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Case Study #2: Bigger Isn’t Always Better

HomeSR&ED Case StudiesCase Study #2: Bigger Isn’t Always Better

MSN had been helping a mid-sized automation/custom equipment manufacturer prepare their SR&ED claim since 1999. As the company grew over the years, they were approached by one of the national accounting firms. The company decided to move their accounting and SR&ED business to this national firm. MSN had successfully prepared large SR&ED claims for the last eight years for our client, with only 1 audit and without any adjustments.

The national accounting firm prepared their next two SR&ED claims, which were about 35% larger in size than the MSN historic claims. Unfortunately, CRA performed a science and financial review of both claims, and both were reduced by 50%-75%.

The audits were long and time-consuming. The national accounting firm wasn’t very helpful during the audits and was unable to preserve much of their claims. They encouraged the client to pursue tax court, along with a notice of objection.

The client has now returned to MSN. We prepared their next claim, and it was accepted as filed without audit.

Lessons Learned: MSN is a boutique consulting firm specializing in SR&ED. At the end of our claim preparation process, we do a “peer review” of your claim to ensure the claim size makes sense relative to the size of the company and relative to the work performed. If your claim is too large or if the costing isn’t “in sync” with the technical work described, it creates red flags for CRA. Since SR&ED is our craft, we know how to prepare high-quality SR&ED claims.