The Revenue Commissioners published eBrief No. 17/17 on 17 February concerning its audit policy of R&D tax credit claims. It provides that Revenue will minimise the need to engage experts to verify the Science Test requirement for R&D tax credit claims.

Background

By way of background, Revenue’s process for examining a claim may be considered by reference to two criteria:

  1. The Science Test: that the activities under review are consistent with the statutory definition of R&D activities.
  2. The Accounting Test: that the expenditure claimed as qualifying R&D expenditure is correctly so claimed.

When auditing the Science Test, it is within Revenue’s discretion to engage an expert to independently verify the scientific validity of an R&D tax credit claim.

What has changed?

Revenue have confirmed that with a view to minimising the need to engage experts to verify the Science Test in R&D tax credit claims, it has been decided that Revenue would not, as a rule, seek to challenge a claim for the R&D tax credit under the Science Test, where;

  • an IDA / Enterprise Ireland R&D grant has been approved in respect of the project;
  • the R&D tax credit claimed for an accounting period (of not less than 12 months) is €50,000 or less;
  • the project is undertaken in a prescribed field of science or technology, as defined in regulations; and
  • the company is a micro or small sized enterprise.

This is a welcome development for SME companies undertaking R&D activity, applying to claims for qualifying expenditure not exceeding €200,000. Such claims are of course still open to audit by Revenue for the purpose of reviewing the Accounting Test and other requirements, or other interventions such as a desk enquiry.

For more information, you can view Revenue's eBrief.

Should you have any queries in respect of this update, please contact Paddy Stapleton [email protected]) or Rebecca Deane ([email protected]), or your usual contact at RSM Ireland.