No R&D tax claim should get left behind!
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It may be understandable that historically, the majority of R&D Tax Claims submissions have been for larger amounts of eligible expenditure—and therefore larger benefits—where the return may be deemed a fairer representation of the effort involved in processing them.
The consequence though, is that some small and start-up businesses may have struggled to access claim support, particularly from larger firms or dedicated consultancies that operate on a different cost and profit model compared to traditional accountants.
Moreover, with HMRC’s changes to the R&D Tax Claim rates announced in the Chancellor’s Autumn Statement, the attraction to process small claims could further diminish.
This presents an opportunity for accountancy firms with SME clients to extend their trusted advisor status and service portfolio to include R&D Tax Claims and add additional value to their clients as a result.
New Support Model
Any accountant servicing SMEs knows the importance of every penny in tax relief. As a trusted advisor, the goal is to ensure your clients get the tax advice they are entitled to, irrespective of size.
Accountants have their professional integrity to uphold, a duty of care to their clients, and are in a position to ensure that their clients are getting the right support. So, if a client can legitimately receive £1,000 from an R&D tax claim, why not support them to make it? The challenge—and opportunity—is in ensuring these claims are processed in the most cost-effective and robust way; removing manual processes in favour of a technology-enabled, repeatable methodology that is backed up by specialist R&D tax support from industry experts when needed.
For accountants used to supporting SMEs, the recently announced tax benefit cuts may well increase the potential client pool. This is especially the case if they have—or are willing to invest in—technology that supports a structured, repeatable, cost-effective R&D Tax Claim process that will enable them to confidently offer a fixed fee model to clients, while building on their trusted advisor status to deliver tangible value.
This approach has been successfully embraced by many accountants keen to offer their clients a holistic, cost-effective service irrespective of the size of claim. While the average size of an R&D tax claim submitted to HMRC represents a tax benefit of approximately £57,000, the average claim put through WhisperClaims’ R&D tax software in 2022 was somewhat smaller at around £37,000. This isn’t surprising. With specialist consultancies tending to focus on larger claims, we’d expect to see that WhisperClaims customers—accountancy firms that are addressing the wider SME population—are supporting generally smaller businesses with correspondingly smaller claims. Having said that, the range of claim sizes we’ve seen go through our technology is vast, with the largest claim having over £9.6m of eligible spend and the smallest being just under £1,500.
Firms that are using software to create an effective, repeatable and low-cost approach to preparing R&D Tax Claims are providing a valuable service to clients—irrespective of size of business, eligible expenditure or claim. With a subscription model, a cloud-based software solution offers complete pricing transparency. When an accountant inputs a claim through the software, the cost of completing the claim and likely tax benefit to the client is immediately apparent. This allows a swift decision between client and accountant about the value of making the claim, further reinforcing the depth of relationship.
With businesses of all sizes under pressure given the current socioeconomic circumstances, every opportunity to recognise and reward eligible innovation through harnessing HMRC’s tax relief scheme is vital. And, by harnessing technology, no claim needs to be left behind.