Behind the scenes of a R&D claim (blog)
Many people that have worked with Research & Development (R&D) tax relief providers on a claim may think the process is simple – they have a chat; the report gets written up and hey presto – money is in the bank!
However, a lot more goes into the journey than you may realise. In fact, you’re only involved in around 40% of the claim process!
So, what actually goes on behind the scenes for the other 60%? Let’s explore the 10 steps to making an R&D claim.
Step 1: Let’s start at the very beginning…
When working with the tax man, you need to feel comfortable with making any sort of claim - VAT, tax, etc. Therefore, it is down to the tremendous efforts of sales and marketing teams to help you learn about the R&D initiative and all its wonders. There should be ample information out there, such as videos, blogs, and articles (to name a few) that answer your basic questions. (Side note: if you’re struggling to get started, check out my video on the top 9 R&D questions asked below!).
9 FAQs About R&D Tax Relief Answered
Take a dive into the most commonly asked questions in this blog and get to grips with the basics of R&D tax relief in this blog!
Once you’ve got to grips with the idea of making a claim, choose your provider and let the games begin!
Step 2: First Questions Call & Assigning an Account Manager (You’re Involvement)
Following your initial chat with a sales professional, the next stage is usually a “First Questions” call. Although this isn’t always necessary, the growing number of claim investigations by HMRC is making many providers maximise their due diligence, and it is becoming increasingly implemented.
This is a short 15-minute call to confirm the basics of what was discussed with the sales professional. Here they will want to ascertain if words like “advance”, “technological uncertainty” and “competent professional” were used.
You will also be assigned an Account Manager who will be involved throughout your full journey. During the process, there are several experts involved at different stages, so having your Account Manager as the main point of contact for questions and sending information to will be extremely helpful.
Step 3: Technical Consultation (You’re involvement).
You wouldn’t believe the number of claims that are submitted to HMRC without a technical report. Well, from April 2023, that is being stopped.
To build a thorough report, an R&D Specialist Tax Consultant (STC) will set up a meeting to go through your projects with a fine-tooth comb. And in my experience, I’d give a good 2 hours of dedication to this, whether it's face-to-face or via teams. Not only is it a fantastic learning opportunity for you and your team, but it's also the chance to face any uncertainty around potential HMRC investigations.
Throughout the consultation, the STC will also discuss the associated costs, and the legislation, as well as offer additional advice on other incentives you could benefit from. These tend to be tax breaks for other areas of your business, including commercial property, contaminated land, and grant funding.
Step 4: Report Writing (Behind the Scenes):
Having sat the consultation and still feeling confident that there is potential to progress with a successful claim, the STC will then begin to write their report, relying on their expertise within the R&D space along, with their knowledge and understanding of your industry.
Step 5: Cross-Check the Report (Behind the Scenes):
The report is then reviewed by a senior member of the team. This step is key to ensuring that nothing has been misunderstood or gone astray.
Step 6: Calculate the Benefit (Behind the Scenes).
Now you’ve had your consultation and you’ve discussed the costs; your Account Manager will now request the basic financials necessary to begin building your claim. Sometimes clients involve their accountants here for ease and other times, they have the financials close to hand. A Senior Tax Analyst (STA) will then calculate what sort of benefit you are due. I.e., will it be a reduction in your current corporation tax liability or a cash injection? Or perhaps you wish to offset it for next year.
Step 7: Final Due Diligence Checks Are Made (You’re Involvement)
If the Senior Tax Analyst (STA) has any further questions regarding your financials, they will ask your Account Manager to reach out to you and clarify.
Your Account Manager will then help you to understand what benefit options are available and which best suits your business needs.
Step 8: Claim Submission (You’re Involvement)
Once clarified, you will receive a breakdown of your benefit and your claim will be submitted to HMRC.
It’s worth noting that typically you will not have full access to your finished R&D report as this is the IP of specialist firms. However, an amended version should be available to give you peace of mind on what topics have been submitted.
Step 9: The Wait Game (Behind the Scenes)
Your claim has been submitted and now it’s a matter of waiting. Subject to HMRC’s processing times, the guideline is around 6-8 weeks. If this period lapses, your specialist is entitled to chase for an update and continue chasing until processed. As the business owner however, you are also permitted to reach out to HMRC directly regarding your claim progress.
Step 10: Payment and Benefit Released (You’re Involvement)
Depending on the agreement you have with your R&D partner, you may be expected to pay your invoice once the claim has been submitted (as technically, the R&D specialist work has officially been completed and the claim is expected to be successful). However, most specialists are happy to wait until the benefit has been released before they invoice.
This is something you must agree on initially upfront.
Pain-free process
As you can see, the R&D claim process is a much longer process than many clients get to see, and a good specialist will make it as pain-free as possible.
The hardest step for you should be choosing which provider to use. Everybody calls themselves a ‘specialist’ so make sure you understand what that means. If you’d like more guidance on what makes a good R&D provider, check out my other blog below on “5 things my R&D provider should be doing”!
Check out what separates average R&D consultants from truly great ones here in this short blog read!
Or if you have any follow up questions, reach out on the contact me form here or directly via Karen@innovationinsights.uk