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:
1. A ‘digital R&D champion’
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.
2. Invested in business process design
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.
3. Trained & educated their Client Managers to spot R&D
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.
4. Growth targets
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.
What R&D trends do we expect to see in 2020?
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.