When deciding on a consultancy firm to assist with your R&D tax credits claims, it can be very difficult to tell the good from the bad.
Whilst there are a number of reputable firms available, there are also a lot of poor advisors who use less than honest marketing techniques to fool people into believing that they are legitimate.
Since we started in 2012, the number of R&D advisors has increased dramatically, with cold calling being a favoured method of marketing. We know this as our clients tell us they get numerous calls a week guaranteeing them thousands of pounds from making an R&D claim.
So how do you avoid poor advisors?
Below are some of the common misleading claims made by R&D consultancy firms which should hopefully help you when deciding who to trust to assist with your R&D claim:
A claim for R&D tax credits is risk free
FALSE: From the time an R&D claim is submitted, HMRC has a year in which to open an enquiry (ask you to defend your claim). If HMRC finds that the claim is overinflated or invalid, it can issue a fine of up to 100% of the claim’s value. So, if you have been told an R&D claim can get you £50,000 there is also the possibility of a £50,000 fine if the claim is not compiled properly.
We have a 100% success rate
FALSE: Claims for R&D tax credits are submitted under self-assessment and in the majority of cases will never be checked by an HMRC inspector. No R&D consultancy firm can say 100% of claims it has submitted have been successful as, in reality, it’s more likely most haven’t been checked.
We can guarantee you a benefit of £000s
FALSE: Whilst R&D claims can generate a substantial benefit to qualifying companies, less honest consultancy firms will often promise large sums from an R&D claim before they have even checked that the company qualifies.
This is misleading at best and downright dishonest at worst as until you have been through a robust process to identify what qualifying R&D activities a company has undertaken and the allowable costs in relation to these activities, it’s impossible to tell a company what the benefit of it’s R&D claim could be.
We use an HMRC approved methodology
FALSE: HMRC doesn’t approve methodologies or consultants, so this type of claim is simply untrue and designed to make people believe the way in which the consultancy firm prepares claims for R&D tax credits has been authorised by HMRC, which it cannot have been.
HMRC will approve your claim and send you a payment
FALSE: As mentioned above, the majority of claims don’t get checked by HMRC and any payments are sent automatically.
Regardless of payments received, HMRC still has a 12-month window in which to open an enquiry and this can result in a request for repayment of funds and potentially a fine on top. Always ensure if you engage an R&D consultancy firm that there is a clause in its contract which covers it repaying its fee in the event of such circumstances.
If you have any questions on this blog or anything R&D related, please contact us at email@example.com.
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