Lies, damned lies and statistics
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It’s statistics time again! That one hallowed day of the year when I get to take off my Operations Director hat and let out my inner scientist. The annual Research and Development Tax Credit Statistics have been released, and, as usual, they make very interesting reading.
Now, from this point, I could just copy and paste the blog I wrote last year, because the trends in the data are remarkably consistent. The 20% year-on-year increase in the number of claims continues, as does the rise in first time claimants, which is great news for us and the R&D tax relief industry as a whole. However, I’m more interested in digging further into the stats, and looking at how they can be used and manipulated.
One statistic that all R&D tax relief specialists will tell you is that the average tax benefit from an R&D claim for FY2017-18 is £54,000. They’re not lying. If you take the overall total paid out in R&D claims and divide it by the number of claims, you get that number. Great, you might think, I’ve got lots of clients who could claim R&D tax relief, and would be really happy with a payout of £54,000.
However, looking a bit harder, and you’ll see that a very different story emerges. In FY2017-18, 76% of SME scheme claimants received less than £50k in benefit. Looking specifically at this group, the average tax benefit is only £16k, a serious drop from the quoted £54k. That’s not to say that most claimants wouldn’t be happy with £16k in benefit, but they might if they were expecting three times that!
The other statistic you’ll see time and time again, often alongside the £54k figure, is a company claiming a ‘100% success rate’ with R&D claims. Sounds great, doesn’t it? But it all depends on your definition of success, and, just like the R&D stats, can easily be manipulated to the point of being meaningless.
So, why would we point this out? Well, partly because we love it when statistics and marketing are aligned and being used to tell compelling stories, and partly because we’re suckers for upfront honesty. While statistics aren’t always what they seem, we’ve expended a huge amount of time and energy in developing a system that is what it appears to be – a straightforward way to gather information from your clients and the means to prepare robust and editable R&D reports at the touch of a button. While your success rate may not be 100% (clients sometimes go bust or miss the deadline), at least you can be sure that you’re using a system that is specifically and unashamedly designed for one purpose – helping you to take effort and cost out of your R&D process while enhancing your clients’ experience of working with you.