Markel Tax's R&D expertise a win-win for brokers and their clients

Leverage specialists to simplify claims, reduce risk, enhance value — and unlock new revenue stream

Markel Tax's R&D expertise a win-win for brokers and their clients

Professional Risks

By Mallory Hendry

This article was produced in partnership with Markel UK

Brokers are all about mitigating risk: they want to provide the best possible cover for their clients. But in today’s competitive environment, it’s also about seizing opportunities to level up — both for their client and their own business. Brokers operating in the technology space and working with Markel are in a unique position to make the most of one such opportunity, says Justine Dignam, Director of Tax Incentives and Reliefs.

The UK government’s research and development (R&D) tax credit scheme provides a significant incentive for eligible companies — clients are able to claim 100% of the business’ costs related to investment on  seeking an advance in science or technology projects, plus up to an  additional 86%  as a reward for investing in innovation — but claims are time-consuming to pursue and require in-depth knowledge to ensure compliance. An award-winning insurance business, Markel’s specialist tax team has the expertise to manage applications end-to-end, from identifying opportunities and reviewing existing claims to compiling technical reports and submissions, as well as handling any queries by the HMRC. And because Markel pays brokers a percent of the invoice as an introducer fee, Dignam qualifies it as a win-win.

“It adds value to customers and at the same time develops an additional revenue stream for brokers — a compelling strategy for those who are entrepreneurial-minded, and an area we’re seeing increasing interest in,” Dignam explained. “Introducing a client to us gives access to these additional services and compliments a broker’s main objective, to insulate a client from risk. It reinforces the message that the broker is actively looking to protect and further their clients’ interests.”

Markel won’t ‘shy away from difficult conversations’

The R&D scheme has been in the press for all the wrong reasons lately, with the HMRC’s latest report finding fraud and error cost the public purse over £1.3 billion. This rampant exploitation has led to the government cracking down on abuse of the system, with the HMRC stating that the market rate of claims investigations currently sits at 1 in 5. Although Markel have seen a significant upturn in HMRC enquiry activity, thankfully we are not seeing the numbers spike to this level confirmed Dignam.

If a business uses a substandard R&D provider, there’s a marked risk of being embroiled in messy, daunting, and lengthy inquiries which at best serve as a distraction for the business and at worst result in repayments of tax benefits and potentially hefty penalties. While there are many such horror stories, Dignam stresses that businesses shouldn’t shy away. If it’s a properly qualified claim, the scheme is a great way for a company to expand its work to the next level. However, in the current climate it is more important than ever to ensure these claims are handled by a trusted provider with proven capabilities — and that’s where Markel comes in.

A force in the space for 20 years, Markel’s tax team is comprised of just under 30 individuals that run the gamut of industry know-how. Many have PhDs in science and engineering and when an R&D claim comes in front of them, “we marry the financially tax qualified people in the team with the technically qualified people to ascertain from all angles whether there’s a valid R&D claim.”

“We also don’t shy away from difficult conversations; if something doesn’t qualify, we explain why the client would be putting themselves at risk to put a claim in — it gives clients certainty and peace of mind,” Dignam said, adding that another advantage of engaging with Markel is that they defend all its claims at no extra cost. “We ensure the right businesses claim the right amount of money for the right kind of activity, ultimately protecting the client from falling foul of the legislation and the consequences of that.”

The bottom line?

“It’s important to get it right the first time,” she stressed.

Markel’s advisory edge is your client’s benefit

Brokers are uniquely positioned to facilitate support on R&D claims because they’re constantly discussing clients’ future planned activity around product development to determine what coverage they’ll need. It’s a natural next step to point them in the direction of an industry leader like Markel, “you know your client is in good hands,” Dignam noted.

Having spent the last decade dedicated to driving growth, spreading education about tax incentives and reliefs, and building inter-referral partnerships, Dignam said the core of Markel Tax’s mission is ensuring quality at every step. With experience across multiple sectors informed by a range of specialists, the team engages with companies on a peer-to-peer basis, a significant differentiator in the market.

If a client is doing a software R&D claim, for example, their accountant can manage it from a financial perspective but it’s another level of process — and a considerable amount of extra time — to explain the specifics of software development. Most times, the client ends up writing the technical report themselves. But by partnering with Markel, there’s a baseline knowledge: the team understands the implications of the proposed innovation and can determine whether it fits the criteria for the scheme, crafting a robust HMRC submission pack and ultimately getting things over the line more efficiently. 

“Not all accountants have the specialist knowledge in the field of science and technology — but we do,” Dignam said. “So, brokers, if you’re talking to a client and R&D is discussed — which it will be — and they want to make a claim, ensure they’re working with a business that has the expertise and experience to assist them adequately. If you feel they would benefit, bring them to us: we’ll make sure your broker relationships are protected by providing best-in-class service to your clients.”

Mark Lowther, head of financial lines sector sales at Markel UK, added: “We did an extensive insights project into the tech sector before building out our technology proposition. Tech firms told us that the R&D tax relief scheme is an amazing opportunity to support their growth – but that they’re nervous about the complex application process.” This insight was why Markel built expert tax consultancy into their MarkelTech product to support brokers’ tech clients with R&D tax relief.

“We’ve made sure that MarkelTech was built on insights, backed by experts and delivered with a suite of services that support them through the opportunities and the challenges of running a business in this competitive, ever-evolving sector,” Lowther concluded.

R&D opportunities are vital to tech innovation, but time-consuming to pursue. Our specialist team can work with brokers to identify opportunities, review existing claims, and compile technical reports and submissions for their tech clients.  Learn more here.

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