How to Claim R&D Tax Credits: In-House, Accountant or Advisor?

There are number of ways to make a R&D tax credit claim. Discover the pros and cons of each method in this guide.

There are four ways to make a R&D tax credit claim: doing it in-house, using an accountant, with a traditional R&D advisor, or with a specialist R&D advisor.

If you’re exploring options for your upcoming R&D tax credit claim, this article will help you to weigh up the pros and cons of each potential R&D claim route.

Feature	DIY – In-House	Accountants	Traditional R&D Advisors	Specialist R&D Advisors
Expertise:	Limited in-house knowledge	Basic understanding of the scheme	Domain experts and technical writers	Specialist R&D advisors and ex-HMRC staff
Technology:	None	None	Limited	Cutting-edge platform with integrations
Cost:	Free	Potentially low (may have added fees)	10-33% of claim value	Up to 10% of claim value
Time Commitment:	Very high	High	Moderate (for your team)	Low
Control & Transparency:	Full control, but high risk of errors	Control over information included	Less control, potential lack of transparency	Shared control, high transparency with platform access
HMRC Enquiry Support:	No support	Limited support	May have limited support, potential extra fees	Dedicated support included
Pros:	Confidentiality, potential cost savings	Trusted relationship, cost data collection	Rigorous process, single point of contact	Efficiency, cost-effectiveness, year-round access, integration with accounting systems
Cons:	High risk of errors, time-consuming, lack of expertise	Potential to undervalue claims, limited R&D expertise	Expensive, time-consuming, potential lack of transparency and enquiry support	Varying levels of expertise, potential lack of personal interaction

To learn more about each individual option, including the pros and cons, read through the detailed sections below.

1. DIY – In-House

By handing everything internally, you can take full control of your R&D tax credit claim.

Pros:

• You have control: There is no outside influence; you have full control over R&D cost collection and the technical information you choose to include in your R&D tax relief claim.
• You can keep it confidential: Rest assured, knowing that your R&D costs and technical information will remain secure and confidential.
• It could be a quicker process if there are not too many stakeholders: The lack of external advice or help could make the process of building a claim quicker.
• You can save money: Constructing your claims in-house guarantees that there are no fees.

Cons:

• Lack of specialist R&D tax relief expertise in-house: While you may have a financial officer or developer in-house, building an R&D tax relief claim is complex. Without the experience or knowledge, you could very easily build and submit a claim incorrectly. 
• Time-consuming claims process: When it comes to writing the technical narrative and gathering the qualifying R&D costs, it can be a time-consuming and laborious process, especially when new to R&D tax credits.
• High risk of undervaluing your claim:  Without experience or knowledge of the scheme, you may miss qualifying R&D costs or lack the technical detail required and undervalue your claim.
• High risk of an HMRC enquiry: A lack of scheme knowledge can increase the chance of an HMRC enquiry.
• Enquiries can hinder your company’s progress: Enquiries can take up to 13 months to resolve, wasting valuable time and energy for your company.

2. Accountants

You can leverage your existing accountant’s financial knowledge to assist with your R&D tax credit claim.

Pros:

• Trusted partner: An accountant that’s worth even a fraction of their weight in gold will know your company inside out and can provide essential advice regarding all sorts of financial matters, including R&D tax credits.
• Adept at collecting cost data: Your accountant should have a good understanding of your accounts and be able to collect your R&D cost data quickly and efficiently. 
• Basic knowledge of the scheme: Your accountant may possess knowledge of the fundamentals of the scheme, especially around the tax implications.
• You’re in control: Your accountant will gather the necessary R&D costs, and file the relevant documents and associated papers. Nevertheless, you’ll retain complete control over the information included in your claim.

Cons:

• Lack of specialist expertise in R&D tax relief: Though accountants are well-versed in many financial matters, the R&D tax relief scheme is an intricate field with many potential pitfalls. It requires specialised knowledge that accountants do not possess since they may not typically manage R&D claims.
• High risk of undervaluing your claim: As accountants do not handle R&D tax credit claims every day, they are likely to miss qualifying R&D costs and will therefore undervalue your claim.
• Time-consuming claims process: Accountants often lack the expertise required to write technical narratives, meaning that you or your technical team will need to get involved. The claims process has also become more complex with the introduction of the Additional Information Form (AIF) and, in some cases, a Claim Notification Form. If your accountant handles these on your behalf, it may come at an additional cost. This process can be time-consuming, expensive, and prone to delays, as compiling a technical narrative and getting the AIF spot on is no easy task.
• Risk of an HMRC enquiry amplified: A lack of scheme knowledge can increase the chance of an HMRC enquiry. For instance, an accountant might include outdated costs that no longer qualify, or allocate a disproportionately large percentage of costs to the R&D activity being claimed for. 
• Unfamiliar with handling HMRC enquiries: As accountants rarely encounter R&D tax credit claims, they’re typically inexperienced when it comes to responding to HMRC enquiries. Without the necessary technical expertise, you may have to seek enquiry advice from an R&D specialist. 

3. Traditional R&D Advisors

You can engage experienced R&D tax credit specialists to manage the entire claim process for you.

Pros:

• Rigorous claims process: Traditional R&D advisors will spend a significant amount of time on phone interviews, email, and spreadsheets for both the cost data and the technical narrative. They may also conduct site inspections at various companies to acquire further knowledge.
• Relevant domain experts and experienced technical writers in-house: A good traditional R&D specialist advisor may have a relevant domain expert on their team who will help with the technical narrative. Alternatively, they may have experienced technical writers to help write up your claim.
• Single point of contact: Traditional R&D advisors will typically give you a single point of contact who will oversee the whole claim-building process and submission.
• Straightforward process once the information has been acquired: Once the R&D advisors have extracted the information from your tech team, building the claim itself should be relatively smooth. On top of that, they’ll also usually submit the claim for you.   

Cons:

• Lack of automation or technology: Traditional R&D advisors seldom have the automation or tech to capture cost data from whichever finance platform you use. This makes cost collection an arduous process for everyone involved.
• Lack of integration with accounting systems: This leads to data silos and cumbersome manual processes.
• Time-consuming claims process: The lack of technology and rigorous claims process can be time-consuming for your team.
• Expensive option: Traditional R&D advisors will charge a fee that ranges from 10% to 33% of your claim.
• Lacks transparency: Once the advisors have extracted the information from your tech team, there is very little in terms of communication or tracking of your claim.
• Lock-in contracts: In certain instances, traditional providers have a reputation for binding companies into multi-year contracts at exorbitant rates. 
• Won’t share the claim before submission: Often, advisors won’t allow you to review your claim before it is submitted. This leads to the potential for essential R&D costs or technical information to be omitted.
• Lack of enquiry support: This lack of pre-submission review makes enquiries much more complex as some traditional R&D advisors do not offer any form of support. They may even charge you extra for enquiry support, even if they assisted in building the claim.
• Lack of historic insights: Without an intuitive platform, traditional providers lack insights into claim history, which can affect the accuracy and speed of building a claim.

4. Specialist R&D Advisors

Specialist R&D advisors combine cutting-edge technology with expert guidance for an efficient and optimised R&D tax credit claim experience.

Pros:

• One source of truth: If your team needs to collaborate on your R&D claim, specialist R&D advisors who utilise technology to collect your data and technical information are a good option. Having a technology platform that gives you a single source of truth reduces the chance of duplication or omission.
• Quick and efficient claims process: A platform should create significant efficiencies, allowing multiple users to collaborate on a claim together. You’ll also find that integrations and data uploads significantly reduce the burden on both tech and finance teams.
• Year-round access: Access to an R&D platform means that you can build your claim throughout the year, logging in and capturing costs in real-time. You can also log technical details in the platform whilst they’re fresh. The ability to regularly update a claim throughout the year ensures that it is as robust as possible.
• Accounting software integration: A specialist R&D platform is likely to integrate with accounting software like Xero, allowing for quick and easy cost collection.
• Time efficient: Thanks to the software in use, you’ll spend less energy and time creating your claim. 
• Cost-effective: Due to the streamlined process, you can expect to pay only up to 10% of what your claim is worth.
• Specialist R&D advisors and ex-HMRC staff in-house: Software R&D & specialist R&D advisors will often utilise technology alongside knowledgable specialist R&D advisors to ensure compliant and optimised claims.
• R&D Advance Funding Partners: If you need to access your R&D credit quickly, some specialist R&D advisors have funding partners that can give you up to 80% of your credit 9 months prior to receiving the receipt.

Cons:

• Varying levels of expertise: Unfortunately, not all Software R&D advisors include specialists within their team. Find out who’ll be working on your claim, and look for experienced R&D advisors, as well as ex-HMRC inspectors.
• Less interaction than the traditional approach: For some, 24/7 chatbots and video calls may not be suitable. There are no face-to-face meetings, phone calls or onsite visits.
• Lack of enquiry support: Not all advisors in this area offer an enquiry service as part of their package, so it’s important to double-check before moving forward.
• Unfamiliar with handling HMRC enquiries: Not all Software R&D & specialist R&D advisors will have experience dealing with HMRC enquiries. With enquiries rising, this is a red flag. Ask to hear about their approach to enquiries.

Why choose EmpowerRD?

• Expert-led claims with cutting-edge technology: EmpowerRD combines the expertise of experienced R&D tax specialists with a powerful, user-friendly platform to deliver robust and optimised claims.
• Keep more of your claim award: With one of the lowest rates in the industry, you can keep more of your award and reinvest it back into your business.
• Seamless and efficient process: Our platform streamlines the entire claims process, from data collection to submission, saving you time and effort.
• Unrivalled support: Benefit from expert guidance throughout your R&D journey, including dedicated support in the event of an HMRC enquiry.
• Trusted by innovators: Join over 1,200 UK businesses who have already claimed over £260 million in R&D tax credits with EmpowerRD, contributing over £1 billion to the UK economy.
• Minimise risk: Our rigorous process results in an HMRC enquiry rate of less than 5%.

We can streamline the claiming process for those who have claimed before, while first-time claimers can rely on our intuitive platform and expert guidance to navigate the process with ease. Feel free to speak to our team to learn more.