC.
Here at WhisperClaims we’re keeping a close eye on the situation. We’ll update our users as and when more information is available, and will make sure that the app is updated to cover whatever funding scenarios result from the current situation.
As corona virus continues to spread many of our customers have told us that, come what may, they’ll be doing their utmost to help their SME clients stay in business and are focusing on those most in need of assistance. Fully appreciating the huge stress that some people are coming under, this got us thinking about specific ways we could help.
To help take the strain off our most time-pressed accountancy customers, for the next eight weeks we’ll be dedicating resources to:
This will allow you to fast-track companies who haven’t claimed before.
For the next 8 weeks we’re also relaxing our licensing rules to allow up to 10 people to use WhisperClaims for the price of 3 users. This enables not just the tax team to use it, but also staff who’re really close to your clients, such as Client or Account Managers.
We’re happy to on-board and train those new staff too, so that they hit the ground running, ensuring that all eligible companies in your portfolio get the R&D support they’re entitled to as quickly as possible.
We’ve also been asked by several customers in the last few days whether our team could play a more active role in the delivery of their service. Jen and Richard are ex-R&D consultants and this is well within our capabilities.
Richard founded an R&D consultancy company called Jumpstart, now AGBI Ltd, in 2008 and was responsible for building the consultancy team from scratch.
Jen’s got a PhD in Immunology and worked on the R&D claims of 100s of companies.
If required, we can undertake the following on your behalf, freeing up your time to spend with those who need it most.
If you want to discuss any of the above, you can get in touch on:
or 0800 211 8197.
We’re here to help.
Yesterday’s budget was good news all-round for companies undertaking R&D! Not only has the RDEC rate been increased, but the looming PAYE cap on the payable SME tax credit has been delayed until April 2021, much to the relief of many small companies that rely on subcontractors to carry out their R&D.
The big R&D related announcement was the increase in RDEC. This means that large companies and SMEs with grants or other subsidised expenditure will now receive a benefit of just over 10.5% of their eligible spend on R&D, receiving £105.30 for every £1000 spent. This had been widely reported ahead of the budget, and will be welcomed by all RDEC claimants.
However, hidden in the detail of the budget was a more significant point for many SME claimants – the changes announced in budget 2018 that were expected to come into force in April 2020 have been delayed until April 2021. The proposed changes would have restricted the cash credit payable to three times a company’s NIC and PAYE liabilities for the year. For small, loss-making start-ups that often rely on subcontractors rather than paying salaries this would have been a major blow, so we welcome the delay and potential redesign of the cap.
Other than these points, the increase in employment allowance to £4000, coupled with recent changes that we detailed here will mean that SME claimants will be up to £130 better off.
Lastly, the government pledged to increase public investment in R&D to £22bn a year by 2025. While the specifics of how this will be spent are yet to be fully revealed, it’s great to see more money going into innovative work and research in the UK.
Stay up to date with news on the R&D tax relief scheme by subscribing to the WhisperClaims newsletter.
Jen Badger, our Operations Director, is a go-to member of the WhisperClaims team for R&D tax relief knowledge and updates to the scheme. A recent announcement about changes to Employment allowance got us scratching our heads so we sent Jen out to investigate.
Employment allowance was introduced in 2014 as an incentive to employers to hire staff, and consists of £3000 to offset against Class 1 secondary NICs (National Insurance Contributions). Although it was successful, the flat rate nature of the allowance meant that it was unattractive to larger employers. This has led to the Government making changes to target the allowance at smaller employers.
From April 2020, EA will only be available to employers who paid less than £100,000 in employer’s NIC payments in the previous year, and will have to be applied for every year. So, far, so straightforward. However, there is a more significant change for small companies that have received grants, or who plan to claim R&D tax relief – EA is now a ‘de minimis’ state aid.
This small change could have a big impact on small companies. Under state aid rules, a company can only receive €200,000 of ‘de minimis’ aid over a rolling three year period, so any employer that has received ‘de minimis’ aid will have to make sure that claiming EA will not push them over this threshold, and may be prevented from applying for further funding on this basis.
As for how this will affect claims for R&D tax relief, the current answer appears to be ‘who knows?’! We asked HMRC’s R&D tax team, and they told us that they haven’t be advised of any changes, and to continue to claim as usual. Employer’s NICs are an allowable cost in an R&D tax claim, but up until these changes the amount of EA received could not be included.
This seemed fair – the claimant company hadn’t actually spent this money, and it wouldn’t be shown as a revenue cost in the accounts.
However, now that this allowance is a ‘de minimis’ state aid, it will feature in the company accounts, and will affect, for example, the company’s ability to apply for further funding, we’d argue that it should be included in a claim for R&D tax relief as subsidised expenditure.
This would allow an SME to claim for up to an additional £3000 through the RDEC scheme, increasing their claim by £291. That might not seem much, but for many small companies, every little really does help!
Of course, this small increase in benefit is meaningless if it increases the time and effort involved in making a claim. Happily, at WhisperClaims we’re constantly checking for legislative changes that impact how R&D claims are made, and making sure that our system is up to date. This means our users will be able to seamlessly change the way they claim for NICs and employment allowance, enabling them to maximise their client’s claim with the minimum of effort.
We know that some of you will be turning off your laptops and starting the festivities very soon, we want to wish you a merry and peaceful Christmas and a happy New Year.
We’re going to take some time to put our feet up over the holidays, but will still be available to support you on the phone and by email. The only days we won’t be contactable will be the 25th and 26th December and the 1st and 2nd of January. Otherwise, please don’t hesitate to get in touch!
We’ve really enjoyed working with you in 2019, and look forward to a great 2020!
Somewhat incredibly, as we find ourselves staring hungrily down the mince-pie-studded path towards Christmas, the cheeky green shoots of 2020 are clearly visible through the faded, well-trodden lawn of 2019. So what’s happened over the year in terms of HMRC’s R&D tax relief scheme – and what’s coming next?!
Well, it’s certainly no news that the R&D scheme overall continues to expand like a festive waistline. HMRC’s stats, released in October, showed that the projected cost of support for the 17/18 year is approaching £5bn, largely fuelled by growth in new SME applicants and the huge R&D budgets of Large Companies.
What is more newsworthy is how you, our WhisperClaims customers, are having a positive effect on that fast-growing SME market. This year, we’ve watched as a broad variety of accountancy firms and consulting companies have sat through software demos, launched trials, and thought deeply about how to integrate R&D technology into their business processes – all with the aim of being able to profitably cater to that ever-growing demand from SMEs.
Looking across the cohort of our 2019 customers, the firms (and consulting companies) that have achieved the best results are those that have:
This person is typically enthusiastic about technology and motivated to see it adopted within their organisation. They quickly become an expert user of the software, often running classes and workshops to motivate and educate their colleagues. In some cases this is a partner or business owner, in others it’s a manager who’s seen the benefits of using our system and is evangelising it across the firm.
Software doesn’t work in a vacuum, and depends on the aims, attitudes and skills of the people using it. The most successful firms have invested time in designing business processes around the software, giving staff clarity on how R&D work should be streamed between different delivery routes. For them, the software isn’t necessarily a magic ‘one size fits all’ solution, but part of a blended R&D service portfolio that spans pure-software to pure-consultancy.
The most proactive firms have trained up their Client Managers to recognise R&D at a high level, even developing scoring systems that allow prospects to be objectively rated before being entered onto the system or passed to a centralised specialist within the firm.
Finally, we’ve seen several firms set ambitious ‘digital’ targets (i.e. claims prepared through software) for R&D, both for existing clients and new business. Growth targets, coupled with internal competition between teams, can be highly effective in raising activity and motivation.
In general, the customers who’ve seen the biggest growth in their R&D service, and their profitability, are those who have utilised our service to deliver a highly differentiated and cost effective offering to those smaller SME’s that are dominating HMRC’s stats.
Looking ahead to 2020, what trends do we expect to see? Some are obvious (the scheme will continue to grow, of course), and also, we’d expect to see more accountants take R&D work back in-house, reducing their reliance upon external R&D consultants and earning more in the process. This growing trend of empowerment will heighten the already fierce competition between the specialists, resulting in ever more expensive PPC (Google advertising) costs for common online searches, incentivizing them to invest in other, more content-focused forms of marketing that will inevitably attract even more SMEs to the scheme. The SMEs, meanwhile, will gradually begin to realize that they have more options than simply shopping around for the lowest contingent rate, and we’d expect to see WhisperClaims accountants and consultants increasingly offering R&D as a fixed-price service to take advantage of this.
In short, it’s going to be quite a bustling marketplace in 2020 – even before the as-yet-unknown political impacts of the election are felt.
As for the team at WhisperClaims, there will be exciting changes afoot here too! We have a raft of new features to launch and will be investing heavily in the system’s ‘User Experience’ to make the software as intuitive, useful and convenient to use as we possibly can. We’ll also be staffing up, taking on new developers and boosting the remainder of the team as we continue to scale up. We’ll be launching and delivering a raft of new top-up consultancy services, designed to help our customers plug any gaps they may have in their teams by giving them access to very specialized services that build upon the capabilities of the software itself.
Before WhisperClaims, Richard was a Founder-Director of a large, Edinburgh-based R&D tax credit consultancy. With 9 years’ R&D experience and a Software Engineering degree, Richard works closely with our developers to ensure that the products we build are a perfect fit for our customers.
We’ve all been there. You’re snowed under with work, whether that’s dealing with company year ends and or the looming horror of personal tax deadlines, when you realise that there’s a whole pile of R&D tax claims that you should be dealing with. Your heart sinks. You think about how hard it is to get the information out of the client, how time consuming writing reports is, and how it really is time to make sure everyone in the office has been trained in how to prepare R&D claims. You throw your hands up and declare that there must be a better way!
You are, of course, right. There are always ways to improve and optimise your process, and, being the helpful people that they are, Jen and Richard (our WhisperClaims R&D tax relief gurus) have pulled together some tips on how you might get started!
We know that getting information out of your clients can be difficult and frustrating. To avoid unnecessary repetition and to and fro, we recommend developing a structured set of questions to ask you clients about both the projects and costs. Making sure you work through the same questions each time makes sure that nothing is missed and there’s no need to keep going back to the client for more information.
There many ways to make gathering client data more straight forward. During the claim period, it can be helpful to encourage your client to gather and submit project information as they go along. Having shared access to online file-storage, like Dropbox, can make this easy, straightforward and, most importantly, secure.
The more people in your office that can work on R&D claims, the more the burden can be shared! We recommend making sure that you offer robust training in the CIRD guidance and the mechanics of putting together a claim to anyone with a client-facing role.
Even once you’ve been able to gather the information from your client, you still need their input in reviewing and approving the claim. Making sure that the client can access the information as you pull it together can be a massive help with this, as the client is already in the loop and can give immediate sign-off once the claim is ready.
Even with a well-trained team and a slick information gathering process, you still have to invest the time in writing a robust technical narrative to support the claim. No matter what, this isn’t a trivial task, and is a great candidate for automation.
WhisperClaims is designed to take the pain out of not only gathering information, but automates report production, meaning that a report can be generated within an hour. It’s also a great tool for educating your team in the intricacies of R&D tax claims, and can allow you to work with your client in real-time, overcoming the toing-and-froing that plagues anyone preparing a claim.
If you are already using WhisperClaims you can find the login page here.
Take the burden out of R&D tax claims preparation. Our award-winning R&D software makes it easy to prepare a claim, works directly from your data, and creates reports that have been specifically designed to be clear, concise, fit for purpose and as free from red flags and elephant traps.
Last month we hit a really important milestone here at WhisperClaims … it was our one year anniversary! Yay! Now, we’re a modest team but one year is kinda special and we decided a small intimate celebration with blue and white balloons wouldn’t quite hit the mark.
So a vote was counted, it was unanimous, let’s go full celebrity and take it to the media like the divas we really are! A few days later our news spread to the press and we basked in our moment of fame!
While all of this helped to massage our egos a little, a sudden realisation dawned on us … we hadn’t actually told anyone about our story and who we are! (Cue a blog post about the light bulb moment when WhisperClaims came to be!)
So let us introduce our team…
Here’s Mike Dean, Richard Edwards, Jen Badger and Rick Henry, our four directors.
Richard, Jen and Mike met when working at a successful Edinburgh-based R&D tax consultancy, founded by Richard in 2008. During Mike’s time as interim Sales Director, he noticed key trends in the R&D tax market, most notably the high number of claimants that were being turned away because their claims were too small to be economically processed by consultants. All three founders felt that automating the process of preparing R&D tax claims would be hugely beneficial to the industry, enabling smaller companies to access support and advisors to expand their offering.
While Richard and Jen took time out to polish up their technical skills and gain experience of software development and Agile management, Mike formed Whisperclaims and began gathering feedback on the idea of an automated, cloud-based system for the preparation of R&D tax claims.
Meanwhile, through his training at Codeclan, Richard met Rick Henry, our future Technical Director, and persuaded him to work with us to build the system.
Having gained all of the necessary skills and found a great developer, WhisperClaims was up and running! The prototype system was ready for testing within three months, and a few friendly accountants and consultants were recruited to help us test and refine the system. After only a few weeks of testing, the first claims were prepared and invoiced, and, more importantly, submitted to HMRC.
Having validated the concept and process, we set about building a front end and dashboards to create a great user experience. WhisperClaims officially launched in September 2018, and immediately gained traction. Rick Henry became Technical Director in October, and we were awarded ‘Best Use of Innovation’ at the UK Business Tech Awards in November 2018, which was amazing recognition of the hard work we’d put in up to that point.
Through 2019, WhisperClaims has gone from strength to strength. Highlights have included expanding our team, with our first additional developer, Upul, joining in January…
Suz, our Sales Coordinator, in April…
Then Gillian our Marketing Manager in June…
We won ‘Emerging Fintech of the Year’ at the Scottish Accounting and Financial Technology Awards in May, and were shortlisted for two awards at the Scottish Fintech Awards 2019.
One year on, we have over forty subscribed customers – from one-man band accountants to top 30 accountancy firms and leading R&D tax consultancies. That number has continued to grow every month since our anniversary.
While strutting our stuff down the streets of Edinburgh last week during a press photoshoot, we suddenly found ourselves forming a line-up that (with eyes a little squinted) might resemble something from the front cover of a well-known Beatles album or gangster movie. Though we may not be quite in the same league as the Beatles … yet (come on, there’s nothing wrong with ambition!) … our little moment of fame give us a good chuckle and offered us some well deserved time-out to reflect on what has been an amazing year. Here’s to 2020 and what that might bring.
Our fully automated, scalable and white-labelled software is capable of producing all the documentation needed to support an R&D claim within an hour. It is designed for business advisors of all kinds, including Accountants and R&D Tax Consultants.
Or get in touch to find out more about WhisperClaims.