And I would save £500, and I would save £500 more
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HMRC’s 2022 R&D tax relief statistics show that, as expected, most R&D claims are on the small side—72% of SME (and 38% of RDEC!) claims have a tax benefit of less than £50k. In fact, 42% of SME claims are for less than £15k, which represents an eligible expenditure of, on average, less than £60k.
Interesting…but what does this mean for your R&D tax relief preparation service?
In essence, what it means is that most of your eligible clients—and opportunities for scaling your service—will come from this much smaller end of the market. So, you need to think about how to best identify and service these clients in a way that is both robust and economically viable.
This is especially important given the cuts to SME tax relief rates that will come into force for an expenditure incurred after 1st April 2023. Depending on the claimant company’s profit/loss position, these changes will represent a reduction in tax benefit of up to 54%. This will, in turn, impact the fees that advisors can realistically charge for this service. On the one hand, this will be good for accountants who offer R&D tax relief services—consultants in this area will be less able to service these small but eligible clients, enabling you to bring these clients back in house, and protect them from the more dubious end of the R&D tax relief advisory sector. On the other hand, servicing these clients will take time and effort, so you need to be sure that you can continue to service your existing R&D clients and expand to take on these new clients without operating at a loss.
So, what can you do?
It is tricky—you need to maintain quality and compliance whilst streamlining your processes, which is very difficult to do with the standard manual processes for data capture and report production. This problem needs a full rethink and potential redesign, which is where R&D tax relief claim preparation software can be a good choice.
How software can help
Using software can introduce efficiencies in two main areas—data capture and report writing—and ensures that all claims are produced consistently and to the same standard, reducing the checking and rework required.
Anyone who has ever prepared an R&D tax relief claim knows that the most frustrating part of the process is extracting data from the claimant company. While software can’t replace the need to speak to your client about their projects, it can make it easier to receive data from your client. For example, WhisperClaims enables you to invite your client to collaborate with you on the claim, and upload their technical information and figures in their own time.
In the same vein, the major value in using R&D tax relief software is in reducing the time taken to prepare the technical narrative and costs breakdown for submission to HMRC. Report production through WhisperClaims is completely automated, and saves you hours, if not days, of report writing. This free time can then be used to service more clients, or spend more time on maintaining your relationship with your clients!
Overall, however, the key benefit of using R&D tax relief claim software is that all of this can be done without compromising on consistency or quality. You can be sure that all claims are prepared in the same way every time, no matter who’s working on the claim or how last-minute the claim preparation. You can be sure your clients are receiving a robust and high-quality service from you: their trusted advisor.