Updated: Jun 11
From the conversations I've been having recently with agency owners, Research and Development tax credits seems an often overlooked part of their cashflow and forecasting.
This could be because:
a) Their focus is taken up with attracting and winning new clients
b) There's a lot to manage just running the agency
c) They never took time to find out
Maybe they forget that potentially up to a quarter of their resource spend, billable time, tech and systems might be eligible for an R&D claim.
That's money that will come back into their agency!
Which is especially important for any agency, but more so during times like these.
However, R&D tax credit information has become the stuff of urban 'myth' and 'legend'.
I've heard constantly shifting 'chinese whispers' from other agency owners about what you can (and can't) claim for.
Time is precious right now, don't you agree?
Especially for agency owners who might be focused on just keeping their businesses afloat.
I've always believed that the best way to get to the truth, and understand something quickly is to go ask an expert.
So that's what I've done.
Everyone ... meet Kieron :-)
I've was introduced to Kieron (and rest of the team at BHP LLP accountants) through my work for other businesses I've worked in.
They helped me (and the team of 40+) I was managing navigate 3 years of R&D tax credit submissions to re-coup over £900K+.
Yep! .... that's A LOT of much needed cashflow for the businesses my development team was part of.
But you don't need to be a big team of 40+ to benefit from getting tax relief and credits back for the work you do!
Most agencies are working in R&D projects at certain points. So it pays (quite literally) to know what qualifies, where to find advice, and how to approach your projects for R&D claims.
My previous leadership of teams covered work across:
MVP design and builds
Pretty much working across sectors that most agencies cover.
Maybe yours does too?
OK enough chit-chat from me - go find a comfy, quiet place.
Get your headphones on, and listen in to the advice Kieron talks us through in this interview.
N.B. There's further details and helpful resources below the show notes - so you can see what's covered and if it relates to you. :-)
Over to you Kieron ....
(0:00 - 1:15) - intro to how I know Kieron and our work together.
(1:17 - 2:41) - What Kieron specialises in and why it matters.
(2:41 - 6:30) - A concise history of the R&D tax credits, and how to know if you qualify?
(6:31 - 8:25) - Why meeting times and feasibility before quoting for work could form part of your claims.
(8:26 - 10:35) - The ‘chicken and egg’ or 'catch-22' of R&D work.
(10:36 - 12:50) - Compiling ‘just and reasonable basis’ claims and understanding time tracking.
(12:51 - 14:00 ) - Expanding on the right detail for better understanding of roles and responsibilities.
(14:01 - 15:25) - Claims are there to encourage new innovations and projects.
(15:36 - 18:04) - Doing due diligence on qualifying costs and running the numbers for start ups and new businesses.
(18:05 - 21:15) - What are the time frames for claims, and how do ongoing projects fit.
(21:16 - 23:10) - It’s a smoother process than you think, why first submissions are bigger!
(23:11 - 24:55) - Using your claim tracking process to benefit your client’s claims (and make your agency more attractive to clients).
(24:56 - 26:00) - Where to go for more information, and links to resources from Kieron’s team.
(26:01 - 29:20) - Why R&D claims are a ‘no brainer’ for agencies.
(29:21 - 32:44) - How to fit R&D claims around your established accountancy firm.
(32:45 - 25:31) - Extra cash for items through Patent Box and other government initiatives and share schemes for start ups.
(35:32 - 37:40) - Summarising up the topic and some next steps for agencies to take.
Useful links and resources:
Visit BHP's hub page with information around R&D and Patent Box (another opportunity for your clients).
Read this free 'Research and Development - back to basics' info sheet. Click here to open the PDF.
You don't have to switch your accountants!
Got an accountant you already love and trust - no worries! Accountants do a great job - but many are not set up as specialists in R&D tax credits.
R&D submissions don't have to be done with your regular accountant. That's what I liked about BHP's approach. Kieron and the BHP team are super professional, and they can easily work around existing relationships.
You can market this as a stronger client benefit!?
R&D tax credits provide not only an opportunity for your to claim back cash into your agency business (small or large sized), but putting my 'marketing hat' on - I'm surprised how many agencies don't leverage the fact that their work can help client's also claim back on costs?
It might take some minor 'tweaking' to your project management docs, but capturing time, costs, people and meetings during the work your deliver - helps to understand the overall cost in a project.
Time invested by your clients is also part of this - so if you need to have meetings - it can still qualify for them. :-)
If you can position this benefit correctly, it makes an attractive offer to clients. You are actively showing them you can help save money from big projects.
This offer approach can also reduce the client's need to barter you down for better price. You can charge them properly, do a proper job - but prepare the project tracking to hand over to their finance teams - ready for their own R&D claims.
What's stopping you from getting yours?
Again - my advice is to talk to an expert first on how to work this way - but Kieron shares some thoughts on this in the video - and his team are easy to get in touch with to offer advice to understand where you might benefit.
So .....Get yourself an R, ... Get yourself a D .... Get yourself your R&D tax credit!
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