Advocate Commercial Debt Recovery has successfully recovered £2.5k of commission from a Wiltshire-based heat pump installer at no cost to the creditor. The legislation Advocate uses to recover its costs from the debtor applies to the sale of goods or services. In this case, our client was a firm of chartered accountants specialising in taxation. One service they provide is drafting and submitting R&D (Research & Development) tax credit claims. This allows companies to reduce or offset their tax bill against a proportion of their R&D costs.
Research Time
As an installer of the relatively new heat pump technology, the debtor spent considerable sums researching and developing hardware and software to ensure householders obtained maximum benefit from their installations. Having been informed of the R&D tax relief scheme, the debtor instructed our client to review expenditure for a back-dated claim. Working on a commission basis, the client prepared and submitted a £15k R&D tax credit claim, which HMRC accepted, before billing the debtor a modest £2.5k in commission.
Tomorrow Time
Upon receiving the benefit from HMRC, the debtor swiftly ghosted our client and ignored all requests to pay the £2.5k debt. With the invoice reaching 123 days overdue, Advocate were instructed. Within 24 hours, the debtor received a Notice of Court Proceedings and the realisation our client was serious about recovering payment. We quickly got the attention of the Managing Director and struck up a conversation as to how and why the debt remained unpaid. As excuses go, claiming to be stuck on tomorrow time following a holiday to Spain is up there with the likes of a dog eating the chequebook! With the MD now on Greenwich Mean Time, they set about disputing the amount of R&D relief and our client’s commission.
Payment Time
At the discretion of HMRC, R&D tax credits can be received as a cash benefit, offset against existing tax liabilities or a combination of both. During a discussion with the client, it appeared the MD had failed to pay HMRC liabilities of £12k of tax from the previous year. Although the debtor had received a £3k cash benefit from HMRC, they had also received the benefit of £12k being offset against the overdue tax. The commission was based on the £12k. Having explained this to the MD, we emphasised that in addition to the £3k cash, our client had actually prevented HMRC from levying further penalties for unpaid tax! Although reluctant to concede, the FD could no longer justify putting off payment. We received the full £2.5k plus statutory late payment charges that afternoon. This was another successful debt recovery from Advocate Commercial Debt Recovery.