Engineering Projects Attracting R&D Tax Credits

Where there’s engineering there’s innovation

The engineering sector is a breeding ground for research and development. And where there’s innovation, there’s likely to be R&D Tax Credits.

 By getting clued up on what projects - and costs - will qualify, you may find your R&D activities are worth thousands of euros of extra cash.

What engineering sectors commonly claim?

Throughout our years of working in R&D funding, we’ve found that big claimers of R&D Tax Credits tend to be in these subsectors amongst many others:

• Civil engineering
• Architectural and structural engineering
• Avionics and aerospace
• Electronics and electrical engineering
• Software and systems engineering
• Materials engineering
• Defence engineering
• Communications and telecoms engineering

What types of engineering projects and activities qualify?

The scope for eligible R&D Tax Credit claims is incredibly broad, although each claim will be assessed on its own merits by Revenue. However, it’s not as simple as listing your costs and hoping for the best; it’s essential that in order to claim R&D Tax Credits a project must seek to make an advance in technology or science. It must also have aimed to overcome a scientific or technical uncertainty.

In the world of engineering, projects tend to stand a good chance of attracting R&D Tax Credits if they involve:

• The creation of new designs or prototypes
• An appreciable improvement to an existing product or process
• The use of new materials or a new combination of materials
• Streamlining a process through automation
• Multiple technical iterations before going into production
• New or improved design of machinery, electronic products or components

Bear in mind though that although these are good examples, they do not qualify automatically. It’s still down to individual companies to make a high quality application complete with calculations and a narrative - which is where Myriad Associates can help. Not only will we identify relevant projects and costs, we will also work with you during every step of the application process. We’re also likely to spot expenditure which you hadn’t even considered including, and we’ll make sure everything is above board with Revenue. Feel free to get in touch and find out more.

The R&D Tax Credits scheme in brief

R&D Tax Credits mean that eligible Irish businesses can claim back up to 25% of their R&D expenditure from the government. It’s offered either as cash or as a reduction in a company’s Corporation Tax liability, as long as the strict conditions are met. It’s well worth having, as the credit is calculated at 25% of relevant expenditure, in addition to the 12.5% Corporation Tax deduction at the standard rate.

If a company does not have any tax liability in the current or immediate prior period, this is when the lump sum can be claimed in three equal instalments across a three-year period.

Revenue typically pays any cash refund after a company’s Corporation Tax deadline has passed. This is in “normal” times, but due to COVID-19 Revenue has vowed to speed things up as discussed below.

How COVID-19 means companies can now receive the benefit more quickly

Under new measures unveiled in light of coronavirus COVID-19, Revenue is allowing companies to avail of their R&D cash instalments earlier than usual.

For example:

Company A must file their tax return for year end 31st December 2019 by the 23rd September 2020. It files early, in April 2020, and is due to receive an R&D refund of €X amount. This consists of R&D Tax Credits from the preceding three years. However, with these new measures Revenue will now administer the full refund immediately after the company has filed, so there’s no waiting around until the 23^rd September (subject to Revenue checks of course).

These special measures aren’t just open to the engineering sector. But with many subsectors of engineering suffering in the economic downturn the extra fast financial boost could prove to be a lifeline.

Companies looking to accelerate the repayment of any 2020 R&D Tax Credits must:

• Have filed their Corporation Tax return (Form CT1) for the accounting period ending in 2019 at the time of request
• Visit the Revenue website and make a request to expedite the R&D tax instalments using MyEnquiries
• Appropriately tag the enquiry within MyEnquiries to that it relates to “Corporation Tax” (more specifically, “R&D instalments payable in 2020”)

If you need further help in accelerating this valuable tax incentive, feel free to get in touch with the Myriad Associates team for advice.

Tips on claiming R&D Tax Credits in the engineering sector

We’ve helped a number of engineering firms receive the R&D Tax Credits they’re entitled to. So to help, we’ve put together a few tips:

• Don’t run out of time. You can only claim for projects that took place up to two accounting periods ago
• Keep records of everything - what the R&D expenditure was, how it relates to the R&D project and when the costs were incurred
• Eligible expenditure can include contractor and subcontractor costs, staff wages, materials and scrapped materials, prototype costs and overheads used up in the R&D process. However, this isn’t an exhaustive list and again we can advise you on your specific claim
• The qualifying activities can take place anywhere in the world, but must be funded by an entity based in the Republic of Ireland

Why work with Myriad Associates on your R&D tax claims?

By choosing to work with Myriad Associates on your R&D Tax Credits claim, you will benefit from our expert R&D knowledge from start to finish. First off we’ll check your company and project qualifies and go through your current tax position via a no obligation phone or video consultation. Once we’ve ascertained eligibility, we’ll oversee your claim to include all your eligible engineering projects and costs so nothing is left out. This means you’ll avoid over or under claiming, so you know you’ll receive the entire amount you’re entitled to. And, if Revenue raise any questions we can deal with them on your behalf too.

Thousands of euros could be at stake - so why take the risk?

Get in touch

Ready to make or a claim, or just need some advice? Simply call our friendly Dublin-based team on +353 1 566 2001 or use our contact page and we'll call you back. We’re working as usual during the COVID-19 outbreak and will be pleased to assist you.