23 Mar 2015 12:00 AM

Research and Development (R&D) tax credit is an initiative created to support innovative businesses in the UK and to make the UK more attractive to inward investing companies. Claiming a refund can help a company's R&D investment, but when making a claim, it is advisable to choose your adviser with care.

A few years ago Alliotts were appointed by a technology company to provide accountancy and related services.

They had already signed an agreement with an R&D consultancy to handle the R&D tax credit claims. At the time the deal seemed good - the salesman explained that their fee was a 20% cut of the tax that was reclaimed so it was based on a “no win no fee” style arrangement. As the R&D legislation was fairly new it seemed like a bargain at the time. The contract stipulated a 5 year minimum term.

It’s often said that if you ask a consultant the time, he takes a look at the watch on your wrist and tells you what it says. It was similar here, our client kept the R&D records, our client recorded all the costs, the R&D consultancy just turned it into a 2 or 3 page summary and filed that with HMRC.

When Alliotts took over we were horrified at the fees. R&D claims are certainly not simple, but our client had paid the R&D consultancy in excess of £51,000 over a five year period, during which time their net tax refund was £174,378.

This year the contract finally expired and Alliotts handled the R&D tax reclaim work. Not only did our fee come in at less than £2,000 but we realised an £81,815 tax refund for the year, higher than had ever been achieved for the client in any previous year.

The message is clear - if you want to know more about R& D claims talk to the experts. To find out how we can help you with your R&D tax reclaim please contact me by email at peter.guinn@alliotts.com  or by phone 020 7240 9971.

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