- Letting external R&D consultants work with your clients can be a significant risk
- Fees for R&D claims can make a significant difference to your firm.
Still, working with a responsible, ethical, and competent R&D consultancy is first preference for many accountants. If that’s how you’d like to proceed, feel free to take a look at our list of members to see if one of them may be a good fit for your clients.
But as we’ve recently discussed, a lot can happen outside your control – especially if you aren’t proactively offering R&D services to your clients.
In this article we walk you through some good reasons to bring R&D in-house. We also highlight some circumstances to consider when deciding whether to take on the work yourself.
Reason 1: Your clients have found their own R&D providers, and the results have been difficult to manage
Many SMEs have been on the receiving end of telesales or aggressive marketing about R&D services and the claims they could, in theory, be making. While some of these claims will be legitimate, and the providers involved may be ethical and reputable, it’s often not the case. We’ve heard about companies being led or pressured into making claims. The fallout has landed squarely on their shoulders, with their R&D advisor scarpering off into the distance and refusing to take their calls.
Even if they’ve had a bad experience in the past, you’ll likely have clients who are confident they still have SOME eligible R&D work. It’s a natural fit for them to ask you to prepare the claim instead. Most businesses have more faith in their accountant’s advice and ability to follow the guidance correctly and get them the best outcome. So if you’re able to take on their claims, that’s a great outcome for them, and for you. The client gets the work done by a trusted advisor and you’re able to charge additional fees for preparing their claim.
Reason 2: You’re already preparing R&D claims for some clients
If you’ve prepared claims for clients in the past, there’s a good chance that you have enough experience to expand this service to your full portfolio. Consolidating your firm’s experience and making it repeatable allows you to scale up the service more easily.
Just be careful how you offer your service. If you’re offering it to a few clients, but not others, there’s a risk that some will feel left out. In contrast, if you’re able to review your whole portfolio, and be proactive, you can strengthen relationships with all your clients.
Reason 3: You’re looking to expand your advisory services and add new sources of income to your firm
You might be one of many accountants who are happy focus on providing the best possible service to maintain your established clients. Or you might be one of the growing number who are looking for ways to grow, by bringing on new clients and finding more advisory work for your team.
Providing an R&D tax relief service of your own can be an effective way to do both these things. Of course, knowing where to look for R&D is half the battle. Certain sectors, like software, engineering, and food and drink are full of SMEs with potential claims, and you can earn significant amounts by helping them. Just be careful what you claim for, and invest in training and support if you’re unsure.
When should you outsource R&D claims to a trusted R&D consultant?
Bringing R&D in-house is not the right decision for everyone, however. If you’re still on the fence, consider whether you fit one of these categories:
You don’t have the capacity to take on additional work
Whatever the size or maturity of your practice, it demands a lot of your attention. If your plate is already full with annual accounts, tax returns and payroll tasks then it’s a good idea to find a reliable R&D consultant to partner with. They’ll prepare claims for your clients and will often offer a commission for the referral. By introducing your clients to a trusted consultant, you’re not leaving them as vulnerable to the approaches of the cold-calling brigade.
You’d rather focus on your accountancy expertise than on learning new technical skills
Even if you do have the time to take on the work, you’re well within your rights to decide you’d rather find other ways to fill that capacity. Developing a good understanding of HMRC’s guidance takes time, inclination, and effort away from your other work. Think honestly about what type of work you like. Unless you enjoy talking and writing about technology, then your clients might be in better hands if you refer them to a trusted consultant. Some consulting firms have specialist advisers in different sectors, who draw on their industry expertise to help your clients.
You prefer working with numbers and objectivity more than words and subjectivity
One of the major differences between R&D claims and other accounting work is the onus on persuasive writing to convey a claim’s merits to HMRC. It’s not about black and white rules, but applying subjective judgements. First you have to explain HMRC’s very subjective guidance to your client and discuss which aspects of their work would qualify. Then you have to explain their work and why it’s eligible to HMRC in a report. Very few cases are cut and dried, so the role can be quite different to what most accountants are used to. Consultants, on the other hand, have often chosen to focus on this specific type of work because they like it. They enjoy discussing the nuances of projects with clients, writing these persuasive narratives, and getting into the subjective details of the work. When you outsource to a good consultant, your clients get all the benefit of that enthusiasm, and you can stick to the work you like best as well.
You don’t have scope to take on a big new business development project right now
Bringing R&D services in-house is not a small side project for a junior admin person. It’s a significant change to your business with a steep learning curve of its own. In the early stages, you might find that claim preparation takes longer than anticipated, and working out what fees to charge isn’t always easy. Getting the right support and training can help with the process, but no one can step in and do every piece of it for you. Can you dedicate a significant chunk of time and energy to overseeing and developing the service, anticipating challenges and adjusting to fit? If not, outsourcing to an R&D consultant makes perfect sense!
What to do next?
If you’ve decided to outsource, and you’re looking for a recommendation for a great R&D consultant, drop us an email through our contact form. We’ll put you in touch with one of the excellent R&D consultants inside The R&D Community.
If you’ve decided you do want to bring it in house, it’s time to do your research and get planning. Check out our recent article 5 things that successful accountancy firms do when bringing R&D in-house for some quick tips.
For a more complete resource, download our free guide on How to run an in-house R&D service, which includes a worksheet to help you put together your plan.