Engaging the right R&D Tax Incentive consultant is critically important if you want to have confidence in your R&D Tax Incentive application, especially if you don’t want to be actively involved in the application. Please read Why choose a good R&D Tax Incentive consultant for a detailed explanation of why you should go to the trouble of finding a good R&D Tax Incentive consultant.
Basically, you should only use an R&D Tax Incentive consultancy if they have solid technical skills and STEM (Science, Technology, Engineering and Maths) qualifications. If you engage a consultancy which only has accountancy and taxation skills, you are taking a big risk.
How to choose an R&D Tax Incentive consultant
These are the things you should ask a prospective R&D Tax Incentive consultant before you engage them:
- Are they a registered tax advisor?
- Is the R&D Tax Incentive program their main focus, or is it a side-line?
- Do they have STEM (Science, Technology, Engineering, Math) qualifications?
- Do they have industry R&D experience? In what industries?
- How many successful R&DTI applications have they made?
- How many AusIndustry reviews have they had? Were they successful?
- Do they keep up with current changes in R&DTI legislation?
- Do they participate in the AusIndustry/ATO State Reference Group?
- Do they have testimonials from clients?
- How many ATO audits have they had? Were they successful?
- What do they expect from you?
- Do they have an application process that sounds workable for you?
- What standards do they have on supporting documentation?
- Who will be drafting your application?
- Do they have experience in AusIndustry? (unlikely, but possible)
Some of these questions relate to the Tax Incentive consultancy as a whole. Other questions relate more specifically to the individual who will be handling your particular application.
There are many roles in the R&DTI process, each with a different skill set. A registered task advisor is required to submit the R&DTI application. A technical writer is needed to draft the technical explanation of the R&D activities. A technical specialist from the client is needed to provide the technical ‘meat’ that the R&DTI technical description is based on.
The need for a registered tax advisor often means that accountants and tax advisors write R&DTI applications. However, the resulting applications are often incomprehensible as a result, due to the lack of technical skills and technical writing skills.
It is common practice (especially with the larger accounting firms) for you to get the sales pitch from senior (experienced) partners, only to find later that your application is being handled by a junior clerk or recent graduate without a lot of experience with either the R&DTI program or R&D in industry.
R&D experience and STEM qualifications are essential – not only will this help achieve a solid and readable application but will minimize the impact on your time in the long-run.
However, be suspicious if the consultant downplays what they need from you or trivialises the process – it may be warning that they are prepared to churn out rubbish applications rather than engage with you to make sure that the application is correct.
The reality is that is a successful R&DTI application requires all three roles noted above – a tax advisor and a competent technical specialist/technical writer from the tax incentive consultant, and a technical specialist from the client. Both the tax advisor and the technical specialist/technical writer needs to now the R&DTI requirements inside out.