We frequently work with companies who previously claimed R&D tax credits through another advisor, and the claim appeared to be successful. We say ‘appeared to be’ because the very fact their last advisor had made them any money at all led the company to believe they’d done a good job.
However, because their advisor didn’t have specialist knowledge of how R&D tax credits apply to the software industry, they usually won’t have received everything they were entitled to.
If they’d come to us, they would probably have got back a lot more than they expected. That’s because we’re not generic R&D tax credit advisors. We’re the UK’s only R&D tax credit advisors who are also software development specialists.
Using our knowledge to maximise your claim
A lot of the time, we can increase a claim’s value simply because we have a much better understanding of the technology involved than other advisors do. Not just the technology itself, but how it relates to the tax credit guidelines set up by HMRC. That’s our niche.
In this particular case, we’d already done some research about the company before talking to their new CEO, and we had a good sense of how big they were just by looking at the data from Companies House. But when they told us how much they spent on their developers’ salaries versus how much they’d got back from their previous R&D claims, there was a considerable disconnect. From our very first meeting, we suspected their previous advisors had missed valuable tax credit opportunities and we were sure we could help them significantly increase the value of their R&D Tax Credit claim.
Identifying opportunities other advisors overlook
When an advisor without software industry experience allocates the costs on an R&D tax credit claim, they won’t always appreciate how much time a typical developer might spend on a particular type of project. When that happens, it’s natural for them to hedge their bets and be more conservative. So, instead of allocating 90% of the developer’s time to R&D (which, in this client’s case, they should have done), the company’s previous advisor had only allocated about 50-60% of the developer’s time to R&D. This had a massive knock-on effect on how much the company could claim through the R&D Tax Credits scheme.
Because we have a comprehensive software industry background, and we’ve worked extensively within the field of software development from the moment our company was founded, we were immediately able to identify all the areas that maximised our client’s R&D tax credit claim. Areas that, for the past several years, their previous advisor had consistently overlooked.
Giving our clients a winning hand
Think of it like playing poker. When you win a hand of poker, you get excited. But it’s not winning hands that makes you a rich poker player. It’s how you maximise your winning hands.
We’re going to be very honest here. When any advisor submits an R&D Tax Credit claim they’re probably going to get you some money back, but it’s highly unlikely they’ll get you as much money back as we can. That’s because other advisors don’t understand the tax credits scheme and how it applies to the software industry as well as we do, and they’ll probably be much more risk averse and cautious with the numbers.
In this client’s case, we maximised their winning hand by thoroughly understanding what they do and identifying absolutely everything they were eligible to claim for.
The result? We doubled the amount of tax credit their last advisor had claimed for, and HMRC paid them back 2x more money than in previous years.