R&D: 9 Common Mistakes of Accountants
I’ve worked with loads of businesses from all kinds of industries; some have never made a claim, others have used a specialist (but the process was incredibly time consuming) and those where we work together with their accountant.
However, the partnership we have with accountants is great. The accountant already has the insight and understanding of the business, to identify an opportunity to claim and we have the experience to ensure that the claim is maximised to its fullest.
But I’ve also witnessed a few horror stories where an accountant should have used a specialist.
Here’s some of the things I have seen:
1) CLAIMING EXPENSES
We took on a client who had spent £15k on travel to meet sub-contractors; paid for on a company card – if the travel has been paid on a personal card, they would have been able to claim nearly £4k back.
2) ACTING AS A SUBCONTRACTOR
A large company was building a web application in-house and subcontracted part of the build to a third party. This third party could have claimed an extra £5K from under the RDEC scheme.
3) DOING WORK FOR A CUSTOMER
We took on a Digital agency who were delivering a lot of R&D work for third parties; they assumed that because the work was for another company it didn’t qualify – we were able to identify two areas giving them a tax saving of £40K.
4) SALARY VS. DIVIDENDS
A Director we worked with was taking a small salary of £10K but dividends of £200K. However, 80% of their time spent was on R&D. We worked with him to ensure that the net he was taking from the company stayed at £148K, whilst the company made an additional saving of £17K.
A pharmaceuticals company we worked with paid £30k/year for a utility and rent package; looking back over 2 years we secured them an additional £2K.
6) NON-TECHNICAL SUPPORT STAFF
A company had 30 employees, of which 3 employees had supporting roles – salaries totalling £80K – they should have been claiming an additional £20K. That’s significant money back into the business.
7) EXCLUDING THE PLANNING STAGE
A client building a prototype for a heating system, had two employees (paid £100K in total) completing preparatory work for a month – through this, we identified an extra £2.5K on top of the claim. Every little counts.
8) INCLUDING ROUTINE DESIGN & MARKETING
We saw a client had been claiming for A LOT of marketing & routine design costs – error – which meant they had been overclaiming by approximately £5K!
9) THE COPY & PASTE
We had a case where an accountant had used a copy & paste fashion, with very little detail, as a result the additional cost claimed was around £50K! This put the client in unnecessary risk for an HMRC enquiry.
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