What to consider when choosing a new R&D tax credit adviser

The landscape for R&D tax relief has evolved considerably in recent years. New regulations and an increased focus on compliance have made it important to engage an adviser that will use its technical expertise to thoroughly evaluate your claim and minimise risk.

If you’re new to claiming R&D tax relief, it can be difficult to know where to start. Stories of unscrupulous agents preparing spurious claims have recently hit the headlines, so it’s vital to do your research and check the credentials of any potential adviser. The Chartered Institute of Taxation – the professional member body – offers guidance on how to choose an R&D tax adviser and provides an excellent starting point.

This blog also offers some helpful pointers, based on the attributes that we know are important to our clients. So, whether you’re new to R&D tax relief or looking to engage a different adviser, why not spend a few minutes asking yourself these questions before committing to next steps?

---

Am I contractually able to engage a new adviser?

This should be the first question you ask yourself if you’re switching from another R&D provider.

It’s imperative that you do your due diligence on your existing contract and check whether there is a contractual lock-in or whether your contract has expired. If it’s the latter, then you’re free to switch. This process should be straightforward: all you have to do is inform your previous adviser that you no longer wish to use their services, and choose a new R&D tax credit adviser.

What is your potential adviser’s experience of the tax industry?

R&D tax relief is a tax incentive – claimed via your company tax return and administered by HMRC. R&D tax advice, including any support with making a claim, is tax advice. So, once you’ve checked any existing contract, a critical starting point for researching an R&D tax adviser is to ascertain the adviser’s tax qualifications and experience. Crucially, are they chartered tax advisers?

Chartered tax adviser status is nationally regarded as the gold standard tax qualification in the UK. ForrestBrown is a member firm of the Chartered Institute of Taxation (CIOT) and our team includes a large pool of qualified chartered tax advisers and chartered accountants.

This means that each of our clients can be sure that:

• They are dealing with appropriately qualified tax professionals who have sat and passed detailed technical examinations in tax,
• Our team undertake regular training to stay up to date on tax law and CPD records can be reviewed by CIOT at any time,
• We hold relevant professional indemnity insurance to protect our clients should something go wrong,
• We are subject to formal disciplinary procedures from CIOT to deal with complaints,
• Every member of our team adheres to a strict code of conduct (Professional Conduct in Relation to Taxation) informing our processes and professional behaviours, and
• We will only provide advice when we are competent to do so, that we will deal with their affairs professionally and transparently and that we will explain clearly any risks associated with our advice.

Of course, nobody sets out to have a bad experience with their adviser. However, understanding the protections that come with professional body membership gives you peace of mind.

Many branches of tax overlap and your R&D tax relief claim forms part of your company tax return. As a result, your adviser needs to work transparently with your in-house tax or finance team, or your external accountant.

Are you confident they will be able to do this smoothly? It will be important that they can. It is very likely that your accountant will be a professional body member themselves, and subject to the same ethical code, since all the major tax and accountancy bodies publish this code jointly.

Are they specialists and what type of businesses can they support?

R&D tax relief is a highly specialist area of tax practice, that has been subject to extensive legislative and procedural change in recent years. Eligibility criteria has changed and new steps have been introduced, including claim notification and the Additional Information Form.

Specialist advisers with deep expertise in R&D tax relief will be on top of the relevant changes, monitor for new ones and can facilitate a proactive approach to claiming. They will likely also have the capacity to partner with accountants to support their clients with claims, where specialist advice is needed.

Make sure your R&D tax adviser can demonstrate their credentials in this space, and that they understand the unique needs of your business. There is no one-size-fits-all approach to R&D tax relief claims and an experienced adviser will have the skillset to assess your needs and prepare your claim, regardless of the size of your business or sector. Expect your adviser to flex their scope of work to suit your needs, and to work with you proactively to identify value and manage risk.

What industry experience do they have?

R&D tax relief advice requires a mixture of tax expertise and sector-specific insight. The incentive is governed by tax legislation, but determining which projects qualify as R&D depends on the assessment of someone with relevant technical expertise. 

To ensure that they can support you to accurately apply the definition of R&D to your business, check whether the advisers you choose employ industry experts that are capable of understanding and communicating the scientific and technological advances being sought.

Have those technical specialists worked in your industry and how relevant is their experience to your business? How much access will you have to them?

If you work in a specialist industry, the language is likely to get technical, so it helps if your adviser has people on their team who can follow the concepts discussed efficiently. This saves your technical team time and ensures that the R&D can be set out in language that HMRC will understand.

What is the process that your adviser will follow?

Work out exactly what your prospective advisers will do for you. A comprehensive service should look something like this:

• Discovery and assessment – reviewing your business activities, processes and records to determine whether it is appropriate for you to undertake an R&D tax relief claim.
• Information gathering and analysis – gathering your business records to support the preparation of your claim. This should involve discussions with your team to understand your projects and related expenditure.
• Preparation of the claim documents – good practice includes the preparation of supporting documentation alongside your tax return and computation. The Additional Information Form includes certain mandatory disclosures, but it’s also useful to capture details such as the methodology used to identify qualifying activities and how expenditure included in the claim has been calculated.
• Review and approvals – R&D claims are complex and draw on different types of expertise. An inbuilt quality assurance process should ensure that the documentation you are asked to review is submission ready. Your adviser should then ensure you have sufficient information to approve the claim.
• Submission of the claim – this is usually an online submission and may be handled directly by your R&D tax adviser, or by your accountant. Either way, expect the two to work together on your behalf. 

ForrestBrown’s process embeds quality assurance at each stage, drawing on the expertise of our multidisciplinary team of chartered tax advisers and accountants, lawyers, technical specialists and a former HMRC tax inspector.

Does the potential adviser have specialist HMRC enquiry expertise?

For most businesses, the next stage after submission will be receiving the benefit of the R&D tax relief claim. However, a proportion of claims submitted each year are selected by HMRC for further review.

In recent years, there’s been an increase in R&D tax relief enquiries – with around 17% of all claims submitted in 2023/24 subject to a compliance check. These enquiries may be based on your standard industry classification code, an inconsistency found in the submission, or it could even be entirely random.

Whatever the trigger for the enquiry, if you have utilised the services of a reputable adviser to prepare the claim, you can go into it with the confidence needed to defend your claim.

Given that enquiries are more common than they used to be, employing the services of an R&D adviser that can offer enquiry support is important. They will know how to respond to HMRC and will take on the heavy lifting for you.

Should the standard enquiry process not lead to a resolution, then next steps may include alternative dispute resolution such as mediation, statutory review or appeal via the First-tier Tribunal. An adviser that understands these processes – and keeps abreast of the latest R&D case law – is vital to have on board.

ForrestBrown’s R&D consultancy practice can offer businesses the full range of enquiry support, as well as helping to plan for the future by reviewing R&D processes and moving from a retrospective to a proactive approach, where R&D is captured in real time.

Have you compared the terms of engagement?

This is another area where R&D tax credit advisers can vary considerably. There are four questions you need to weigh up carefully:

1. Scope of work – what’s the full scope of the adviser’s work? What is not included?
2. Fee calculation – do they offer a fee structure that works for you, or is it a one-size-fits-all approach to charging for R&D claims?
3. Contract term – does the contract seek to lock you into an engagement for a specified number of future years?
4. Corporation Tax return – who handles the Corporation Tax return?

The devil is always in the detail. Ultimately, you’re signing an agreement for expert advice which concerns your tax obligations. Due diligence on the terms of engagement is essential.

The same can be said of contracts with multi-year terms. This speaks to an adviser that’s unsure of its value. ForrestBrown prefers to offer year to year, rolling agreements with our clients. We’re confident that our service speaks for itself.

How will the adviser work with other stakeholders?

R&D tax relief claims hinge on relationships between different stakeholders to complete effectively. Have a think about whether the advisers you are considering will work alongside key people in the process. This includes your competent professional(s), an in-house tax team or individual, your other advisers and HMRC.

Our technical specialists can communicate with your team on a peer-to-peer level. We also have an ex-HMRC tax inspector on our team to help ensure that our approach will meet HMRC’s expectations.

We invest time in developing our processes so that we can work seamlessly with your accountant. We’ll regularly share information, supporting them as appropriate and handling the R&D tax credit part of their wider work. No one is left out in the cold – and it’s this that creates robust R&D claims.

Can they offer support with other innovation incentives?

As the innovation incentive landscape evolves, it’s worth keeping in mind that you may wish to explore other incentives as well as R&D. Incentives such as grants, Patent Box and capital allowances often go hand-in-hand with R&D and can offer valuable sources of funding.

Often you will require specialist support to prepare the claims and having an established relationship with an adviser who understands your business and can advise across the full toolkit can be beneficial in providing a holistic overview.

The importance of choosing the right R&D tax credit adviser

Against the backdrop of an increasingly complex R&D landscape, choosing an adviser with a multi-disciplinary team that can prepare a robust claim is important.

It is worth taking the time to choose well, based on your appetite for risk, time you have available and need for advice across the full innovation toolkit.