Contingency Fees – Are They Really A Problem?

By: BeneFACT Marketing in Uncategorized

May 8th, 2012

Since the release of the 2012 Federal Budget on March 29, 2012, there has been a lot of talk about the concerns regarding contingency fees charged by SR&ED consultants. The government is concerned these so called contingency fees are weakening the benefits of the SR&ED tax incentive. Are they really that big of a problem? The government seems to think so.

In the coming year the government plans to investigate this issue to understand why firms choose to hire SR&ED consultants on a contingency-fee basis, instead of working on the claims themselves. Could one of the reasons be the fact that the process currently in place is so complicated and CRA’s review process has turned off quite a few potential claimants?

Most firms that have a tendency to use SR&ED consultants are SMEs. SMEs usually have limited resources on hand or lack the expertise in the preparation of claims, hence their decision of using an expert. But how do they afford one?  This is where the contingency-based fee helps!

A contingency fee is any fee for services provided where the fee is payable only if there is a favourable result.  So, it’s great news for the firms who don’t have the funds to pay right away. Why would you want to take away the one thing that actually helps SMEs? If there was a set fee charged no matter the outcome, how many SMEs do you think would be able to afford an expert? And in that case, would they even claim SR&ED at all? And let’s not forget about the fact that SR&ED consulting firms generate significant levels of employment for highly qualified Engineers, PhDs etc. So why change something that seems to be working for everyone?

Don’t let your tax credits go to waste. Contact us today for more information on how BeneFACT can maximize your SR&ED claim.