Employing the right R&D tax consultant

By Anita Jaynes on 29 March, 2022

Content sponsored by Purple Lime

When it comes to business tax planning, we understand things can get a bit overwhelming. There are so many different schemes, benefits, and tax reliefs you might be eligible for, and plenty of others you are not even aware of that could improve your business finances. This is just one of the reasons hiring a tax consultant can be a huge bonus for your business. One of the things many businesses do not realise is that they may be eligible for R&D tax credits. This underutilized incentive can save you a lot of money come tax season, or even put money back into your bank account. But it does require you hiring an R&D tax consultant, and today we are going to show you how to do just that.

What are R&D tax credits?

R&D stands for Research and Development, and R&D tax credits are essentially the governments way to encourage more businesses to invest in innovation. Companies who are spending money developing new products, processes, or services (or enhancing ones that already exist) can be eligible for R&D tax relief. This means they can file a claim with HMRC, and you can receive either a cash payment and/or a Corporation Tax reduction. The criteria to meet is pretty broad and applies to most sectors, which means there are a lot of businesses out there that are missing out on this benefit.

What to look for in an R&D tax consultant

When it comes to hiring an R&D tax consultant, there is no shortage of options. But in order to get the best benefit for your business, you need to make the right decision early on. Because while it might be a small part of your business, their role is critical, and you want to be sure your adviser knows what they are doing, and how to do things by the book to get the most from your money. In particular, there are 4 key things you should ask before hiring an R&D tax consultant:

  • Working relationship: While it all comes under one umbrella, the process of identifying, gathering and documenting R&D tax credit can vary wildly between industries. You want to know that whoever you choose is proactive in their approach and understands the processes involved. While you are the expert in your field, the master of your business model, your R&D tax consultant will bring their understanding and experience of the R&D world to the relationship. You need to be happy with the flow of communication and responsiveness in the process.
  • How much experience do you have in R&D tax credits: You also want to ensure your tax consultant has knowledge and experience of the R&D tax credit world and how it all works. They key thing here is to know and keep up to date with legislation relating to R&D tax credits. 
  • What is your time investment: Depending on the way your chosen consultant works, you may find yourself spending more or less of your own time assisting with your R&D claim. Some advisers will quote lower because they push more of the burden onto you. This kind of service usually has you completing lengthy forms or templates for them, which is why they cost less. Alternatively, a good consultant will spend a lot of time in understanding your business, preparing detailed reports to support your claim and handling the submission process on your behalf, either by themselves or alongside your accountant. This kind of service tends to cost a little more, but it shows work ethic and is usually a good way to go.
  • What does your process look like: Since you are still taking on the risk even if you use a consultant, you should have a clear idea of what they will actually be doing for you. While there will always be slight differences from company to company, a comprehensive R&D tax service should ideally look something like this:
  • Discovery & assessment
    • Information gathering & analysis
    • Preparation of claim documents
    • Review and approvals
    • Submission of your claim

At Purple Lime, we are experienced in a wide range of tax planning, including helping you with your R&D tax claims and working out what you can and can’t claim for. We can also offer advice on the best way to utilise R&D tax credits, and if you are missing out on something you could be claiming. You won’t just be getting a tax consultant but a service with a wealth of knowledge from the entire team. If you want to know more, please get in touch by emailing hello@purplelime.uk.com, or calling us on 01249 691360.