R&D: credit where it's due

摘要

The R&D tax credit is a tax-based incentive scheme which operates by giving a company 25 per cent of the difference between what was spent on qualifying R&D activities in 2011 (say, €500,000) and 2003 (say, €100,000) (i.e. €500,000 minus €100,000 equals qualifying spend of €400,000, which results in a credit of €100,000). The benefit to the company is received either as a credit against the company's corporate tax bill or as a cash refund (subject to certain conditions being met). The cash refund is generally paid in three instalments over a period of 33 months after it has been incurred and is generally available to companies even if they are not paying corporation tax. This cash refund mechanism is increasingly important for Irish companies and is a source of cash flow that should not be overlooked. In order to be valid, a claim must be made within 12 months of the end of the accounting period in which the expenditure on R&D has been incurred (i.e. claims for the year ended 31 December 2010 must be made by the end of this year). As this can be a valuable tax benefit or cash refund system, it is an obvious area for the Revenue Commissioners, who operate the system, to police. Therefore, you should expect that any claim made to Revenue may be audited.