Many assume that without formal timesheets, they can't make a claim for R&D tax credits. While documentation is critical, you don't necessarily need traditional timesheets to claim R&D tax credits in Ireland.
This blog explores what Revenue actually requires and practical solutions for companies without timesheet systems.
What Evidence Does Revenue Actually Require?
Revenue requires records that demonstrate staff costs are wholly and exclusively incurred in carrying on R&D activities, with proper allocation of time spent on qualifying work. But here's what many companies don't realise: those records don't have to be traditional timesheets.
According to Revenue's R&D Tax Credit Manual:
"The demonstration of a systematic approach and the preparation of appropriate contemporaneous evidentiary materials is an essential element of any R&D claim. Such evidence does not necessarily have to be available in traditional hard copies, but may be available electronically. When such resources are used to support a claim, they should clearly indicate the author/creator, and the date of creation."
The key requirements are that your records must be:
- Timely
- Consistent
- Continuous
- Demonstrate integrity (including author/creator and date of creation)
Records don't have to be paper-based; electronic records are perfectly acceptable if they meet the same standards. You can read more about general record-keeping for a robust R&D tax claim on our blog.
The Timesheet Question: Can You Estimate?
The short answer is: yes, but you better have evidence.
Revenue accepts that different industries have different norms and approaches to record-keeping. The allocation principle is straightforward: where an employee spends a proportion of time working on qualifying R&D activities, that same proportion of their emoluments may qualify as R&D expenditure. This principle applies to all eligible R&D costs.
Revenue will accept your company's allocation where it's bona fide, reasonable, and based on the facts of your individual claim. However, there's an important caveat.
Revenue's position is clear:
"The legislative definition of a qualifying company requires that such a company carries on qualifying R&D activity and maintains a record of expenditure incurred by it in carrying on that activity. Proper records must be maintained by companies claiming the R&D credit. […] Contemporaneous records, whether in a hard copy or electronic format, must be available for inspection by Revenue officials."
It's true that many companies claim without evidence in place, taking the risk that Revenue won't ask to see it. However, retroactive estimates without supporting evidence or lack of documented methodology for allocation may lead to your claim being reviewed or disallowed in an audit or aspect query from Revenue.
What Does "Reasonable" Allocation Look Like in Practice?
Here's where it gets interesting: records of time spent must be contemporaneous, but the allocation itself doesn't have to be done at the same time. Allocation and apportionment can be done on a timely basis: for example, a month in arrears or at quarter-end review.
The critical requirement is that the allocation must be completed before you make your R&D claim on the CT1 form, and supporting documentation must be available for review.
Your documentation should show:
- When staff record their work and who reviews it
- How the qualifying element of the project is identified
- The basis for allocation and the process and control procedures around monitoring it
The level of detail depends on the size and complexity of your claim. A €50,000 claim for a single project will require less elaborate documentation than a €500,000 claim spanning multiple projects.
Practical Alternatives to Traditional Timesheets
If you don't have formal timesheets, here are practical alternatives that can satisfy Revenue's requirements:
Project-based tracking
Link staff to specific R&D projects with documented project phases. If your software development team worked exclusively on a new algorithm for three months, that's your evidence. Project plans, sprint reviews, and milestone documentation all support time allocation.
Periodic assessments
Monthly or quarterly reviews of time allocation by project managers can work well. For example, at the end of each month, your R&D manager reviews which team members worked on qualifying projects and estimates the proportion of their time spent on R&D versus business-as-usual work. This requires a strong understanding of qualifying projects as they are being completed.
Role-based allocation
Where certain roles are dedicated to R&D activities, this simplifies matters. If your head of R&D spends 90% of their time on qualifying projects, that allocation is straightforward to justify.
An administrative simplification measure was recently introduced in Budget 2026, effective for accounting periods starting on or after January 1, 2026. Under this new rule, 100% of an employee's costs can be considered qualifying if they spend at least 95% of their time on qualifying R&D activities.
Email and calendar evidence
Your existing digital records can demonstrate time spent on qualifying activities. Meeting invitations for R&D project reviews, email threads discussing technical uncertainties, and calendar entries all provide contemporaneous evidence.
Meeting notes and technical documentation
Revenue expects documentation charting the lifetime of the project from start to finish, including milestones achieved. Your technical documentation, design reviews, and meeting notes all support your time allocation claims.
The Apportionment Documentation You Need
Based on Revenue's suggested file layout for R&D claims, you should have:
- Names, qualifications, experience, job titles, and location of staff employed in R&D activities
- Details of how staff were allocated to the project, with a description of the system used to record work on qualifying and non-qualifying projects
- Details of when reviews took place to identify qualifying and non-qualifying elements and who undertook the review
For example, Company A claimed €200,000 in staff costs for their R&D project. They didn't have timesheets, but they did have:
- A project plan showing which team members were assigned to the R&D project
- Monthly project status reports documenting progress against technical milestones
- Email evidence of technical discussions about resolving scientific uncertainties
- Quarterly reviews by the CTO allocating staff time percentages between R&D and production support
This combination of contemporaneous evidence supported their time allocation methodology, and Revenue accepted the claim.
You Don't Need Timesheets, But You Do Need Evidence
You don't necessarily need formal timesheets, but you do need a reasonable, documented approach to allocation and clear evidence of how you achieved your allocations.
The key is establishing your methodology before claiming and ensuring it's based on actual project facts. When in doubt, err on the side of more documentation rather than less.
If you're worried about whether your current record-keeping will satisfy Revenue's requirements, we can review your documentation and help you build a compliant approach for future claims. Get in touch to discuss your specific situation.
