Could your business be eligible for R&D Tax Credits without even knowing?

It’s easy to miss out

Has your company undertaken an innovative project recently? Were there scientific or technical challenges that required investment and therefore financial risk? Did your project benefit your sector as a whole, rather than just your company?

If so, you could be eligible for a tax rebate towards the costs that may well run into the thousands. Read on!

R&D Tax Credits in a nutshell

“Ideas won't keep. Something must be done with them.” - Alfred North Whitehead

Innovation, disruptive technologies and investing in your company’s future are the only ways to grow and succeed. But it doesn’t come cheap. Additional staff wages, contractors, materials and extra overheads can all make innovative projects a pricey leap of faith.

However, if your company has recently carried out research and development (R&D) activities, then it could be entitled to a generous R&D tax rebate scheme called R&D Tax Credits. Backed by Revenue it’s an extremely lucrative opportunity, releasing cash for further business investment.

Many activities come under the umbrella of innovation, like investing in a new software, products, services or processes. If this rings a bell, then your Corporation Tax bill could be reduced by up to €30,000 for every €100,000 of innovation spend. A huge range of costs can be included in your claim too, including salaries, consumables, testing and equipment.

But the unfortunate fact is, way too many companies in Ireland miss out on thousands of euros each year simply because they don’t know about the scheme. And of the ones that are aware of it, many wrongly believe they won’t be eligible so don’t bother to claim.

You don't know what you don't know

Although R&D Tax Credits have been around since the early 2000s, it’s still not something many business owners have heard of. On top of that, each claim will be unique, and subject to ever-changing guidelines. That’s why getting the most out of the scheme requires the specialist eye of specialist R&D tax consultants.

R&D can take place just about anywhere - in sustainable energy, healthcare, food production and retail, to name just a few. Any Irish company that is subject to Corporation Tax can submit a claim, as long as money has been invested in qualifying research and development activities. The scope for identifying R&D is actually very broad, yet many businesses don’t even know that a project they’ve been working on will qualify.

Only large established companies can apply, surely?

We hear this a lot. Okay so your company may be small – it may not even be profitable right now – but that doesn’t matter. R&D Tax Credits are available to all companies in Ireland, regardless of size, sector or structure. There’s no minimum (or maximum) claim value either. And…

“The good news is that R&D Tax Credits for SMEs was increased to 30% for accounting period starting on or after the 1st January 2020.”Myriad Ireland

Yep, smaller businesses can get a whole 30% rebate on costs incurred in their R&D projects (it’s otherwise 25% which is certainly still generous). That could easily end up being thousands of euros, even on the smallest claims.

On top of this, a new piece of legislation (s766C TCA 1997) has recently been unveiled that enables small and micro companies that are conducting pre-trading research and development to claim R&D Tax Credits before they’ve started trading.

Previously, any pre-trading expenditure could only be included in the accounting period during the which the company actually began to trade. However, small and micro companies can now offset any excess of their pre-trading R&D Tax Credit claim after offsetting against their Corporation Tax liability, against payroll tax and VAT liabilities for the period to which the pre-trading claim is in relation to. Find out more.

I thought my business had to be profitable to claim R&D Tax Credits?

Nope, not true. While many R&D Tax Credit claimants are indeed making a profit, the scheme is also open to those who are loss-making. As long as the project has demonstrably attempted to make an advancement in science or technology then any losses may be offset against R&D expenditure. Again, amounts can also be significant.

My company isn’t really in a science or technology sector

Again, this comes up a lot. And yes, certain sectors like manufacturing, IT, engineering, construction etc. do lend themselves more to R&D Tax Credits than others. But the fact is you don’t have to be working in a super sciencey or techie area to claim. It’s open to all.

Basically we’re talking about three things here: uncertainty, investment and risk. That is to say, if money was invested (and therefore financial risk taken) in tackling a specific technical or scientific uncertainty - where the outcome was unpredictable by competent individuals in the field - then R&D Tax Credits could well follow.  

But we’ve not created anything brand new

Again, no problem. While R&D Tax Credits can certainly be claimed for the creation of a brand new product, service or process, it can also cover a substantial change or modification of an existing one.

Ready to claim?

If you’re ticking a lot of boxes for an R&D Tax Credits claim and believe your company is eligible then serious cash could be on the way.

We recommend starting off by using our free R&D tax credit calculator to get an estimate of how much you could receive from Revenue. It’s worth trying the free demo too so you can get acquainted with the system and how it works before you begin.

At Tax Cloud, we’ve seen a wide range of companies, projects and scenarios so will soon be able to confirm your eligibility just from a quick call. We then help you maximise your claim at every stage, on a success fee basis. Don’t risk going it alone and missing out - or even ending up with a Revenue tax audit!

We’re here to support so feel free to call our friendly team on +353 1 566 2001. Alternatively, you can always send us a message and we’ll get right back to you.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad Associates are the creators of Tax Cloud, we help enterprises navigate, apply and secure tax incentives and grants. We specialise in R&D Tax Credits, Enterprise Ireland grants, Horizons Europe grants, and the Digital Games Tax Credit

  • Submitting R&D tax claims since 2017
  • Strong track record delivering R&D tax credit claims
  • Over €10m claimed and counting
  • Industry leading specialists
  • We employ technical, costing and tax experts
  • Confident of delivering value to our clients, we offer our R&D tax services on a success fee-only basis.

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
Jillian Chambers Jillian Chambers Technical Analyst/Writer
Lauren Olson Lauren Olson Technical Analyst Manager
Rabia Mohammad Rabia Mohammad Corporate Tax Associate