Consultants are considered from several varying perspectives by the CRA and by companies. These opinions and perspectives used to depend on the work of individual consultants, but there seems to be an emerging trend of demonizing consultants. Although using consultants is quite simply outsourcing to acquire missing knowledge or skill sets, their use is often viewed quite negatively and inaccurately
Consultants from the CRA’s Perspective
A term often used by the CRA to describe consultants is “bottom feeders”. During their annual conference in Hamilton, and throughout a well planted misinformation campaign in the Globe and Mail, the CRA seemed to blame many of the issues with the SR&ED program on consultants, and in particular those who had come from the CRA. The discussion that was sparked by the Globe and Mail article brings to mind a very accurate proverb: “If you want to shoot the dog, first you have to accuse it of having rabies.”
Simply put, the CRA had to find serious fault with consultants before condemning them.
Some research and technology advisors (RTAs) see consultants as a threat to their power within the SR&ED program. However, good RTAs appreciate that consultants often carry out strong due diligence that lessens the overall burden of SR&ED claim preparation. A good RTA also knows how to tactfully advise a consultant in ways that avoid undesirable practices and interpretations. One commissioner used to openly state that the triad of taxpayer, CRA and tax practitioner was most often a healthy and productive one.
Consultants from the Company Owner’s Perspective
Company owners, on the other hand, often despise consultants for two different reasons:
- The consultant is overly aggressive and calls too often concerning SR&ED matters; and
- Their contingency percentage rates seem too high.
Both reasons can be problematic for business owners, but it is important to consider the following reality when forming an opinion on SR&ED consultants: a minimum contingency percentage of 15% of the total tax claim amount is normal. This 15% covers the costs of claim preparation and helps to ensure that there is extensive proof and documentation of the claiming process. As there is currently great uncertainty in the SR&ED field, using a consultant helps to safeguard against some of the issues that come along with this uncertainty.
That being said, there are alternative strategies. Consultants don’t necessarily have to complete all the work, thereby using up more of a company’s resources. Instead, consultants can:
- Help set up the system to capture the SR&ED components;
- Train the workers on the program and what minimal information to keep; and/or
- Oversee the quality of technical/claim write-ups.
The moral of the story is that good consultants should and will adapt their services to suit your specific needs.
This article is presented only for informational purposes and does not constitute legal advice. You should retain legal counsel if you require legal advice regarding your individual situation.