Should I Use a Consultant, Software, Or DIY My R&D Tax Credit Claim?

You know your project qualifies for R&D tax credits and you're starting to consider how you should prepare your claim. You're aware there's a lot of steps and the risk of an HMRC compliance check makes you take a beat before plunging headfirst. R&D tax advisers have reached out to you, promising to help, but should you consider a software approach, or even going it alone? What option suits your company best?

We'll compare all three approaches honestly: their costs, benefits, limitations, and the scenarios where each one makes sense. By the end, you'll know which route suits your business.

What does each approach actually involve?

Full consultancy services

When you engage a full R&D tax consultancy, you're bringing in specialists who provide an end-to-end service. This includes technical interviews with your team, documentation preparation, HMRC liaison, and often, compliance support. A consultant or team of consultants manages the entire claim process and keeps track of different teams involved, providing a single point of reference for the entire claim and future claims.

It's worth noting that this isn't entirely hands-off. Your team is still required to get involved and provide data to the consultant. Without your input, there's no claim.

Most consultancies often include audit defence and enquiry support as part of their service. You can find typical fee structures on our industry pricing page.

R&D tax software tools

Direct-to-consumer software tools include Tax Cloud, EmpowerRD, and RDVault in the UK. These are guided digital platforms with structured questions designed to walk you through the claim process step by step.

They're lower cost than consultancy, and some offer compliance checks and expert reviews. Different tools provide different service levels, so it's worth comparing what's included before you commit. It’s important to know if your software tool has humans behind it that review your claim for accuracy and what level of support they will give you to keep you on track.

The key difference from consultancy is that you will likely spend more time on the claim in-house. It’s a mid-point between the robustness and compliance you can expect from a full consultancy approach and the costs saved by taking on that work yourself.

DIY approach

Going the DIY route means you handle everything yourself: technical writing, calculations, and form completion. You take full responsibility for compliance and accuracy, with no safety net if something goes wrong.

It requires a strong understanding of HMRC guidelines and submission requirements. The only direct cost is your staff time, but that's often more substantial than finance directors initially expect.

For experienced teams or teams willing to learn, a DIY claim may be worth the time, allowing you to keep your entire claim value. For other teams, a DIY claim may be more feasible with a few supported claims under their belt.

How much does each option cost?

Consultancy fees

R&D tax consultancies typically charge between 15-25% of your claim value on a contingency basis, though fixed fee arrangements are also available. What you're paying for is expertise, time, risk management, and enquiry defence.

For a £100,000 claim, you'd expect to pay between £15,000 and £25,000 in consultant fees.

Software costs

Software tools typically charge between £2,750 and £4,000 as a minimum per claim, with fees increasing based on the size of your claim (usually 5%). This is significantly cheaper than full consultancy.

Using the same £100,000 claim example, software might cost you £3,000-£5,000 in fees.

DIY costs

DIY has no direct fees; whatever your claim is worth, you get to keep.

But there are hidden costs you need to consider. Internal staff time for a first claim can be up to 40 hours when you factor in learning HMRC's requirements, gathering evidence, writing technical narratives, and completing calculations.

There's also the opportunity cost of having your finance and technical teams focused on R&D claims instead of their core work. And perhaps most significantly, there's the potential cost of errors or missed opportunities.

When does full consultancy make sense?

You should consider full consultancy if one or more of these apply:

• You're claiming across multiple projects and teams or complex technologies
• You've faced HMRC enquiries before
• You lack internal technical documentation processes
• Your team doesn't have bandwidth for R&D claims
• You want enquiry defence included

For example, Company A, a software solutions company in the south of England, had a total of nearly 100 employees whose time was claimed for, and over 30 projects of different sizes. Keeping track of all these projects, ensuring they all qualify according to HMRC guidelines, gathering the time spent on these projects per person and writing the relevant reports is a larger task than the internal teams were willing to take on alongside their own responsibilities, so a full consultancy approach was the best option.

Limitations to consider

Your R&D tax claim is only as good as the data you provide. If your team can't articulate what uncertainties they faced or what advances they achieved, the consultant can't manufacture that information.

Not all consultants are equally scrupulous, either. Some may not adhere to HMRC's standards, bumping up your claim in an effort to claim the largest fee they can. And not all services are included by all consultants; always check what's covered, particularly around enquiry defence and future support.

When does software make sense?

Software works well when one or more of these apply:

• Your R&D is relatively straightforward to write up
• You have a small number of clear qualifying projects
• Your finance and technical teams have capacity
• You want cost efficiency but need structure and guidance
• You're comfortable with digital tools and have strong internal processes

For example, a software development company working on a single product with clear technical challenges with a team already documenting their work effectively can be an excellent fit for a software tool.

Limitations to consider

You're responsible for technical accuracy. Software can prompt you with questions and flag potential compliance issues, but it can't interview your team or extract nuance from complex technical discussions.

Not all services include HMRC defence; make sure to check terms before you commit. And crucially, software requires a good understanding of what qualifies as R&D in the first place.

Using a software tool still requires team input, even if it’s less than the DIY option. Your team will still need to prepare narratives and analyse their own costs, despite the benefits of a structured tool.

When should you consider DIY?

DIY might work if one or more of these apply:

• Your claim is too small to have much left after consultant’s or software tool’s fees
• You have someone internally who understands HMRC's R&D definitions and requirements
• Your R&D is well-documented already
• You have previous successful claim experience
• You're prepared to invest significant staff time

If you've successfully claimed before, understand the process, and have solid internal systems, DIY for subsequent claims are a great option to save some money.

Limitations to consider

Most businesses underestimate the complexity when they start DIY. Here's what typically goes wrong:

• Describing outcomes instead of uncertainties: HMRC wants to know what you didn't know at the start of the project, not what you achieved at the end
• Missing qualifying costs: Subcontractors and externally provided workers have specific rules that many businesses get wrong
• Poor technical narrative: Writing in vague generalities rather than specific technical detail
• Insufficient contemporaneous evidence: Trying to reconstruct what happened months later without proper documentation
• Calculation errors: Particularly around apportionment of staff time and indirect costs

What about compliance and risk?

HMRC enquiry rates are rising

In the 2023-24 period, HMRC estimated 6.5% of R&D claims were made erroneously or fraudulently. This figure is obtained by random sampling of claims to establish if they're eligible.

Getting your claim wrong can mean:

• Claim rejection
• Repayment demands plus interest
• Penalties for inaccurate claims
• Future claim scrutiny

Since HMRC randomly selects claims for review, as well as picking up claims with obvious markers for ineligibility, your claim needs to be robust and compliant all the way through to avoid losing out.

How each approach handles compliance

Full consultancy: Your consultant usually manages enquiries and provides defence throughout the process. Their reputation depends on compliance, so they're incentivised to get it right. Some offer enquiry insurance or guarantee support. They stay current with HMRC guidance changes, so you don’t have to worry about your claim being lost on a technicality.

Software: Software tools are designed with HMRC compliance in mind. Some tools cover enquiries, some don't, and some will for a fee. Quality and support varies significantly between platforms, so research carefully before committing.

DIY: You're entirely responsible for staying compliant. HMRC correspondence goes directly to you, mistakes are yours to fix, and there's no safety net if HMRC challenges your claim.

The hybrid approach: Can you combine methods?

Some businesses successfully mix approaches, and this can offer a good balance between cost and expertise:

• Use software for straightforward claims; hire consultants for complex claims
• Start with consultancy for your first 1-2 claims, then transition to software or even DIY once you understand the process
• DIY with optional expert review for borderline projects

This requires honest assessment of your internal capability. If you're not sure whether a project qualifies, don't guess; that's when expert input becomes valuable.

How to decide what's right for your business

Ask yourself these five questions:

1. How complex is our R&D? Multiple projects across different teams = consultancy. Single, clear project = software might work.
2. What's our internal capacity? No bandwidth = consultancy. Strong finance and R&D teams with time = DIY could work.
3. What's at stake? Large claims justify consultant fees. Small claims may not.
4. What's our risk tolerance? Low risk appetite = consultancy. Comfortable managing compliance = software or DIY.
5. Do we have R&D claim experience? First-timers often benefit from consultancy. Experienced teams may manage with a lighter touch.

Which option is right for you?

It's a fair question, especially when you're weighing fees against potential claim value and compliance risk.

The truth is, there's no universal answer. The right approach for a software startup in its first year of trading won't be the same as for a £50 million pharmaceutical company. The process of claiming varies significantly depending on your resources, claim complexity, and risk appetite.

What matters most is compliance, accuracy, and claiming everything you're legitimately entitled to. Whether you choose full consultancy, software, or attempt DIY, make sure you understand what R&D tax relief actually rewards and what HMRC expects to see. If you'd like us to assess which approach suits your business, get in touch.