Hiring a good SR&ED consultant is not as easy as you think it is. You shouldn’t, I repeat SHOULD NOT, just google it, pick the one at the top of the list, and go with it. The Scientific Research and Experimental Development Tax Incentive Program is a pretty complex program that requires competence and experience (hence the reason why consultants for it exist). A good SR&ED consultant will enable your organization to maximize its refund and have all the information to back up claims presented if needed.
So the real question here is, if I can’t just go to Google and pick the one at the top of the list, how do I identify a SR&ED consultant that knows how to maximize the hell out of my refund? The answer to this is questions. You need to ask a few pointed questions. The answers to these questions will help you sieve through a whole list of potential SR&ED consulting firms, and leave you with the good ones to choose from.
One of the best ways to find any service provider is to ask 5 friends in similar businesses who they would use. If one name keeps on coming up, use them.
How much prior experience do you have with SR&ED claims for my industry?
You want to make sure that the consultant or firm that is going to be helping you has substantial experience in SR&ED, not just general accounting. How many reports have they written, who is on their team, their qualifications, how long they have been with the company, and will any of the work be outsourced.
Tip: Straight-up accounting firms are not well qualified in handling SR&ED. Especially when dealing with the scientific aspect of SR&ED.
What is your review rate and your adjustment rate (the average reduction in the SR&ED claim after review)?
If the consultant has more than 20% of their claims selected for review, they are probably being too aggressive and the CRA is watching them. If their average adjustment rate is more than 40% (for each claim that is selected for review, they lose more than 40% of what was submitted), they are probably too aggressive or do not understand the tax act well. If the consultant does not have the data, stay away.
Follow-up question: Can you provide references for similar clients which you have done work for in the past 2 years?
Long story short, your prospective consultant should be able to provide you with a list of referrals/references. If they can’t (or they say “providing references is a breach of their confidentiality agreement with their clients), then you don’t want them. Red flag. No go. If references are given, make sure you make the effort to make contact. They might even have some pointers for you.
What methodology will you be using?
SR&ED is not just an exercise in spreadsheets. If a consultant can’t explain the method that they will use to gather and prepare all pertinent information, find another guy. A good SR&ED consultant follows the scientific method in preparing your package.
How are claims processed?
Ask your potential consultant to walk you through the process and tell you what to expect. What happens if there is an audit? Will they help you, or are you on your own?
Read the sales agreement closely. Some consultants will readily threaten you or put a lot of pressure on you if you don’t have SR&ED to file. If the contract allows the SR&ED consultant to unilaterally manage the claim process stay away. If there are hidden costs stay away. If there is no obligation for the consultant to perform, ask why.
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