5TH JULY, 2019

What Projects Qualify for R&D Tax Credits in the Medical Industry?

The pharmaceutical industry is one of the biggest areas of research and development activity in the world. Despite this, many companies in the sector are still yet to claim the 25% tax credit on qualifying R&D expenditure.

How do I know if I qualify for R&D tax credits?

To qualify for R&D Tax Credits, your company must be within the charge of Irish Corporation Tax, have a project which has sought a technological or scientific advancement in its industry and navigate a degree of difficulty. Tax Credits apply to eligible costs, like wages, materials, overheads, outsourced third parties and even payments to universities, so there is plenty in the pharmaceutical industry which qualifies for R&D Tax Credits.

How does this apply to the pharmaceutical industry?

Drug discovery is one of the largest aspects of the pharmaceutical industry where R&D tax credits are claimed. The development of a drug or treatment and its chemical research and further testing is a prime example of R&D in the pharmaceutical industry. Our experience with pharmaceutical companies suggests that most of the qualifying activity for Pharmaceutical R&D Tax Credits occurs in the clinical trials of Phase 1-3.

Devices in the medical field often show evidence of R&D. This includes devices for administering drugs or monitoring patients.

Testing Methods that are being developed are equally eligible for R&D Tax Credits. Although there is a presumption that R&D Tax Credits only apply to the final product and not to its manufacturing process, the production and associated activity very much qualify. By using technology to improve efficiency or efficacy of a testing method, a company can be entitled to R&D Tax Credits.

Development and improvement of products, processes or services are often forgotten as aspects of R&D but can yield great results. For example, companies that seek to make a process more efficient, effective or to improve the results of an existing product may qualify for pharmaceutical R&D Tax Credits. This includes improvements like sterility, speed of process or fitness for market (i.e. a sugar-free drug).

In Summary:

There is plenty of activity in the pharmaceutical and medical industries which qualify for R&D Tax Credits, from the creation of a new drug to the packaging. Adapting and improving the product or process to be more efficient, cost-effective, sustainable or to yield greater results can all help your company make a claim for R&D Tax Credits. Although the process may seem daunting, Tax Cloud offers you the opportunity to submit your claim yourself for a lower price than what’s offered by traditional tax advisors, with plenty of support available every step of the way.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad Associates helps businesses maximise tax credits and secure R&D grant funds. We specialise in R&D Tax Credits, Enterprise Ireland grants.

  • Submitting R&D tax claims since 2001
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  • Member of the Research and Development Consultative (RDCC) committee

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey David Farbey MA, FISTC, FRSA Technical Consultancy Director
Deborah Chapple Deborah Chapple ATT Corporate Tax Director
Lauren Olson Lauren Olson MA, MISTC Senior Technical Consultant