What to negotiate with your R&D Tax Relief provider
Read our “Negotiation tips” to use with your R&D Advisor.
29 Sep 2023
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When selecting a new R&D Tax Relief Provider, it should be pretty simple. And for most parts it is, however there are specific elements to look out for in the negotiation process when deciding if an R&D provider is the right fit for you, and below is a list of what you should look out for, and what you should expect.
Expected Payment date
Payment should always be upon success.
No brainer, if there’s ever one who asks for even 1% up-front, say no.
RDvault are paid upon the success of the claim being paid out.
Length of Contract
Some R&D providers ask for you to sign up to a multi-year contract to work with them, however there is no client value to this.
🤒It causes great headaches later🤒
The justification you are given is that the first R&D claim they work with you on upfront knowledge to learn, and they operate at a loss on the first R&D claim.
Brilliant, so that £5,000 - £10,000 you gave them on your £50,000 R&D claim wasn’t enough? Bahamas don’t come cheap you know!
The truth is that a multi-year contract is of no benefit to a client.
It guarantees income for the provider, that’s all.
What happens if you have a terrible experience in year 1? The contracts will offer no exit, you will be expected to commit to the final 2 years. You have no protection on quality, service or any other variable of a supplier-to-client relationship.
Stay clear and away from this.
RDvault works on a per-claim basis. If we do a good job, that will encourage you to use us again, just how business should be. Pressure on us, to keep you happy.
This is the big one, and it’s essential you appreciate the fair market price for the service.
In 2019, the market charged an average of 20% - 25% on the claim amount to service an R&D claim.
In 2023, companies have seen a squeeze on their pricing, which is a good thing.
At the time of publication, we see the following;
• Minimum fees starting at £2,000
• % fees for claim values under £100k between 10% - 17.5%
• Claim values above £100k are closely guarded, but we see them floating between 3% - 10%
RDvault has simple and transparent pricing, beating market prices far more often. You can see our pricing here.
Access to the R&D Report
It sounds silly, but some providers won’t give you your R&D report even when it’s submitted to HMRC.
This is a 🚩red flag🚩 and the reasons why this happens are as follows:
1. It is because the provider hasn’t actually done an R&D report for you
2. It is to “protect their IP” in case you change R&D suppliers
3. They don’t want you to see how similar the report is to the previous claim period report
No. 1 is just shocking, and yes, it does happen occasionally.
No. 2 is just poor standards, it’s a form of making it more difficult for the client to leave the R&D provider. How can their IP be about documenting your IP?!? 🤔 #Baffling
No. 3 is…..well, you get the idea. It’s just not the provider you should deserve (remember the fees?).
RDvault provides access to all the numbers and narrative while you are a client, or should you stop becoming one even.
This is super important.
Too many R&D claims have been made on the basis that HMRC wouldn’t check them, due to having too few staff to service the 55,000+ claims that would go into HMRC at its peak p/annum.
HMRC have increased the enquiries team greatly, and acknowledge the system needs better policing. Whether you feel you are pure R&D by definition, or have had enough success previously to believe you are R&D eligible, you need to prepare for the fact that HMRC now checks R&D claims, through various methods (randomised included).
Perhaps you are the pure essence of what the R&D definition is to HMRC, but are you claiming costs within the framework correctly? Even a pure R&D claim can have faults in the costs claimed, or in the scope that its projects cover.
For that reason, an R&D provider should offer two things:
• The willingness to stand behind and be accounted for the R&D advice they give you
• The desire to defend your R&D claim to HMRC themselves, or through a proxy
RDvault takes a unique approach to this.
We believe that all our claims, of which all are pre-vetted, thoroughly investigated and conclusively reviewed before submission, are within HMRC’s framework and to the “T” of their definition.
However we also charge a low-cost service, as we don’t believe charging higher fees to cover low-probability of enquiries for the claims we submit is fair on clients.
As part of RDvault’s pricing, we include two rounds of enquiry support with HMRC on an R&D claim, and thereafter charge on a case-by-case basis. This keeps pricing fair, manageable, and beneficial for all clients of RDvault.
Who Submits the R&D Claim?
This is a big one, and comes down to your preferences.
Many providers would offer to submit the R&D claim for you, but there was usually a secret reason why they offered this. In the past, providers could put their bank details on the CT600 form so that they would be paid first, take their fee off the claim amount, and send the rest to you.
Case for an R&D Provider submitting your claim:
1. Keeps the R&D process with one entity
Cases against an R&D Provider submitting your claim:
1. The R&D provider will (likely) get your R&D claim before you and take their fee automatically
2. An unauthorised agent is submitting tax calculations of your company to HMRC
RDvault does not submit your R&D claim, nor AIF to HMRC - instead, we provide step-by-step guidance, pertinent to your claim, to your accountant, and assist where needed.
RDvault can offer to do this task at an additional fee of £375 + VAT but we actively aim to educate your accountant on this and forgo the cost instead.
Check the provider's review ratings.
Ask for them to explain why the low reviews happen - does it pass the smell test?
Big tip: Pick a person on a review website to be introduced to. Companies are known to artificially inflate their ratings, so if they can’t provide a connection between you and them on the 2nd or 3rd attempt then something may be fishy 🐟🐟🐟
RDvault has some of the highest reviews nationally - just saying…
1. Pricing: 10%+ should be a no-no when companies like RDvault are here to end the myth that the work commands such fees!
2. Multi-Year contracts: ⛔ Just No ⛔
3. Get a copy of your R&D report: Both the numbers and the narrative, every time they submit!
4. Ensure you trust the R&D Provider: The liability of a bad R&D claim is the company that is on the CT600 (i.e. yours) - so trust your provider, trust your provider.
5. Make sure they stand up to their work: Will they help you at the enquiry level, especially for the fee they charge? If you see discontent on ratings websites, be mindful.
R&D tax claim
R&D tax credits