The Broader View – Leveraging the R&D Tax Credit Incentive

As the December deadline is looming – are you missing out? It is an outdated opinion that the R&D Tax Credit incentive (25% Credit or Refund on R&D Expenditure) is reserved only for tech companies and think tanks in laboratories.

It is essential to recognise that R&D can happen in a wide variety of industry sectors. The application and availability of today’s allowances are on a much broader basis under the current scheme.

The most common dismissal we hear is “That doesn’t apply to my company. We do not carry out any Research and Development.” 

Too often, this lack of understanding of what constitutes as R&D under current legislation, prevents many businesses from claiming their just entitlements.

Is my business eligible?

Any company in any sector that designs, develops, or further advances their products or processes or services may be eligible.

The R&D does not only have to relate to creating new products; it can be R&D carried out into new market opportunities, new equipment to further develop the manufacturing or design process, introducing a new ERP System for example, and many other areas of business one might not readily associate with the term R&D.

‘’The Outcome cannot be known or determined in advance’’

For an activity to be a core R&D activity, a competent professional cannot know or determine the outcome of the activity in advance or replicate from an open source.

This activity is individual to the company and the outcome requires to be one that the team/ company can determine only by applying a systematic advance of work, based on principles of established science.

Here are some Industry examples:

• Software development. The development of a new AI capability to deliver novel insights and value.
• ICT hardware development. The development of new firewall security.
• Engineering design. The development of a new packaging design with a unique chemical structure.
• New construction techniques. Designing or developing unique engineering structures to meet the demands of “Industry 4.0”.
• Bioenergy.The advancement of renewable energy applications, including biomass energy
• Cleantech. The development of new energy-efficient appliances.
• Agri-food. Newer technologies such as cloud-based solutions to execute precise fertilisation strategies to yield higher crops

Life and Health sciences. The development of technology in an outpatient environment to improve statistical power in multisite clinical trials.

Importance of Claiming R&D Tax Credits

Figures produced by Eurostat {1} late last year show Ireland’s expenditure on R&D is less than 1 per cent (0.78 per cent) of GDP Figures which is below both the OECD average of 2.4% and the EU average of 2.0%.

High numbers of multinationals distort our figures even further and leave us with a poor uptake for SME’s. The SME sector, as we know, is vital to the economic wellbeing of the country.

They need to avail of every single initiative to help boost their Cashflow and warrant their investments in Research and Development.

The value of Investing in and Recouping spend on R&D is undeniable particularly for early-stage companies which are not yet making profits however legislative uncertainty, coupled with a perceived heavy administrative burden, can deter smaller companies from claiming the credit.

It pays to engage a Technical Consultant to assess your activities

Some companies have legitimate reasons to doubt their return, others have had previous negative experiences with Revenue, others simply do not invest the time to discover the nature of the incentive and others prepare internally, either underclaiming or resulting in less than favourable outcomes.

At Visiativ Ireland, we have seen the value our clients get from engaging with us.  We offer new clients a FREE Initial Consultation to identify less obvious activities and assess their eligibility for the Credit/ refund where we apply stringent and ethical assessments to ensure your claim is Audit ready at submission.

Don’t wait and Contact us today for a no obligation complimentary assessment – your company could receive an R&D Tax Credit Incentive!

Source: {1} R&D expenditure in the EU at 2.19% of GDP in 2019 – Products Eurostat News – Eurostat (europa.eu…