R&D Tax Credits For Engineering Firms

A valuable funding injection

The Irish engineering sector has been booming in recent years. It’s an adaptable, dynamic sector where research and development thrives across a range of disciplines.

Engineering is one area of Ireland’s economy where competitive advantage is key. It’s about constantly updating skills and knowledge in the development of brand new technologies, materials, products, systems and devices. Plus of course, in improving what’s been created before.

R&D Tax Credits can have a hugely positive effect on a company’s ability to invest in innovation. Year on year, claims can trigger a cycle of ongoing research and development. The resultant cash can also be spent on anything, from purchasing materials and paying debts to hiring staff and training up future generations of technicians.

Engineering disciplines by sector include:

• Mechanical engineering
• Chemical engineering
• Structural engineering
• Telecoms and network engineering
• Architectural engineering
• Motorsport and automotive engineering
• Biochemical engineering
• Aerospace engineering
• Construction engineering
• Infrastructure engineering
• Civil engineering
• Military engineering
• Petrochemical engineering
• Railway engineering
• Electrical engineering
• Green engineering
• Engineering for manufacturing
• Marine technology engineering
• Systems engineering
• Engineering relating to materials
• Plant engineering
• Power engineering
• Software engineering
• Transportation engineering

Standing out from the crowd

To remain competitive in solving the most challenging scientific and technological issues, engineering companies frequently take on eligible R&D work without even realising it. This is why working with R&D funding experts like Myriad Associates (developers of the Tax Cloud) is so important. We can quickly spot where applicable activities have occurred that will attract R&D Tax Credits, so that all claims are maximised. After all, not all research and development work in engineering is immediately obvious.

Examples of relevant R&D activities

There’s a broad range of activities in the engineering sector that are highly likely to bring about an R&D Tax Credits claim. There’s no way we could include them all in one list, however some of the most common examples include:

• Developing a new or updated product, service or process that is different to what’s currently available. Perhaps they’re more robust, sustainably produced or efficient
• Creating prototypes
• Developing processes and techniques for scaling up production
• Designing new technological equipment or software
• Streamlining manufacturing processes through automation
• Developing a pilot plant to investigate new ways of increasing throughput

If you believe your engineering company has grounds for an R&D Tax Credits claim, we’d be pleased to offer any advice you need. Once we’ve ascertained your eligibility, you can then use the Tax Cloud portal to create your fully guided application.

How much are R&D Tax Credits worth?

Launched in Ireland back in the early 2000s, the R&D Tax Credit system allows for companies to claim a tax credit of 25% on qualifying R&D expenditure. It is offered in addition to the standard Corporation Tax deduction of 12.5%, bringing the overall benefit to 37.5%.

The beauty of the scheme is that not only is it very generous, it also reduces commercial risk and can make companies more favourable to investors. As long as a technological or scientific uncertainty is addressed in the course of an engineering project, then R&D Tax Credits are likely to follow.

What does R&D mean in engineering?

R&D is likely to take place at every stage of an engineering project. Once a goal has been defined early on, specific technical risks and uncertainties will become more apparent. This is when feasibility studies will begin.

The next stage – development – will also necessitate ongoing analysis and design work, again likely to attract R&D Tax Credits. Engineering projects themselves tend to be on a larger scale, with CAD modelling and new software essential. In certain disciplines, this stage also involves the production and testing of prototypes. It’s this designing and testing that helps to manage the risks and is particularly essential in R&D projects where outcomes are typically uncertain.

Further testing and remedial work may well also count as R&D. This could involve solving later technical challenges such as logistics and storage issues, depending on the product.

It’s a highly valuable scheme - but applying isn’t easy

Although many R&D projects in a wide spectrum of engineering disciples are eligible, identifying R&D activities can be a daunting task. It’s essential that R&D work is identified from the start when an R&D Tax Credit claim is expected to be made. The R&D process must also be evidenced in a consistent way throughout, with a high quality technical report included too. While this shouldn’t put engineering companies off claiming, it does highlight the importance of working with R&D funding professionals.

To conclude

Engineering lends itself to research and development like no other sector. From aviation and aeronautics to electrical engineering and mechanics, the range and breadth of R&D in this area is vast. Whilst the application process isn’t necessarily straightforward (unless you work with us of course), successful claims can be worth tens of thousands of euros or more. The ongoing benefit in supporting future innovation is also invaluable.

Back in the summer we wrote an article called Engineering Projects Attracting R&D Tax Credits which we also recommend reading.

Make your claim today using the Tax Cloud portal

Don’t let your engineering company miss out on generous R&D Tax Credits.

Devised by the R&D funding experts at Myriad Associates, the Tax Cloud portal allows you to enter in your own figures to see what you can claim. It then takes you through a step-by-step application process with full support from our team at each stage.

You will also use the portal to put together a high quality technical report that meets with Revenue criteria. It’s free to sign up and there’s nothing to pay up front either. Plus, as it’s cloud-based you can complete your application at any time, on any internet-connected devise.

Sign up to the Tax Cloud portal to make your R&D Tax Credits claim today. Or if you’d like to speak to our expert team about anything we’ve raised in this article, simply call +353 1 566 2001.

Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud