Fee types

Software-assisted claims

Some advisers prepare claims largely through software, with your staff entering the information. Fees may be a percentage, a subscription or both. Who checks the claim matters as much as the price.

Some advisers prepare claims mostly through software. Your staff answer questions on screen, upload records and time data, and the system assembles the claim. A person at the adviser may review it, or may not. The fee may be a percentage of the benefit, a subscription, or a mix of the two. This page describes the model in general terms. It is not about any product.

Worked example: software-assisted claim

Illustrative

Depends on the subscription priceillustrative subscription of $6,000 a year, whatever the claim

The fee at each claim size
Claim	$100,000	$250,000	$500,000	$750,000	$1,000,000
Software-assisted claim	Depends on the subscription priceillustrative $6,000 a year	Depends on the subscription priceillustrative $6,000 a year	Depends on the subscription priceillustrative $6,000 a year	Depends on the subscription priceillustrative $6,000 a year	Depends on the subscription priceillustrative $6,000 a year

Scroll sideways to see every claim size.

Assumptions used

Claim of $250,000, the same claim every fee type page uses.
A subscription of $6,000 a year, whatever the claim (illustrative; depends on the subscription price).
The same work and scope for every model.

Illustrative figures. Same claim and assumptions for every fee model on this site.

How it works

You sign up for a term, which the letter should state. The software guides you through the claim: which projects, which costs, which people. It may ask you to write the technical descriptions yourself. The adviser's fee is then a percentage of the benefit, a subscription, or both. The claim is still filed in your name.

On the shared example, the illustrative percentage of 20% gives a fee of $50,000 on a $250,000 claim. A software-assisted service might quote a lower rate; at half that rate the fee would be $25,000. Any rate is a figure to check against the proposal, not a market price. Illustrative figures. The shared example shows the subscription route as a figure rather than a calculation: an illustrative subscription of $6,000 a year, whatever the claim. A real subscription depends on the price the service sets. Illustrative figure.

Who it can suit

This model can suit a business with a small, simple claim and staff who can describe their own work clearly. It can suit a business that already keeps good records and wants a lower cost route. It can also suit a business that wants to understand its own claim rather than hand it over.

What it does well

The cost can be lower than a full service, and the price can be easier to see. You keep control of what goes into the claim, and you learn what the tax authority expects. Good software can keep records in one place that would otherwise be scattered.

Risks for the business

The largest risk is that no qualified person looks at the technical case before filing. Whether a project meets the test for qualifying work is a judgment someone has to make, and the claim is in your name whatever the tool says.1 If the tax authority reviews the claim, you usually repay any reduction with interest and sometimes a penalty, and the subscription may not include help with the review.

A lower percentage is still a percentage. Ask what it applies to, whether it is capped, and what happens if the claim is reduced. A subscription is still a fixed cost, due whether or not you claim.

Ask who is named on the claim. Some countries ask for the details of anyone who helped prepare it, and the country pages explain what your form asks for.2

What the engagement letter should say

The letter should say what the service includes: the software, a review by a named person or role, help with a tax authority review, or only the tool. It should say who writes the technical descriptions and who is responsible for their accuracy. It should set out the fee base, any cap, the subscription term and how you leave. It should say whether your data and your claim documents stay available to you if you stop paying.

An example in practice

A small business uses a software-assisted service at half the illustrative rate, 10% of the amount claimed, for a $100,000 claim. The fee is $10,000, well below any of the full service models on the same claim. The business's own engineers write the project descriptions. Two years later the tax authority asks questions about one project. The subscription does not include review support, the engineer who wrote the description has left, and the records are in the software the business stopped paying for. The saving was real. So was the cost of not asking who would check the claim and where the records would live. Illustrative figures.

What to ask

Does a qualified person review the technical case before filing, and who? Is help with a tax authority review included? What is the fee based on, and is it capped? What does the subscription cover, and can you leave with your records? Who is named on the claim?

Sources

The business repays a reduced claim, with interest and penalties where they apply: IRS, "Interest" and "Accuracy-related penalty" (United States); HMRC, "Tell HMRC if you've claimed too much R&D tax relief" (United Kingdom); Revenue, Tax and Duty Manual Part 29-02-06, "R&D tax credit: clawback of relief" (Ireland); Income Tax Act section 161(1) and CRA, "Avoiding penalties" (Canada); Department of Industry, Science and Resources, "Decisions we make about R&D Tax Incentive applications" (Australia); Inland Revenue, "Interest on overpayments and underpayments" and "Shortfall penalties" (New Zealand); IRAS, "Penalties for errors in tax returns" (Singapore). More detail on your country page. Back
What the claim form, or the return it is attached to, asks about the people who prepared it: Canada Revenue Agency, Guide T4088, Part 9 "Claim preparer information" (Form T661), and Income Tax Act section 162(5.1) to (5.3) (Canada); Internal Revenue Code section 6695(b) and (c), 26 CFR 1.6109-2 and IRS, Instructions for Form 6765 (United States); HMRC, "Submit detailed information before you claim Research and Development (R&D) tax relief" and manual CIRD182000 (United Kingdom). More detail on your country page. Back

Examples use invented figures to show how each fee model works. Actual fees vary.

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