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Got a message from Revenue about your R&D tax credit claim? Here's what they're asking for and how to be defend your claim.
Many companies are surprised to receive a follow-up message from Revenue after submitting their R&D tax credit claim. In reality, it's a routine part of how Revenue reviews claims to prevent fraud and error, and the message itself tells you exactly what they want.
The good news is that none of this information is unreasonable to provide, with a little preparation and strong record-keeping. This post walks through each of the seven points Revenue typically raises and what you should have ready.
When you submit your R&D tax credit claim through the CT1, there's no option to attach supporting documentation. There's also no obligation to do so at that stage. But once Revenue opens a review, you're required to respond fully and promptly.
In most cases this takes the form of an aspect query: a targeted request for information on a specific part of your claim. In more serious cases it may escalate to a full audit. Either way, receiving this message isn't a signal that your claim is invalid. It's a standard part of Revenue's compliance process, and companies that claim the R&D tax credit regularly will encounter it.
The best way to approach it is not to treat it as a post-submission exercise at all. If you've prepared full technical reports for each qualifying project, kept contemporaneous records of your R&D costs, and documented your workings from the outset, responding to Revenue becomes a matter of sending off information that already exists.
Revenue's message sets out seven categories of information. Here's what each one means and what you should have in place to address it.
A message from Revenue will say:
"Please provide a brief synopsis of the R&D activities which were carried out by the company, please include details of the number of qualifying R&D projects being undertaken and the types of R&D activities involved, including examples."
Revenue isn't asking for a detailed technical dissertation, but "brief synopsis" shouldn't be interpreted as a few lines per project. What they want to see is that you understand what qualifies, that you can describe the technical uncertainty your work was addressing, and that you can distinguish qualifying R&D activities from routine development or production work.
For each qualifying project, you should have a technical report that covers:
The difference between a robust description and a weak one usually comes down to whether the uncertainty is front and centre. Compare these two approaches:
A software company describes its project as "developing a new data processing platform." That tells Revenue almost nothing about why it qualifies.
The same company describes the project as "resolving a specific uncertainty around processing latency in high-volume real-time data pipelines, where existing frameworks couldn't achieve the required throughput without data loss." That grounds the claim in a concrete technical challenge.
A message from Revenue will say:
"The number of employees carrying on R&D activities."
This is a straightforward headcount, but it needs to be consistent with the cost breakdown in point 3. If you're claiming costs for six employees, Revenue will expect to see six names in your workings, and those names should correspond to people whose R&D involvement you can actually evidence.
Your employee headcount should tie directly to your time apportionment records. Keep these in good order.
A message from Revenue will say:
"A detailed breakdown of the R&D costs for each employee, including your calculation of same."
Revenue wants to see the maths, not just the totals. A lump-sum figure for staff costs won't satisfy this request. When preparing your claim, your workings should show, for each employee:
If employees split their time between R&D and non-R&D duties, you need a documented basis for the split. Timesheets are the most straightforward evidence. Where timesheets don't exist, a reasonable and consistently applied allocation methodology, documented at the time, will generally be accepted. A retrospective estimate, constructed after the event, is a much harder position to defend.
A message from Revenue will say:
"A detailed breakdown of all other R&D expenditure."
Beyond staff costs, your claim may include materials, consumables, software licences, utilities, and other direct costs. Revenue wants these itemised, not presented as a single line. Where possible, costs should be allocated to specific projects.
Where costs are shared between R&D and general operations, document how you've made the split. The methodology should be reasonable, consistent, and applied at the time the costs were incurred.
A message from Revenue will say:
"Details of any subcontractor costs included in the above."
If you've engaged subcontractors to carry out R&D work on your behalf, Revenue will want to know who they are, what they did, and why it qualifies. Keep subcontractor agreements and invoices, and be clear in your documentation about the specific R&D activities the subcontractor was engaged to carry out.
Worth noting: there's a limit on the amount of qualifying expenditure that can relate to third parties. Our guide to R&D subcontractor costs covers this in more detail.
A message from Revenue will say:
"Any expenditure which is met or to be met directly or indirectly by any grant assistance will not qualify for relief and should be disregarded when computing your claim. This means that any R&D expenditure which is met by grant amounts received or to be received should be disregarded when computing your claim. Please provide the relevant R&D letter of offer from the granting body in support of the R&D claim, and please confirm the amount of research and development expenditure disregarded in respect of grant assistance (i.e. the amount of the grant received or to be received)."
In plain terms: if a grant has funded part of your R&D expenditure, that portion is not eligible for the R&D tax credit. The relief and the grant cannot both apply to the same euro of spending.
If your company has received support from Enterprise Ireland, the IDA, or any other grant body in connection with your R&D activities, you'll need the letter of offer and a clear figure for the amount of R&D expenditure that has been excluded from the claim as a result.
This is one of the most common sources of error in R&D claims. If you've received grant support and haven't excluded the relevant expenditure, your claim is at risk. Revenue will disallow the overlap, and depending on the scale, it can affect the value of the entire claim significantly.
A message from Revenue will say:
"Please provide computations in support of your claim for any carried forward amounts included in your R&D refund claim."
If your R&D tax credit exceeds what can be offset against your current year liability, the unused amount can be carried forward. Revenue wants to see the workings behind any such amounts included in your claim.
Maintain a running schedule that shows prior year claims, amounts surrendered or paid in credits, and the balance carried forward into the current period. This is particularly important for companies with a history of R&D claims, where the cumulative position may not be immediately obvious from the current year figures alone.
The seven points above reflect exactly the kind of documentation you'd want to have in place regardless of whether Revenue ever asks for it. The practical approach is to build your claim file as you go, not once the CT1 has been submitted.
A robust R&D claim file should include (where necessary):
To see how this works in practice:
A software company has 6 developers working across 2 qualifying R&D projects. At the start of each project, the project team writes a note covering the uncertainty being addressed and the planned approach. Developers log their time by project using a simple weekly timesheet. At year end, the finance team compiles a cost breakdown showing each developer's salary, PRSI, and the percentage of time attributed to each project. The project team write up a report on the project and how it qualifies, describing the advance sought, the uncertainty and the work carried out.
When Revenue's message arrives, the company already has everything it needs. The technical reports address point 1. The headcount and timesheet records address points 2 and 3. The itemised cost records address point 4. Subcontractor invoices and agreements are already filed. Grant correspondence has been retained and the exclusion applied from the outset.
Revenue can disallow your claim entirely if you don't respond to an information request, or if your response doesn't support the figures in your return. In more serious cases, they can raise an amended assessment and pursue underpaid tax with interest. A poor or incomplete response can also increase the likelihood of a full audit, which is a significantly more demanding process than an aspect query.
A response to Revenue is much easier to put together when the information already exists. The work is in building and maintaining the records, not in writing the letter.
If you've received a message from Revenue about your R&D claim, or want to ensure your documentation is in good shape before you submit, don't leave it to chance. Contact Myriad to discuss your position.
Got a message from Revenue about your R&D tax credit claim? Here's what they're asking for and how to be defend your claim.
You must split out your R&D and non-R&D costs for a valid R&D tax claim in Ireland. This guide covers staff, software, subcontractors, consumables and more.
Ireland's R&D tax credit can cover subcontracted R&D costs, subject to a 15% cap and €100,000 floor. Learn the rules, notification requirements, and exceptions.
Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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