We received a phone call earlier this week from a company looking for assistance with their R&D tax credit claims, the company was involved in developing critical equipment used in oil and gas exploration.

They’d successfully claimed R&D tax credits on a number of occasions, unhappy with the service they were receiving from their current provider, they’d decided it was time to find a new R&D tax relief specialist to work with. Their story is unfortunately one that we’re hearing more and more frequently.  After a bit of Googling and some initial discussions they decided that they would like us to handle their claims going forward.

We requested some information and started work on the initial calculations to assess the potential financial benefit to the business.  The client found themselves in the market for an alternative adviser after having already submitted information for 2 years worth of R&D claims to their previous R&D advisers, to receive no response. They chased again with the specialists, because cash was short, and they really needed the funds to boost cash flow. After receiving no response a second time they had concluded that their adviser was clearly not interested in their business any longer, it was time for them to find a new adviser.

From here, we only had limited time in order to be able to complete the claim, as there was less than 3 weeks remaining until an HMRC submission deadline, after which time the opportunity for them to recover expenditure incurred in their accounting period ending 2013 was set to expire.  After requesting some further information, we received a phonecall from a rather upset client, wishing to apologise. He had contacted their previous advisers, to request some information pertaining to their previous claims, to be advised that they had actually signed a contract which locked them in to a 4 year agreement for their R&D claims! These long term lock-in contracts are increasingly common in the R&D tax relief space.

Quality of service is critical

Despite having received a far from satisfactory experience with their previous advisers, keen to avoid any legal dispute, they felt they had little choice but to continue to work with them. At ForrestBrown we believe that quality of service is vital to the way we work. We never lock clients into long term contracts, or ask that they commit to onerous conditions which take away the impetus for us to deliver an exceptional service. If we fail in our duty or don’t deliver the service that our clients fully expect, then they have every right to shop around and look elsewhere.  We just don’t see why any company should ever need to commit to signing a three, four, five and even ten year contracts for R&D tax credit claims, we just don’t think it’s necessary. We can’t see how it can ever be in a clients best interests to commit to a service provider for such a long period of time in an industry where service is everything!

The contractual side of things may seem like merely a formality when you’re looking to select an R&D tax credit provider, the client mentioned above was not even aware of the terms of the agreement they’d signed, some years ago. R&D tax credits are hugely valuable to qualifying businesses, and the news that you could qualify, particularly if it comes out of the blue can maybe lead people to get caught in the euphoria ‘I can get £50,000 back from HMRC’ comes as fantastic news to any company director, but that shouldn’t impact on the due diligence that you’d undertake when selecting any service provider. With ForrestBrown you can be confident that we will always aim to exceed your expectations, if you don’t feel that we have, then you’re more than welcome to find an adviser able to better serve you. If a business hasn’t previously claimed R&D tax credits, then we can typically handle three claims within the first twelve months of working together, and this is likely more than sufficient to judge whether you like working with us and you’re satisfied with the service we deliver. If your mobile phone or electricity supplier asked you to commit to a five year contract with them you would likely laugh in their face, but many companies, often unwittingly, commit to such onerous terms with an R&D tax specialist.

Why we don’t ask our clients to commit to these ‘lock-in’ agreements

We feel these ‘lock-in’ agreements for R&D tax relief claims are rarely in the interests of anyone other than the R&D specialists themselves, who are naturally keen to try and secure a strong pipeline of future fee income. We’d far prefer to retain clients by delivering a smooth and straightforward claims process, always aiming to exceed expectations. You can rest assured we would never consider asking anyone to commit to one of these lock-in agreements, we want our clients to be working with us in years to come because we’ve consistently delivered an exceptional service, not simply because they’ve been contractually obliged to. If you’re asked to sign one of these agreements, you should certainly be asking yourself why the service provider feels it necessary. There has also been a noticeable trend of late for companies handling R&D claims to ask that the prospective client makes an up-front payment, often called an administration fee, or a submission fee, in order to handle the claim.  This fee is often not mentioned during meetings or initial phone calls, and frequently only becomes apparent once engagement documents are issued. For many this would call into question the nature of the ‘no win, no fee’ basis on which they believed they had been asked to sign up to. As a company we would never charge an upfront fee to handle an R&D claim, and would never ask that a company commit to a long term lock-in contract, and we only wish other R&D specialists could say the same. If you’ve been asked to sign an agreement and having read the terms of the engagement letter you’re not 100% happy with the terms issued, feel free to get in touch and we’d be only too happy to show you that there is another way, and you certainly won’t be the only person to feel a sense of fear that you’re being asked to unnecessarily sign your life away.