Preliminary GovGrant research finds a potential 50% service gap in for UK businesses. Over a third, (38%) of UK accountancy practices may not provide their clients with tax credit services for innovation and R&D, and a further 13% say there is no client demand for this service. The preliminary findings come from a survey of accounting firms by innovation tax specialist GovGrant, which helps the UK’s most innovative businesses claim tax benefits for their R&D and intellectual property.
Luke Hamm, GovGrant CEO, said: “If the findings are correct, there is a massive opportunity for accountancy practices which is currently going begging. While not all clients will be able to claim R&D tax credits, firms will expect their accountants to be proactive with the knowledge, skills and resources to offer this advice whenever it could apply. And the indications are that half of accountancy firms aren’t offering this service as standard.”
He said: “It’s pretty shocking that so many businesses are passing up free tax relief, which they can reinvest in their companies to make them even better. Many businesses rely on their accountants for tax advice, so we urge accounting professionals to address this gap as a matter of urgency.”
He explained that between 2016-2017, more than 43,000 claims were made for research and development tax credits (up 22% on the previous period). The total amount of R&D support claimed increased by 25% to £3.7bn. 75% of claims for SMEs are under £50,000 and the average claim to date is £53,000.
Luke said: “We should aim to double the number of claims made during the next two years, and accounting firms can lead the way. Around 21% of accounting practices provide innovation tax credit services themselves, and 18% partner with a specialist provider such as GovGrant.”
He said that GovGrant has many successful partnerships with accounting firms on an outsourced basis, providing different levels of support.
“These include Partner level, support at senior level to handle the process from start to finish. Or at director level, where we provide a flexible resource that can plug gaps and work to a specific brief, or a back-up resource which offers training, quality assurance or specific advice.”
“We help firms talk clients through the options, deliver on the technical requirements and go beyond the numbers to help a client grow, and build the brand equity and reputation of the accounting firm.”
Additionally, what’s good for accountants is also good for the economy. Luke said that each pound claimed in R&D tax credits generates additional GDP between £1.80.-£2.40. “It’s a win-win for the government to champion R&D in this way, especially in the post-Brexit economy where innovation is a critical success factor for the UK’s industrial strategy.”