Why UK companies should still claim R&D tax relief and the benefits of using an adviser

Overview

Despite the reduction in R&D tax relief rates from April 2024, UK companies should not overlook the value of making an R&D tax claim. The recent changes to the tax relief scheme aim to simplify the system and reduce abuse, but the incentives for innovation remain significant especially for companies investing heavily in research and development; and at the end of the day, a tax saving is a tax saving. This article will cover:

• What changed in April 2024?
• Why you should still claim
• Should you prepare your claim in-house or use an adviser?
• How to identify a trusted R&D tax relief adviser?

What changed in April 2024?

From April 2024, the UK government merged the SME and RDEC schemes into a single, streamlined system known as the merged scheme. While the headline rates have dropped, the merged scheme still offers a post-tax benefit of 15 – 16.2% reinforcing the value of making an R&D tax claim.

Why you should still claim R&D tax relief

1. Reduce corporation tax liability or potential for a cash payment
2. Increased cash flow
3. Funds future innovation projects
4. May encourage a competitive advantage

Should you prepare your claim in-house or use an adviser?

Given that the value of making an R&D tax claim is now worth less then they were, a key question being considered by many companies surrounds whether to continue using a advisor to prepare the R&D claim or whether this is something the company should now take on inhouse. As a quick summary, the key advantages and disadvantages are as follows:

	In-House Preparation	Using an Adviser
Pros	Lower or no potential cost and retain full control of the preparation/process	Expertise and experience, maximised claims through knowledge of rules, reduced risk, time-saving, support in the event of a HMRC enquiry
Cons	Risk of errors, time-consuming, may miss eligible costs, no support in event of a HMRC enquiry	Fees, data sharing

How to identify a trusted R&D tax relief adviser?

The value of making an R&D tax claim is further enhanced by choosing to claim via an adviser, but how do you know who to choose?

1. Importance of Specialist Advice:
   • R&D tax advice is a complex area requiring specific expertise.
   • Not all accountants or tax advisers are experienced in R&D claims.
   • Make sure you consider whether they advertise themselves as specialists or whether their marketing looks ‘too good to be true’, check the company’s reputation.
   • Identify if they can work alongside your usual accountants and tax advisors to make the submission process as smooth as possible without needing an extra layer of review under the Professional Conduct in relation to Taxation requirements.
   • R&D advisors must be registered for anti-money laundering supervision so a request for this information suggests they meet their regulatory requirements.
2.  Qualifications and Regulation:
   • Prefer advisers who are professionally qualified and regulated by a recognized body (e.g., ATT, CIOT, ICAEW).
   • Qualified advisers must adhere to ethical standards and maintain professional indemnity insurance compared to those who are not regulated.
3. Experience Matters:
   • Choose advisers with experience in your industry or sector.
   • Ask for references or case studies from similar businesses – although note they may not be able to share details with you due to confidentiality.
4. Transparency and Ethics:
   • Be cautious of firms that make exaggerated claims or say they are “HMRC approved” (HMRC does not endorse advisers).
   • Ethical advisers will clearly explain what qualifies for a claim and what doesn’t.
   • Have they been clear about the process and the service they will offer throughout the process.
5. Fee Structures and Services:
   • Understand how fees are charged—fixed, percentage-based, or contingent.
   • Remember any refund in tax should come straight to you and not to your advisor under the R&D guidelines so any suggestion that the refund will offset any fees should be disregarded and seen as a red flag.
   • Ensure the adviser will support you in case of HMRC queries and enquiries.
   • Make sure you understand whether the advisor is happy to be ‘reappointed’ each year or if they are planning on locking you into the contract for a few years.
6. Due Diligence:
   • Ask about the adviser’s methodology, how they gather information, and how they ensure compliance.
   • Check if they follow the Professional Conduct in Relation to Taxation (PCRT) standards.
7. Making contact:
   • Invest time into finding the right advisor – it is often advisable to meet with several firms.

Summary

The value of making an R&D tax claim is still prevalent, with the merged scheme still offering a post tax benefit of 15 – 16.2%. We would always recommend claiming via a trusted specialist adviser who can help you navigate the complexities of this landscape outlined in this article. Get in touch with one of ours today to learn more about how they can help with your R&D tax claim.