by Mike Dean, Managing Director, WhisperClaims
In a commodity compliance market, accountants need to generate new revenue streams – but they also need to build the strong relationships that are key to long-term client retention. Mike Dean, Managing Director, explains why it is a perfect time for accountants to leverage their trusted advisor status and productise an array of services, including R&D Tax Relief, to add value and get ever closer to clients.
With traditional accountancy services rapidly reaching commodity status, price pressure continues to increase. Enjoying ever-decreasing profit margins in book-keeping and accounts preparation, accountants are exploring a raft of options in a bid to add revenue. Adding new customers to the mix is both an expensive process and, given the competition, a race to the bottom in a commoditised market. To create a more profitable business model, growing numbers of accountants are tapping into new areas of service provision that can leverage the existing client base.
What services will be the most valuable – to both clients and the business? How can a firm build the right expertise, entice existing clients to embrace new service options and, critically, create a service that can be delivered at a price point that is both profitable and compelling?
While firms have been exploring areas such as pensions and investment advice, one of the biggest areas of opportunity – and one that delivers considerable value to clients – is R&D Tax Relief. While this may come as a surprise to accountants who have avoided this area due to perceptions of complexity, several factors are combining to make this the perfect time for a rethink.
One of the most positive changes is that HMRC’s current focus on improving R&D Tax Relief compliance is reframing the way companies and advisors approach this area – and, finally, putting paid to the ‘black magic’ nonsense propagated by dedicated R&D consultants over the years. Yes, there are 500 pages of guidance from HMRC which can appear daunting – but the information is perfectly accessible for qualified accountants with a firm grip on tax legislation.
Secondly, technology, advice and education are now in place to support accountants every step of the way; from learning the scheme, to the process of discussing science and innovation with clients, and completing the R&D Tax Relief claim. Accountants can now build on their existing client knowledge and trusted advisor status to rapidly create a new service line that is both profitable and reinforces the client relationship.
Finally – and most important – is the value of the claims. With one R&D Tax Relief platform reporting an average claim size of £130,000 of eligible spend, equating to around £30,000 of tax relief, this is a service that delivers more quantifiable value to clients than anything else accountants are offering right now.
Once accountants have embraced the concept of R&D, it doesn’t take long to create a profitable service model. As professional advisors, accountants already have an in-depth knowledge of client activities, which makes it far easier to identify those clients most likely to qualify. This process can be accelerated by using an independent Portfolio Review service which assesses client information and highlights those most likely to qualify for R&D tax relief.
At this point, accountants can then embark on a conversation with clients about their use of science and technology to achieve innovation. At every stage, the process can be supported by R&D tax relief technology, to help accountants frame the conversation – and if difficulties arise, a helpline can provide extra insight. Furthermore, with a dedicated R&D tax relief solution, accountants can create a repeatable process. This not only means more claims can be completed – but also introduces the chance to build a fixed fee model – an approach far more compelling than the contingent claim fee percentage charged by dedicated R&D tax consultants.
Of course, some accountants have been making a small fee on R&D tax relief over the years by referring clients to third-party providers, but why let another organisation into a client’s business?
It is not that complex and, more importantly, the process of talking to clients about the potential for R&D tax relief is a great opportunity to discuss the business, a process that often raises new service opportunities. From cash flow advice to loan and grant applications, even if a client doesn’t qualify for R&D tax relief, both accountants and clients will gain value from the process.
At a time when technology has not only commoditised compliance but also created distance between accountants and clients, adding R&D tax relief services to the portfolio not only unlocks a potential new revenue stream but also underlines the value of the accountant as a trusted advisor. It ensures the accountant retains control over every aspect of the client relationship and creates a new level of engagement that will ensure clients understand that a high-quality accountant provides far more than commodity compliance services.