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When it comes to R&D Tax Credits, some projects and costs are obviously eligible - but many aren’t.
The R&D Tax Credits scheme is a generous tax-based incentive designed to encourage business investment in research and development projects. Essentially, for every €4 of R&D an eligible company carries out, it gets to keep €1 of Corporation Tax due. This is in addition to the standard 12.5% Corporation tax deduction, so in effect 37.5% of qualifying R&D expenditure can be clawed back. Valuable indeed!
Working with an experienced R&D tax advisor like us is the first step in ascertaining whether your project is eligible. But to start you off, we’ve put together this article to act as a guide.
In order to qualify for R&D Tax Credits, your company and your projects need to have met certain conditions. Usually companies applying for R&D Tax Credits are doing so because they have created a brand new product, service or process from scratch or they’ve appreciably upgraded an existing one.
Despite the scheme being open to companies of all sizes and in all sectors, the criteria itself is quite narrow. Essentially, your R&D project must have:
Any company can fall under this umbrella, but big claimers include technology companies, pharmaceutical companies, manufacturers and construction companies.
This advancement must benefit the whole field in which the company operates - not just the company itself.
This can involve basic research, experimental development or applied research
It must be the case that a scientific or technological uncertainty exists and that your project looked to address it. This uncertainty cannot be something that’s easily solved by a professional in the field. Bear in mind that it doesn’t matter whether the project ultimately failed in this goal; as long as scientific or technological research was undertaken, the end result is largely academic. Remember, it’s about the ‘journey of discovery’, not the final destination. Furthermore, Revenue is not just looking for giant leaps in technology with clearly defined outcomes. Incremental innovation is perfectly acceptable - you just need to have overcome a scientific and/or technical uncertainty.
This bit can be complex and there are lots of grey areas, again making professional advice extremely important. Some costs are clearly eligible, whereas others won’t be so obvious. Expenditure that definitely won’t count includes:
R&D Tax Credits help to fund ‘research and development’. The costs involved with marketing a product for example, can not be included in a claim.
Routine work, or copying existing products, devices, materials or processes, will not be eligible for R&D Tax Credits. Likewise, any activities that merely change the aesthetics of a product or device cannot be included either. That being said, new technology that has been created to make any aesthetic changes will qualify.
Need further clarity? Contact the team for advice.
Capitalised R&D expenditure is not eligible for R&D Tax Credits. However, certain tax cuts can potentially be claimed in respect of the depreciation of assets used for R&D work. Again, this is something we can advise you on.
We did warn you this can be complex! If you’re not clear on which costs are eligible for R&D Tax Credits and which aren’t please do contact our team for advice.
Our team of R&D specialists will help you devise an accurate, fully optimised claim that’s accepted by Revenue first time. We will:
This will involve collecting and correctly displaying each of your eligible costs and transactions, backed up with as much evidence as possible. We will also advise on the best apportionment of staff time spent on the R&D project.
High quality record keeping and documentation is key to giving yourself the best chance of R&D Tax Credit success. The Myriad Associates team will work with you to implement appropriate tracking systems where possible, reducing the amount of admin required in future and helping to support your claim effectively.
Preparing your technical report can be time consuming and rather tedious, but it’s absolutely crucial to get right. If it’s incomplete or less than convincing, your claim stands far more chance of Revenue rejection.
Our team of technical experts have several years of experience in preparing technical reports to accompany R&D tax credit claims. We will work with you to understand your project work and objectives, and how it met Revenue criteria. We will then create your technical report on your behalf, ready for your pre-submission approval.
By completing your R&D Tax Credits claim with us, the chances of Revenue enquiries are very small. However, should any questions or issues be raised, we will work on your behalf to address their concerns and negotiate where necessary. Our years of knowledge around R&D tax credit legislation means you’re guaranteed a smooth claims process with minimal stress and disruption. And of course, your claim is thoroughly checked by our experts before final submission.
At Myriad Associates we aim to simplify the whole process of claiming R&D Tax Credits so that it’s far more manageable. Not only will we focus on preparing your application from start to finish, but on empowering you and your team to claim confidently in the future. This is done through offering tailored support every step along the way, plus advice on how to spot eligible R&D costs going forward.
We make sure your claims are always optimised, so every single qualifying activity is included. Get in touch
Whether you’re ready to kick off your R&D Tax Credits claim or simply ask a question, please do call us on +353 1 566 2001. Alternatively, send us a message and we'll get right back to you.