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Here we give the lowdown on how innovative companies across Ireland can benefit from this lucrative tax incentive.
The R&D Tax Credits scheme is incredibly generous and companies all over the Republic of Ireland have already benefited.
Here at Myriad Associates we have almost two decades of experience in all aspects of R&D Tax Credits and innovation funding. With this in mind, we’ve put together ten top tips to help boost your chances of R&D Tax Credits success.
Every R&D Tax Credits claim is different, so don’t fall into the trap of thinking that success breeds success. Don’t forget as well that if your company has availed of state-sponsored grant funding at any stage, your R&D Tax Credits claim will very likely be affected.
Whether your company has claimed R&D Tax Credits once or a hundred times before, don’t be blasé about your next claim. Procedures, guidelines and requirements may also have been updated since last time, and it’s easy to miss something off.
Ignore the Revenue’s tax year - this is about the financial year of your company. The reason for this is because any expenses that fall outside of the financial year you’re currently in cannot be included in that year’s claim. So it’s well worth checking closely to make sure you’re claiming for the right time frame.
When you claim R&D Tax Credits you need to have a firm understanding around which areas of your R&D project can be included and which can’t. We can’t emphasis enough how important this is - but untangling it can be a challenge.
Obviously you’ll want to fully maximise this opportunity and claim for as many costs as you can. But if you start accidentally claiming for costs that aren’t eligible, Revenue are pretty much guaranteed to spot it. Mistakes will be a massive red flag, and could easily delay your claim or even lead to a lengthy (and stressful) enquiry.
If you’re not exactly sure whether a cost will qualify or not, contact us at Myriad Associates and we’ll be pleased to advise you.
As mentioned, previous grant funding can affect your R&D Tax Credits claim. But the trick is in understanding whether your grant contributed to the R&D project that you’re claiming tax relief for.
We wrote a blog on this recently. It’s aimed at accountants rather than businesses, but it goes through notified and non-notified state aid in more detail so you may well find it useful. Read it here.
We hear this all time. "Yes our work is innovative but we do it all the time". Although this may be the case, you could well still have a claim. The crucial thing is that your work made a technological or scientific advancement in your field, regardless of how small this advancement was.
A technical narrative is an essential part of the R&D Tax Credit claiming process. It’s the opportunity to describe the project your business undertook in detail, and to explain why you think it should attract the relief. This is your chance to really ‘sell’ the project, and your company, to Revenue inspectors.
We’ve seen many businesses who write their narrative from a managerial perspective rather than a technical one. This tends to lead to the inclusion of information that’s irrelevant or surplus to the claim. But Revenue is really only interested in understanding what the scientific or technological uncertainty was, and what innovative steps were taken to resolve it. Bear in mind too that the harder a problem was to solve, the more R&D was likely to have occurred - and Revenue know this. So demonstrate it to them!
Finally, don’t make the job hard for Revenue. Ultimately someone who doesn’t know your company or your project will receive your claim and need to sift through it. So keep your narrative brief, concise and to the point. Avoid jargon where possible and really make it clear what your project was about.
Don’t forget that your company directors are extremely likely to be cross-checked by Revenue. This makes it essential that their name and details are accurate. If these details are missing or incorrect, your claim could well be delayed or denied. Additionally, bear in mind that directors’ dividends do not count as eligible expenditure.
Yes, even businesses operating at a loss can be eligible for R&D Tax Credits. It’s normally recommended that you carry the loss forward for offsetting against future profits instead of surrendering it straight away for a lower rate. However, this will only work if the company is profitable in future. So if continued loss is likely (especially in the wake of COVID-19) then this will need to be taken into account.
Get in touch with the Myriad Associates team and we can discuss this with you more fully.
If your business has developed a number of products for example, claiming for them individually may be a real headache. With this in mind, see if you can group them together according to the scientific or technological uncertainty that was resolved. This can help you maximise your costs with much less effort. Again, we’ll be pleased to work on this with you if required.
As you’re probably starting to see, claiming R&D Tax Credits is not a straightforward process. Revenue is hot on checking each claim, and any errors - however innocent - can cost serious time and money.
When you work with our R&D tax specialists at Myriad Associates, we will help you compile your claim, together with the calculations and technical narrative, from start to finish. Not only can we assist in identifying all your claimable costs, we’ll also ensure it stands the very best chance of success when submitted to Revenue. Our 100% success rate proves it.
For a no-obligation discussion about our hassle-free, expert R&D tax service, please do call our Dublin-based team on +353 1 566 2001. Alternately, send us a message and we'll get back to you.