What does an R&D tax credit claim cost? Fees, models and value

The three fee models you will be quoted

Most R&D tax advisers charge in one of three ways. A contingent fee is a percentage of the benefit you receive, commonly quoted somewhere between 5% and 25% of the credit. A fixed fee is agreed in advance against the size and complexity of the claim. A time based fee bills the hours spent preparing the report and cost schedule.

Accountancy firms sometimes bundle the claim into a wider compliance engagement. That is convenient, but it is worth asking who actually writes the technical narrative, because that is the part HMRC reads first.

What a contingent percentage really costs

Contingent pricing feels risk free because the fee only arises if the claim does. The arithmetic is less comfortable. On a £200,000 qualifying spend, a merged scheme credit might be worth roughly £30,000 after tax. A 20% contingent fee takes £6,000 of that, and the work involved does not change with the size of the claim.

Contingent models also create an incentive problem. The adviser is paid more for a bigger number, and the company carries the enquiry risk if the number was optimistic. Ask what happens to the fee if HMRC reduces the claim, and get the answer in writing.

What a fixed fee should include

A complete engagement covers technical scoping interviews with the people who did the work, identification and apportionment of qualifying costs, the written technical narrative in the language of the BEIS guidelines, the additional information form HMRC now requires, and filing alongside your corporation tax return with your accountant.

Enquiry support is the item most often missing. If HMRC opens an enquiry, someone has to defend the technical position. A report written on the assumption it will be read closely costs a little more to produce and a great deal less to defend.

Where cheap claims get expensive

HMRC has significantly increased compliance activity on R&D claims. The claims that attract attention tend to share features: a generic narrative that could describe any company, projects framed as product development rather than technical advance, costs apportioned with round percentages and no method, and no named competent professional.

A claim prepared for a low fee by someone who never spoke to an engineer is exactly the claim that produces those features. The saving disappears the moment an enquiry lands.

How to judge value rather than price

Ask three questions of any adviser. Who writes the technical narrative and what is their technical background? What does your report look like, and can I see a redacted example? What happens if HMRC enquires, and is that included?

Then compare the total cost against the value at risk. The point of specialist preparation is not a bigger claim. It is a claim of the right size that survives scrutiny, which is a different and more valuable thing.

Where to go next

Our R&D tax hub sets the claim types side by side and includes a calculator that sizes your entitlement before you speak to anyone. If you are already claiming elsewhere, a free review of last year's report will tell you plainly whether it would stand up and whether qualifying costs were missed.