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Does Your Project Qualify For R&D Tax Credits?

Understanding what projects and costs are eligible for an R&D Tax Credits claim is far from straight-forward. But help is at hand.

Barrie Dowsett

Chief Executive Officer


5 minute read

All companies, all sizes, all industries

From manufacturers to pharmaceuticals, drinks companies to logistics firms, no matter what industry your company is involved in, R&D Tax Credits can make a huge dent in your innovation costs.

A great way of injecting much needed, non-repayable cash into your Irish-based business, now more than ever it’s a scheme that’s gaining in popularity. But how do you know exactly which of your projects perfectly fit the claim criteria, and which ones don’t quite make the grade? Here we take a look.

R&D Tax Credits in brief

Before we go any further, it’s well worth familiarising yourself with the fundamentals of the R&D Tax Credits system and how it works.

Essentially, Research and Development (R&D) Tax Credits are administered by Revenue as a tax incentive for companies to engage in innovative projects. This is because companies that are innovating and growing will take on more staff, expand into additional sites and invest in even more research and development work. This in turn strengthens the economy over time, reducing unemployment and boosting tax take.

R&D Tax Credits help to cover the investment a company has already made in innovative scientific or technological work. Perhaps it has recently developed a brand new product, service or process from scratch, or appreciably upgraded an existing one. Common examples include improvements in packaging, a switch to more ethical processes or expanding a particular product line. As long as a specific challenge was addressed by scientific and/or technological research, then R&D Tax Credits can seriously help with the cost.

How much can be claimed?

It’s a generous scheme indeed! The benefit is provided either as a credit against a company’s Corporation Tax liability or as a series of three cash instalments if the company made a loss. The credit is worth 25% of qualifying R&D expenditure, in addition to the standard rate of 12.5%. So in fact, altogether there’s €37.50 to be claimed for every €100 spent on R&D work. And in the current climate especially, this can make all the difference.

So what kind of projects will qualify for R&D Tax Credits?

The good news is that R&D Tax Credits can be claimed for a huge variety of different projects - and Ireland is an incredibly innovative place to be. In fact, the latest Revenue statistics show Irish companies spent an impressive €1.1 billion on R&D projects in 2018 alone, generating €474.8 million in R&D Tax Credit claims.

Broadly speaking, many eligible projects will fall under software development, pharmaceuticals, manufacturing or engineering. We’ve therefore listed some common examples of projects that would attract R&D Tax Credits in each quality. However we can’t stress this enough: R&D Tax Credits can be claimed by any Irish company of any size and operating in any industry. As long as the project involved financial risks, and contained a level of technical uncertainty even for a competent professional, then eligible R&D work is likely to have occurred.

Software R&D projects

Software development projects that will typically qualify for R&D Tax Credits include:

  • Developing tools that extend the functionality of an operation system or a piece of software
  • Devising extensions to programming languages, database software or operating systems
  • Developing software development tools for use in porting data across platforms
  • Finding ways to integrate hardware and software platforms
  • Devising new methods to integrate, manipulate, transmit and protect data
  • Creating software that will run on devices with pre-installed operating systems, such as mobile phones, tablets and GPS equipment.

This is by no means an extensive list. To check if your specific piece of software development will qualify for R&D Tax Credits, please do contact our team to discuss.

Manufacturing and engineering R&D projects

Common examples in these sectors that may qualify for R&D Tax Credits include:

  • The improvement of existing products or launching next generation ones
  • Designing innovative manufacturing tools and equipment
  • Creating new materials to improve manufacturing processes and product performance
  • Innovative product development using CAD systems
  • Streamlining operational processes so they’re more cost-effective
  • Designing, building and testing product prototypes
  • The automation of manufacturing processes to make them more efficient
  • Developing processes that better meet the latest regulatory requirements

What about the activities within the projects?

Over the course of applicable R&D projects, there are many specific activities that can also be included in an R&D Tax Credits claim. It’s highly recommended these are recognised and documented to support your application. They include:

  • Reviewing new and competing technologies
  • Identifying uncertainties
  • Planning and managing projects
  • Undergoing feasibility studies
  • Defining technical objectives
  • Creating prototypes
  • Testing the product, process or software

On top of this, there are certain indirect support activities that can also be eligible for inclusion in a claim. These would include personnel, administration, R&D training support and finance activities, specifically required to carry out the R&D project.

Again, each of these bulleted lists are not exhaustive. If you’d like to find out if your innovative activity will qualify, our team is here to help.

Where to turn next

As you may have worked out, identifying your qualifying projects, activities and costs that are relevant to your R&D Tax Credit claim is far from easy. But support is available in the form of R&D specialist consultancies like Myriad Associates.

Our friendly, expert team have years of experience in working solely in this niche tax area. We will guide you through the entire R&D claim process and work hard on your behalf, allowing you to concentrate on your business and continue innovating.

When you contact us, we’ll start off by uncovering all your eligible R&D activities and costs, making sure everything is accounted for properly. We’ll then work with you to draw up a high quality technical report that meets all of Revenue’s criteria, and once everything’s done we’ll submit it on your behalf too. We’ll even deal with any Revenue queries, should they arise. So all you need to do is sit back and wait for the award.

And the best bit? We don’t take a cent in fees until your R&D Tax Credit has been awarded - so there’s nothing to lose.

Find out more about the Myriad Associates team.

Get in touch today

Simply call us on +353 1 566 2001 or send us a message to ask a question and get your claim started.

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