Something about R&D tax credits isn't adding up
When it comes to R&D Tax credits, a tax incentive designed to encourage companies to invest in R&D, businesses claim some of these credits back as a part of their R&D expenditure, which can be a process that turns into a bit of a nightmare.
There are a lot of R&D specialist companies out there that can help you to claim these back, but the problem is they charge a lot and the process is often very slow.
Harinder Sandhu, CEO and Founder of EmpowerRD, a former advisor to government on R&D, had a thought - that these incentives within the industry were wrong. These claims were being made as complicated as possible to make the job seem long-winded and therefore charge a high fee. He decided to make the process more transparent. By adding technology into the industry he believed it would make the process much better by reducing the cost of making a claim, and shortening the whole experience too.
Startups Magazine’s Anna Flockett spoke to Maxence Brout, who has worked for EmpowerRD for nearly a year now and explained how EmpowerRD developed a digital platform. This platform generates intelligent feedback on an R&D claim as it is written, so that advisors can concentrate on giving specialist feedback and maximising the claim, in a much shorter time frame.
“What we have done is bring transparency to the process and make it much more efficient using digital technology on an online platform. We charge a maximum fee of five percent, which is capped for larger claims,” Brout explained.
Sometimes companies can be waiting for up to three months before they see any of the money. EmpowerRD work on a much shorter time scale, but also recently introduced a new service. Brout explained: “Now with this new service, the credits will be received on the day the claim is submitted to HMRC, so it is on a much quicker scale.”
EmpowerRD provides discount to startups coming from VCs and incubators. Brout said: “We work with companies of all kinds including startups, but startups are an especially important focus to us, as they don’t always have a lot of funding behind them, so every little helps.”
Brout explained if you work with technology and innovation chances are it is highly likely you can claim money back: “As a rough estimate you could expect you receive between 26-33%.
“Our CEO Sandhu used to work and process R&D tax claims for large businesses and saw first-hand how smaller companies were being overcharged. EmpowerRD is a company now that is a hybrid, we have the technology and the advisors, which means we’re able to deliver world-class advice at a fraction of the cost of traditional advisors, so can help in more than one way.”
Being online makes EmpowerRD different, Brout expressed: “It’s a new way that makes us as a company so efficient. Technology is the enabler here; and combining it with the expertise of our advisors gives us that unique point.”
Typically, users will spend a couple of hours on the EmpowerRD platform instead of days trying to make a claim. Brout commented: “Founded back in 2017, I don’t think any of our ‘competitors’ do exactly what we do, but obviously there are other companies out there – the giants, they just charge a lot more money.
“I don’t think anyone can do the claim as quickly as us.”
Customers can come to EmpowerRD from competitors, and have all their information imported over rather than having to start the process and claim again.
Obviously like any company EmpowerRD has faced its own challenges, as there are so many companies offering this service out there, it is hard to get through to customers. Brout explained: “The industry has a bad reputation due to aggressive sales techniques. EmpowerRD just wants to show some guys out there want to help you, and some are honest out there.”
EmpowerRD is very transparent, and right from the beginning, Brout said: “Straight away we show our fee, there are no hidden expenses. We have also had people come to us that are too small scale for us, so we have provided them documentation so they can do it themselves, that really shows our integrity. People appreciate our honesty, we try to make this service affordable, and at the end of the day we do want to help people.”
Brout added: “Being a company of ten now, we are growing and reaching our ten percent increase target every month. We did take some small funding at the beginning, but the hard work of the team has really allowed the company to grow.”
EmpowerRD will continue to focus on R&D tax credits as it is such a big market. Brout added: “The plan is to continue to grow, and hopefully become a big player in the UK market. We work with a lot of companies, they support us, we support them. It feels good to help companies that need it.
“Startups up to Series C make up 70% of our client-base; when it comes to startups every penny really does help. We work with tech startups who can see and appreciate how much easier it is using this technology and platform.”
Brout added some people do not realise how important R&D tax credits are and how important it is to do it correctly. “If this is not done the right way, you leave yourself exposed to an enquiry from the HMRC. My advice to startups would be, if you are not using us just make sure you are using someone who is an expert, it is crucial.”