Northern Accountants, an accountancy general practice in Leeds, had initially decided not to offer an R&D tax service because it is a specialist area. But thanks to the WhisperClaims’ R&D platform, it started to confidently deliver R&D tax services as part of its offering to clients. Phil Ellerby, Founder of Northern Accountants, explains how much WhisperClaims has helped give the company the confidence to produce quality output, which, in turn, has generated a new source of income.
Northern Accountants, an accountancy general practice that provides a full finance function, has partnered with WhisperClaims, a research and development (R&D) tax FinTech company, to confidently deliver R&D tax services as part of its offering to clients, while unlocking new revenue streams.
Northern Accountants was established in 2008, and since then, has continued to grow – acquiring two offices in Liverpool and Hull, reaching almost £2 million pounds gross recurring fees (GRF) and a team of 24 accountants.
Missed opportunities and spurious claims
The accountancy general practice provides forecasting, insights and software training. However, one missing area that it identified a few years ago was R&D. Phil Ellerby, Founder of Northern Accountants, said: “We didn’t touch R&D tax because it’s a specialist area. The team at Northern Accountants were comfortable with what R&D was and wasn’t, but the structure of putting a claim together was something that we didn’t have the expertise or the time to do – as you have to ensure that it is both tangible and viable.”
R&D reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
Northern Accountants initially formed a relationship with an R&D tax expert to outsource these services. However, Ellerby explained that they would end up doing a lot of the work, and it wasn’t of great value to the team: “It was clear that there was a gap in our services that we could offer our clients. There were times when we weren’t prepared to submit an R&D claim on behalf of our clients because we didn’t believe that what had been produced was factual. Instead, we wanted to provide them with a streamlined R&D process where we could both prepare and submit the claims – without using third parties.”
Then, Northern Accountants came across WhisperClaims during a Mastermind group session. The need for R&D support and automation tools using WhisperClaims’ R&D platform was clear, and the companies started working together in 2018.
Revolutionising R&D
The partnership was heightened during the COVID-19 lockdown period, as Northern Accountants recognised that businesses had both more time available and a greater necessity to look into R&D and, as a result, increased the number of claims they were taking on. Ellerby said: “All of a sudden, we went from doing very little R&D tax to doing an awful lot of it. Now, we have a repeated revenue stream because our clients continue to operate in the R&D sphere and make claims – WhisperClaims has been revolutionary in helping us to be able to deliver this service.”
To date, Northern Accountants has completed more than 100 claims using WhisperClaims’ platform. When describing the user experience – compared to traditionally outsourcing R&D tax – Ellerby said: “When we compared the quality of the output we are able to generate with WhisperClaims, in comparison to the claims that we were seeing from some of the rogue providers, we recognised that we are now offering greater quality, something we’re comfortable in doing, and ultimately, generating a new source of income.”
One of the key benefits of WhisperClaims’ platforms is that it makes the R&D reporting process much easier and more streamlined, as Ellerby explained: “It really helps us put together the claims that we were always concerned with doing. We can now pull together a report in a quarter of the time that we would spend either typing it out manually or building templates to do it. It’s flexible, straightforward and effectively bespoke, but on a systematic basis – as the platform can be tailored to what you need easily.”
The relationship between WhisperClaims and Northern Accountants was another fundamental reason for its partnership, as Ellerby highlighted: “When I met Mike and the team, there was instant synergy, we clicked and we got on well. The relationship we’ve got is second to none, they can’t do enough for you. We’ve got their team’s expertise on tap to advise and provide us with the support we need. They’re there to help protect the R&D legislation and the industry, as well as us.”
In addition to utilising Whisperclaims’ platform, Northern Accountants has also taken advantage of its complementary services: “I’ve had a ‘full portfolio review’ on our clients to help us identify opportunities and an ‘advanced review’ for those clients to give me a better angle on how to approach them to talk about the key areas and trigger points that they felt would be particularly relevant to the industries they are in. We’ve also used the claims review service. Anything that WhisperClaims has done, I’ve got involved with because it’s not only lucrative for the firm, but it’s also a great value-add to our clients,” said Ellerby.
Closing the door to red flags
HMRC is reinforcing its commitment to tightening up compliance and R&D tax relief is a priority. As part of this, partnering with WhisperClaims was important to Northern Accountants so that it could ensure that when it prepared R&D claims, they were put together in the appropriate way to comply with HMRC. Ellerby said: “There are some grey areas with R&D, and if you’re putting claims together on your own, you might interpret the legislation differently. Therefore, the language used, the way it’s structured and the points you need to meet, are all important considerations when it comes to building a robust claim. Having a platform like WhisperClaims helps give us the structure of the report, meaning we can feel confident when submitting the return as we, and our clients, know we’re not going to put anything forward that might be incorrect or raise a flag with HMRC.”
With new legislation coming into effect over the next year, it is crucial that accountancy firms begin to invest in such platforms. One of the new rules that is being introduced is the need for an R&D report to accompany every claim, but Ellerby explained that this is something that is commonly underserviced by R&D tax experts: “We’ve done R&D claims with some pretty big firms and we’ve asked for the R&D report, instead we got a spreadsheet of numbers – which is how they calculated it. Where’s the R&D justification in it? They might only be small claims and they might not feel it’s justified, but it leaves the door wide open to questions from HMRC. We welcome these new rules and working with WhisperClaims helps us to identify where the red flags are, and if red flags are raised, we can then question whether the claim should be made or not.”
Looking toward the future, Northern Accountants is planning to develop a specialist tax department within its organisation, expanding on the general practice. The team is heavily investing in having a dedicated tax team and has recently built its own software to support this. Ellerby concluded: “We’re not far off launching, aiming for 2023, but hopefully we’ll have specialist teams doing this day in and day out with the support of WhisperClaims. I’d recommend WhisperClaims to any accounting professionals who are looking to evolve into R&D tax – it’s a great product with a great team behind it.”