Although a SR&ED consultant relationship can feel like a marriage, if it isn’t going well, there is always a way out.
If you are already working with an SR&ED consultant and you aren’t happy with the services or have not recently checked if there are better options, but don’t know how/when to switch, this blog is for you. You aren’t locked in for life with an SR&ED consultant, and it is more common and simpler than most people realize to switch providers.
This blog explains the ins and outs of why, how and when to switch SR&ED consultants if you aren’t happy with your current provider.
Common Reasons Companies Switch SR&ED Consultants
There are a plethora of reasons people switch consultants, but at the end of the day, it is because the services they are offering aren’t aligned with what your company values.
Most commonly, the reason is high fees for low effort. We hear this a lot, where the consultant’s SR&ED process is very manual, requires a ton of effort from the client’s end, and costs upwards of 20% of their SR&ED refund. Questions often come up about the value added for the high cost.
The second most common reason is in the case of a bad audit experience. In the case of a review (or audit), every consultant provides a different level of support and assistance. Some companies need less help and are happy with a more hands-off approach, whereas many others want as much support, guidance and assistance during the review as possible. If you had an audit and did not receive the level of support you were hoping for, or if your audit came back with a significant adjustment to your SR&ED claim, and your consultants didn’t fight for you, you should consider changing consultants.
A common complaint is that the SR&ED process took too much time from the internal team. Many traditional consultants are using little to no technology to expedite the claim process. This means that it could take hours upon hours of meetings and manual questionnaires being filed out by the technical team to get to the details of the technical work. These processes can be very time-consuming and labour-intensive for the technical teams.
With SR&ED, a priority should always be maximizing your claims. Many companies switch consultants due to missed or underestimated claims. If your SR&ED consultant is not doing a deep dive to maximize your SR&ED claim, you are leaving money on the table. Lack of intensity in the investigation into SR&ED-able costs will lead to lower SR&ED returns. Don’t lose out on free money due to your SR&ED consultant.
Your SR&ED consultant should be a strategic partner, not just a service provider. You should work together throughout the year to plan, evaluate, and strategize around how to maximize your SR&ED claim and use your SR&ED refund to grow your company. If there are no value-added insights, just filing your claim, it might be worthwhile to explore other, more strategic options.
Lastly, some companies switch consultants every few years to ensure they are always working with the consultant that best aligns with their business needs at the stage they are at. Whether the company is motivated by reduced time to prepare the claim, lower cost, less effort required, more industry expertise, or any other factor, it is always a good idea to evaluate the available options and make sure your consultant is aligned with your business.
If any of these sound familiar, it might be worth exploring a change.
What the Switching Process Looks Like (Step-by-Step)
If you have decided that you are interested in switching SR&ED consultants, but don’t know where to start, this is for you.
Step 1: Review your current contract.
Most agreements are 3 years, some are just one year, but most do auto-renew. Understand where you are in your cycle and what the timeline looks like. Typically, there are no fees or financial implications associated with ending a contract early if you are not satisfied with the work, so investigate what this looks like for you.
Step 2: Schedule a discovery call
Deciding who to go to next is an important decision, as you don’t want to waste your time or get into a bad agreement. At GrowWise, we start with a short, no-commitment, 30-minute conversation to understand your current needs and make sure we are aligned on our priorities. Try this handy tool to help decide which consultant best suits your needs: SR&ED Consultant Matrix, or read this blog about how to choose the best SR&ED consultant for your business.
Step 3: Ending your current contract
Once you understand your current contract and have decided that you want to work with another consultant, you need to end your current contract. The steps here greatly depend on the timing and language in your current contract. If your contract is over, you just need to let your consultant know that you will not be auto-renewing your contract, and it is that simple. If you are in the middle of a contract, typically you can just let your consultant know that you will be using a different consultant going forward, as you are not satisfied with the services being provided.
There is not typically a cost or fee associated with switching, but this may vary among consultants. Even if there is a fee, you need to evaluate the overall financial impacts of staying with a consultant whom you are unhappy with vs paying the fee to end the contract and access a better service.
Step 3: Sign your new contract
Work with your new consultant to agree on your new contract, and sign that agreement before proceeding to the SR&ED claim.
Step 4: Transition access to your documents
CRA filings, technical reports, and past claims can be securely transferred to your new consultant so that the transition is low-touch for you and your technical team. You and your technical team should have all of these documents on hand, but if anything is being stored with your previous consultant, you have the right to access all of that information to more transfer it to the new consultant.
Step 5: New consultant takes over future filings
Depending on the last time you filed SR&ED, your new consultant can take over from there (going back up to 18 months). If you haven’t filed your most recent claim yet, or if you are partially done, we may be able to take that over.
One common question we get about switching consultants is, “Does switching SR&ED consultants trigger a CRA review?” There is no evidence, information or empirical data to show any correlation between switching consultants and a CRA audit or review in the following year. The CRA reviews audits based on factors such as the size of a claim, the percent of total payroll and the increase in SR&ED year over year, but nothing to do with switching SR&ED consultants.
The switch can be done in under a week, with zero disruption to your operations. Admittedly, it does take some effort from you and your team to review your current agreement, end the contract, find your next consultant and sign your new contract, but if the problems you are facing with your current consultant are causing troubbles, that switching effort is relatively low compared to another year with the services you aren’t happy with.
What to Ask Before You Switch
What happens if we’re audited? How will you support us? Does that service cost extra, or is that included in your base fee?
How much of my team’s time will this take? Get clear on the time requirements for you and your team members.
Can you show me how you’ll maximize my claim, not just file it? What investigation and deep dive will you do to ensure the claim is as large as possible? How ambitious are you with your previous claims?
What percent of your claims get audited, and of those, what percent of the claims have been approved in the audits? (The industry standard is 10% selected for a review, 6% approved after some reductions, and 4% denied.)
Lastly, understand how the firm aligns with you and the priorities of your team. If your top focus is low cost, reduced time for you and your team, audit support, etc., make sure you find a consultant that is aligned with your needs.
Final Thoughts: When It’s Worth Exploring a New SR&ED Consultant
It is wise to evaluate the available options every 2-3 years to ensure you are working with the provider that best aligns with your needs, goals and priorities.
If you care about making SR&ED simple, easy and fast, consider working with GrowWise. We are hyper-focused on making the SR&ED claim process efficient and easy for you and your technical team with our Supervised AI platform that expedites the claim preparation, while ensuring your claim is maximized.
Want to compare notes or get a second opinion on your current SR&ED setup? We’re happy to chat, no pressure, just clarity. Connect today: https://growwise.ai/lv30/
