There has been much talk about the regulation surrounding R&D tax advisors and it is a welcome conversation. I would love to work with like-minded advisors to keep evolving the conversation. To find the right framework for this industry today, and just as importantly, where it goes next.
For companies such as GovGrant, a huge part of the value we bring comes from our integrity and the standards we follow. But when it comes to who and how the industry should be regulated, I possibly think differently. We say, very clearly, we are not tax advisors or accountants. We are technical and commercial experts first and we stand by that as the very best way for clients to realise their innovation potential.
Holding ourselves to the highest standards
Firstly, any interaction with tax should follow the widely adopted the Professional Conduct in Relation to Taxation (PCRT) standards. This is a set of rules that provide clear guidance on professional conduct and links in with statutory instruments such as Money Laundering Regulations (MLR) and financial crime. It is therefore essential, and non-negotiable, that anyone who touches tax in a professional capacity needs to follow this guidance.
Secondly, we choose to be supervised under the Practice Assurance (PA) service from the ICAEW’s Quality Assurance Department (QAD) as we hold ourselves out to the highest standards. But should ICAEW or PCRT regulate the R&D sector? Probably not.
Which box do we fit in?
To get the most compliant, maximised claim you need scientists, engineers, developers, and a whole host of other professionals. This expertise can go toe to toe with a client’s own knowledge to uncover the gems of R&D that exist in the business. One area we focus on is to challenge a client’s perspective on R&D to help remove preconceptions or industry taught definitions that invariably differ from the government definition of R&D and what activity they are looking to support.
For us R&D is a much wider subject than just tax, tax is the outcome but the journey to get there requires a different skillset. What’s more, the wider value we can bring has very little to do with tax and lots to do with commercial focus around Intellectual Property.
Is it therefore right that we look toward the group of accounting and tax professional bodies to regulate what we do? Would the Intellectual Property Office work? Would the scientific institutes be better? It’s worth more discussion.
We should be doing the right thing anyway
The point of regulation is to drive standards and ethics that create a robust professional approach. My early career focused solely on the regulation and liability of professionals (PI insurance) and I was privileged enough to work closely with ICAS, RICS, and the FCA. From those experiences, I believe that what drives standards is the professional integrity and culture of a firm. When you see corporate failures or the most severe liabilities, it is invariably down to culture and poor process. Whilst regulation can provide a framework and authority to help set the standards and intervene before someone suffers loss – if you’re a bad apple, you are a bad apple regardless of who is watching.
The availability of knowledge and information at someone’s fingertips can make it very clear which companies take themselves seriously and will treat their clients well. When you visit a website, you rely on our own gut instinct and quick impression of whether that company will align with what you want and need. You may seek a regulator’s stamp of approval, but if it’s only a badge what does it actually tell you? With respect, it doesn’t guarantee that a company will be one of the good guys. We have all heard of regulated firms, from many different industries, that fall well below the bar people and the regulator expect.
Finding the right fit
We are not regulated by one of the main professional bodies but are registered with HMRC and have ICAEW supervision for AML purposes. And, of course, operate to PCTR standards. But more than that we invest our time and money investing in our people and our processes to make sure that our culture and infrastructure have the very highest level of integrity. We also continually evolve our proposition – we are straight-talking, commercially focused professionals – and that won’t work for every client. And that’s the point. We will never be all things to all people and we don’t want to be. We want to work with businesses that buy into the fact that we want to start with the technical and not just the numbers.
Yes, R&D tax relief is a market with lots of choices for clients. That in itself is a great thing as in theory it means more businesses will benefit from this government incentive and turbocharge the UK economy. But there are sharks in the water, regardless of a regulators badge, so businesses should look deeper to find the right R&D advice for them.