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Plan your R&D Tax Credit claim to avoid a last-minute panic

Research and Development (R&D) Tax Credits can offer a sizeable cash injection to Irish businesses that qualify, and just about all innovation work could be in the running.

Launched in the year 2000, R&D Tax Credits are a Revenue-backed tax incentive to help companies meet the costs involved in innovation and growth. The government has long recognised that companies engaging in a range of innovative activities not only make themselves more competitive but boost the economy as a whole through investment and job creation.

Has your company undergone R&D work lately? Then time is of the essence. While R&D Tax Credit applications can be made within 12 months from the end of a tax year, we recommend completing the claim over the course of the year in real time. This then avoids a rushed, last-minute exercise in data gathering and panicking about getting your submission in on time. It’s also worth thinking of the process as a set of stages, so that information can be collected and processed in a timely fashion.

What is Revenue’s R&D Tax Credit scheme?

The Research and Development (R&D) Tax Credit scheme is open to all Irish companies that have recently undergone - or are currently undergoing - innovative projects either in Ireland or inside the European Economic Area. This sounds pretty broad, and it is – but the big proviso is that there has been some element of scientific or technological advancement involved.

The scheme provides a 25% tax credit against a company’s bill for Corporation Tax, over and above a tax deduction of 12.5%. This effectively means an accepted R&D Tax Credits claim can generate a refund of €37.50 per €100 worth of R&D expenditure. In essence, R&D Tax Credits actually reduce the real cost of R&D by as much as 37.5%.

How Irish companies can qualify for R&D Tax Credits

To be eligible for the R&D Tax Credit scheme, a company’s R&D work must meet a number of criteria, namely that the R&D:

• Involves experimental, investigative or systemic activities
• Attempts to make a scientific or technological advancement
• Is in a technological or scientific field
• Requires experimental development or basic or applied research
• Aims to resolve a specific scientific or technological uncertainty.

How does an R&D Tax Credit claim stand the best chance of success?

The application process for R&D Tax Credits is notoriously difficult. There is a large amount of data gathering and explanation required, and it has to be done exactly as Revenue requires. Getting it wrong will, at best, mean your claim is unsuccessful and at worst could land you with a Revenue enquiry into your wider tax affairs.

This is why we strongly recommend you use a professional claims portal like Tax Cloud so you can rest assured you’ve submitted your claim correctly.

R&D Tax Credits: The claims process

Here we have divided the claims process into several distinct stages to explain more about how we work.

Step One: Looking over active projects and current processes

Our first step is to look closely at your existing processes, tracking systems and organisational tools particularly. In doing this, we can be objective about the R&D work that’s going on and determine whether it qualifies for R&D Tax Credits and what the realistic chances are of a successful claim. It also determines the best, most efficient way of gathering the required financial and technical information.

Step Two: Collecting data together for technical reporting

Next we can work with you in developing a plan for capturing the information Revenue requires for supporting your application from a technical perspective. Our team can recommend the best ways to capture internal technical information if there isn’t any to hand or put forward suggestions to enhance the current process.

Step Three: Project costing

So now we’ve done the technical part. Next we need to capture the information necessary to support your claim from a financial perspective. This includes compiling financial/expenditure information based on the selected R&D work in an itemised report that shows qualifying costs per project in the very best light.

Step Four: Review of information before submission

Once the information for both the technical and financial reports have been compiled they will need to be reviewed fully by the key members of staff involved to check for accuracy. This step is crucial before submitting and if anything has changed at this point we can work with you on any adjustments. Once everything is checked, submission of your application can take place. This should be well in advance of the deadline so that it will be received on time.

Step Five: After submission

With Revenue audits on the increase, it’s really important that businesses allow enough time for everyone involved in the application process to put everything together exactly according to Revenue’s latest guidelines. If Revenue is not happy with any aspect of your claim, or the calculations within it, it will ask further questions or even open an audit which is best avoided at all costs. The Tax Cloud team will guide and support you through this if it happens.

How can the Tax Cloud portal help?

Whether you’re brand new to the world of R&D Tax Credit claims or you’ve been working alongside us for years, the Tax Cloud portal is vital. Developed by the R&D tax and funding experts at Myriad Associates, the portal is accessible online 24/7 with nothing to download or maintain – it simply takes you through each step in making a fully optimised R&D Tax Credits claim.

Guided and supported by our experts, each stage of your application will only unlock once the last the one has been checked through. The portal will even submit your claim for you, and there’s support available all the way through should you have any questions. Plus, as you’re entering in your own figures and technical narrative, the (much lower) fee reflects this too!

Why not book a free Tax Cloud demo today or give us a call on +353 1 566 2001. Alternatively, you can use our contact page and we’ll call you back.