R&D

[kingcook]

I could be doing some web based back office system for a potential client. We've discussed the project and they are happy with my rate.

At the end of the meeting, they dropped a bombshell: "We'd like you to show the words R&D on your invoices so we can claim R&D tax credits".

I've read a bit about R&D, and i'm pretty sure a (basically speaking) stock control/invoicing/customer management system does not count as R&D

Has this happened to anybody? Any ideas on the best way to let the client down? They have (apparently) spoke to some R&D expert and it's fine apparently (i'm not sure i'd call him an expert TBH!)

To be clear, it's not me who wants to claim R&D - it is the client.

[SueEllen]

You have two choices:

1. Tell them straight to explain to you why it's R&D and explain clearly why it isn't under HMRC terms - then expect them not to engage you as they don't have the money, or,
2 Get a written contract from them and copy their wording for the description of your services on the contract on your invoices.

[kingcook]

You have two choices:

1. Tell them straight to explain to you why it's R&D and explain clearly why it isn't under HMRC terms - then expect them not to engage you as they don't have the money, or,
2 Get a written contract from them and copy their wording for the description of your services on the contract on your invoices.

Unfortunately I think it might be option 1

[SueEllen]

Unfortunately I think it might be option 1

Unfortunately sometimes in life you have to tell prospect clients that what they are doing is crooked and you want no part of it.

I forgot to add option 3 which involves being more crooked then option 2.

[Contreras]

I could be doing some web based back office system for a potential client. We've discussed the project and they are happy with my rate.

At the end of the meeting, they dropped a bombshell: "We'd like you to show the words R&D on your invoices so we can claim R&D tax credits".

I've read a bit about R&D, and i'm pretty sure a (basically speaking) stock control/invoicing/customer management system does not count as R&D

Has this happened to anybody? Any ideas on the best way to let the client down? They have (apparently) spoke to some R&D expert and it's fine apparently (i'm not sure i'd call him an expert TBH!)

To be clear, it's not me who wants to claim R&D - it is the client.

Well if they are telling you that it is for their R&D...

Tis only fair that in return they provide you with a letter of Real Working Arrangements which fully ticks all the boxes in your favour. Plus a schedule of work with defined deliverables, which also states clearly that it's an R&D project, which you can then quote on the invoice.

OTOH...

Just say that your accountant won't let you.

He/she is also a risk averse type that would report you/them to HMRC/SFO/SOCA etc. and you don't want that hassle. So as much as you really would like to comply it's not an option.

[TheFaQQer]

There is nothing to stop you describing the work you are doing as research and development - you are researching something and developing it.

If the client then wants to try to claim that to get an R&D tax credit, then that's their tax affairs.

Feel free to try to explain to them that you don't think it's eligible, but if they have taken all their due diligence and want to run the risk, why should that stop your company?

It's not your responsibility to make sure that they pay the right taxes. If it were, then we wouldn't use Google or shop at Amazon.

[jmo21]

having now read about R&D tax credit, it seems clear that in an investigation, they would get their arse tickled.

But I'm not sure exactly how it should affect you. Can HMRC come after you for the tax?

[VectraMan]

"R&D" is a vague term; just because you call it R&D doesn't mean you're in any way saying that it's valid for the purposes of R&D tax credits.

Just do it. What your client does with their tax return is none of your concern.

[kingcook]

having now read about R&D tax credit, it seems clear that in an investigation, they would get their arse tickled.

But I'm not sure exactly how it should affect you. Can HMRC come after you for the tax?

It's the HMRC coming after me bit i'm concerned about. AEOD if the client wants to says it's R&D well then that's up to them, they can deal with HMRC as they're the ones making the claim.

[Maslins]

There is nothing to stop you describing the work you are doing as research and development - you are researching something and developing it.

If the client then wants to try to claim that to get an R&D tax credit, then that's their tax affairs.

Feel free to try to explain to them that you don't think it's eligible, but if they have taken all their due diligence and want to run the risk, why should that stop your company?

It's not your responsibility to make sure that they pay the right taxes. If it were, then we wouldn't use Google or shop at Amazon.

This is largely my view...though possibly not the first paragraph. If you know their intentions and believe it to be wrong, by putting "R&D" on your invoices you're arguably aiding and abetting (sp?).

If I were you, it wouldn't stop me taking on the job, but I'd just "forget" to put R&D when it came to invoice time. I doubt they'd get anything in the contract about you writing that, and I doubt they'd try to use it as a reason not to pay you (risky game)...but I could be wrong.