It is no secret that many businesses will prepare their own claim for an R&D corporation tax refund. Although this can be a cost effective way to do it, there are certain factors that should be taken into consideration. We have summarised the key risks in going it alone.
Management Time
Putting together a robust technical narrative can easily run across 10 pages, whilst preparing supporting cost calculations requires in depth review of the company accounts. This is a process that can only really be carried out by senior technical staff, who will likely have much better things to be spending their time on. We have carefully developed our process so that we obtain the necessary information in the most efficient way possible, enabling us to limit client time spent. What could have taken key client staff a whole week to prepare, we can do with just a fraction of time input. We then conduct R&D technical report writing and produce your claim.
Claim Value
The average claim under the SME scheme is in excess of £50k, however 77% of claims are less than this amount, which indicates that many businesses may not be claiming everything they are entitled to. Worryingly, 18% of claims are less than £5k, which suggests that businesses are not fully understanding the rules of the scheme, which is understandable due to its complexities. This is likely to be driven by SME’s taking an overly cautious approach as they fear a backlash from HMRC. Although using an advisor such as SAS R&D will incur costs, the likelihood is that these could be more than offset by an increased claim value, supported by our expertise in only claiming qualifying expenditure.
HMRC Enquiry
It’s unusual for HMRC to open up an enquiry without having a reason to do so. If they spot an obvious error or suspect that the claim has not been put together in line with the scheme rules, then the chances are they will hold off approving the claim and request more information. The enquiry will start with HMRC requesting further evidence and often leads self-claimers to wish they had just used an expert in the first place. In our experience, HMRC will rarely close off an enquiry until they have recovered at least some of the tax benefit being claimed. We are yet to have any claims open up an HMRC enquiry, but the good news is that all submitted claims include unlimited support in the event of HMRC investigation.