Claiming R&D tax credits can be a great way for innovative businesses to recover a portion of their investment in research and development. But navigating the complex rules, definitions and documentation requirements can feel overwhelming.
As a result, many companies wonder whether they should go it alone or work with a specialist to reduce their workload.
In this post, we’ll explore what an R&D tax credit specialist does, the potential benefits and pitfalls of using one, and how to decide if bringing in expert help is the right move for your business.
The Role of a Specialist in R&D Tax Credit Claims
An R&D tax credit specialist is a professional with training and experience focused on helping businesses identify, document, and claim eligible R&D activities and expenses. They possess a deep understanding of HMRC’s guidelines, ensuring company compliance with the law while maximising potential returns.
Though the most obvious area they help with is the technical report (the document that demonstrates the qualifying work done in the period and that is largely used as the basis for the Additional Information Form), an advisor will also help gather and allocate costs, as well as handle any submission and communication with HMRC.
A specialist is important to ensure that you don’t overclaim by including ineligible projects or costs, however equally, they will try to avoid you underclaiming, ensuring that all qualifying activities and expenditure are included.
There are many types of specialists in R&D tax credit claims, coming at different price points and with different benefits (and drawbacks!).
Boutique consultancy firms
The most obvious is the boutique consultancy firm, who specialises in R&D tax credits and perhaps some other forms of innovation or government funding. These firms make R&D tax credits their bread and butter; they know the legislation, they know the claims and they know HMRC.
Consultancy firms will often charge the highest fees of the specialists, as their usual proposition is to take your claim entirely out of your hands. In many cases, the professionals will conduct interviews to discuss your projects, help you gather your costs, and write up your reports and costing details. They should also submit your claim as part of their process.
However, in the era of a largely unregulated scheme, the Wild West of R&D tax credits, many consultancies opened up looking to profit off of HMRC’s lax attitude towards claims. These cowboys told companies that they qualified for R&D tax credits without proper due diligence, leading to a huge number of claims later being picked up for a compliance check when HMRC began a review of the scheme and introduced anti-fraud and error measures.
Tax Cloud was developed by Myriad, one of the industry’s longest-standing and most respected R&D tax credit advisor – get in touch here to discuss your claim and potential fee structures.
Accountancy practices
Accounting practices often offer R&D tax credit services for their innovative clients. For smaller practices, this may only include the financial and tax elements, or even just the actual submission. For larger practices, they may take on the entire claim at the same level as a boutique firm.
It’s always worth discussing your options with your accountant and assessing their appetite for preparing your claim.
Some accountants may even outsource the R&D tax credit preparation to a third-party specialist, meaning you can keep all of your tax information in one place.
Online portals
A variety of online portals are now available to help you make your R&D tax credit claim. Some offer a simple template for you to fill in, some have taken advantage of the powers of AI to help you write your report, and some have R&D tax experts reviewing each claim behind the scenes.
As with any advisor, you should investigate the level of support you will receive, both when making your claim and in the event of a compliance check.
As the number of AI-powered software solutions surges, it is prudent to consider whether the results can match those of human specialists. When it comes to explaining your own R&D projects, AI chatbots may not be able to work in the depth and detail of your project based on basic prompts.
Similarly, you should be wary of templates, fill-in-the-blanks and standardised reports. Reviewers at HMRC will be able to identify text that is often repeated, like you may find in templates, and may ask questions about the due diligence carried out.
A cursory report, like those that result from templates, simply do not have enough detail to withstand the scrutiny of a compliance check. Always ensure your technical documentation can be held up to the microscope on first pass, to avoid cobbling together a response to HMRC months later.
Tax Cloud is the UK’s first online portal for SMEs to make their R&D tax credit claim. It is fully supported by an expert team who review and edit all project information and submit the claim on your behalf.
In-house and DIY claims
Working with a specialist is not a requirement for an R&D tax credit claim; many companies have successfully written and submitted their claims alone.
Your own finance department may have enough experience in R&D tax credits to complete a claim. Alternatively, resources are available to help you make your own claim; if this interests you, you can download our R&D tax credits eBook here.
However, this should not be taken on lightly. Preparing a robust R&D tax credit claim that holds up to scrutiny requires time and precision. Your team will need to be familiar with the technical requirements, alongside the financial and tax aspects of a claim.
Without the specialised insight that an R&D tax credit specialist provides, there is a heightened risk of overlooking eligible R&D activities or misinterpreting HMRC guidelines, which can lead to reduced claims or penalties.
While finance teams possess a broad understanding of accounting principles and tax regulations, they may lack the niche expertise needed for R&D tax credit claims. However, finance teams are essential to making an R&D tax credit claim, even with an advisor on board, as they know your projects’ costs and accounting like no other.
Benefits of Using a Specialist
One of the main benefits of using a specialist is the reduced risk of audits and penalties. With the specialist providing a precise and documented claim, businesses are less likely to be challenged by HMRC. In the event of an enquiry, a specialist should provide the necessary support and documentation to ensure a successful resolution.
Specialists stay up-to-date with HMRC legislation, ensuring a company benefits from any changes that may arise. They provide continuous consultation and support, ensuring that a company's claim aligns with its R&D efforts, avoiding oversights and potential penalties.
Another benefit is time savings. Identifying, documenting, and claiming R&D credits can be time-consuming. Specialists expedite this process, allowing businesses to concentrate on their core operations. This frees up valuable time and resources that can be used for other revenue-generating activities.
Correct claims lead to increased cash flow that can be reinvested in R&D or used for other business activities. Conversely, incorrect claims due to a lack of specialised knowledge can result in financial penalties and missed opportunities.
The Downsides to an Advisor
When it comes to claiming R&D tax credits in the UK, companies may hesitate to engage a specialist due to the initial costs involved.
This is especially true for those with particularly small projects, where an advisor’s fees may wipe out any benefit that you could receive, or significantly reduce the value to a point where the effort is not appropriately rewarded.
Relying too heavily on an outside advisor may prevent your own team from developing in-house expertise about what qualifies for the R&D credit, so you stay dependent on the advisor.
However, the cost of engaging a specialist may well be worth it when considering the hours of time saved and the peace of mind you’ll get from a claim well made.
Choosing a Specialist
Not all specialists are born equal; no matter how they operate, through a full consultancy approach or through guidance and templates, there are certain things to look for:
- Have they been operating for enough time to be a credible advisor?
- Do they have positive reviews and case studies?
- Does their team include tax, finance and technical writing professionals over salespeople?
- What are their terms of service? Do they still charge if your claim is eventually rejected?
- Do they handle any potential compliance checks? To what level? Is there an additional fee for this support?
- Are they held accountable by a chartered or accredited organisation (e.g., ACCA, CIMA, ICAEW…)? Do they follow anti-money laundering procedures?
- Are they a recognised and registered advisor with HMRC?
You should avoid any practice that offers guarantees without knowing your projects or that pushes you to claim more costs than you think is reasonable.
Final Thoughts
Ultimately, whether you choose to work with an R&D tax credit specialist or manage your claim in-house comes down to balancing your team’s capabilities, risk appetite, and available resources.
While preparing your own claim is entirely possible, the complexity of HMRC’s rules – and the significant financial stakes – means that expert guidance can provide crucial reassurance. A qualified specialist not only helps maximise your claim but also protects you against costly mistakes or compliance issues down the line. Whatever route you choose, make sure it aligns with your business’s needs and equips you to keep investing confidently in innovation.
If you’re interested in a full consultancy approach, Myriad have decades of experience in R&D tax credit claims. With different fee structures based on your company and projects, Myriad is a flexible partner for your R&D tax credit claim. After initially gathering project details over calls, Myriad takes over the claim preparation process before sending off to HMRC. Get in touch with our team here.
For companies looking for a smaller financial commitment or more control over their claim may be interested in Tax Cloud, the UK’s first (and best!) online R&D tax credit portal. You enter your project details and costs online and submit them for review. Tax Cloud’s team will then advise if any changes need to be made and handle submission to HMRC. Get in touch with our team here.
