A legitimate question a business owner may ask themselves is ‘’Does my company require external advisors to assist in filing the R&D Tax Credit Claim?’’
The answer is most likely yes however, companies nearly always tend to rely on external technical subject matter expertise because they typically do not have these unique subject matter technical resources in-house to ensure ultimate success in maximising the potential of their R&D Tax Credit Claim. Companies typically hire external subject matter experts whether they are accountants, lawyers, and other industry-specific advisors because they know that they will provide a value add that is simply not achievable in-house. Sure… you can get by without them, but will the results be as favourable? After all, the only item that is submitted to Revenue when filing is the R&D Tax Credit figure. Although this may seem like a simple filing procedure, Irish Revenue often challenge claims and it is vitally important that companies have the subject matter expertise and sound advice to foresee and prevent any such related issues.
As the R&D Tax Credit Program is a technical one, it is critical for the claimant company to understand what activities could be potentially qualifying. Although the guidelines provided by Irish Revenue are a definition of basic requirements for qualification criteria that the company must meet and satisfy, the success of any claim is engaging with advisors that have subject matter expertise in a broad range of different industries. The Science Test and the relevant technical consulting, requires substantial effort, starting off with reviewing your company’s project lists, due diligence, conducting interviews with individuals, gathering information and documentation and drafting technical reports:
Why is Technical Consulting really needed?
- The obvious answer is to advise on activities and projects, associated percentages and portions of qualifying costs based on the criteria.
But besides that, what value does it add?
- The Technical Consultant formulates a narrative. In case of a technical review by Revenue, it is extremely important to describe the work in a manner that fits into the guidelines. Any deviation may result in rejection of any part or in its entirety. The Technical consultant’s job is to formulate the expertly crafted narrative that will satisfy the Revenue auditors and result in the claim’s full approval.
The Revenue may not audit every claim…. Does my company need to hire Technical Advisors if the chances for an audit are low?
- The benefit of hiring subject matter expert advisors is that the consultant discovers all relevant eligible activities and claimable expenses that may have been overlooked previously. When the consultant reviews the work, carries out facility tours, and authors the expert narrative, they ALWAYS explore every potential activity, department, and expense to maximise your claim. An example may be a new piece of machinery the company purchased, and a certain percentage of it may have been used for R&D purposes but was not added to the R&D expenditure. Another example can be work carried out by support personnel to assist the Engineers and the Scientists, which the company thought ineligible.
- The Technical Consultant will also advise how to tune the R&D tracking systems and processes to capture relevant activities on a real-time basis, which otherwise could be lost or forgotten when reviewed retrospectively. But even more importantly, the Technical Consultant redefines / redirects / identifies both “low hanging fruit” as well as the “high hanging fruit” projects. The latter may become the most substantial part of your claim. They may be related to further development of production processes, changes in the company operations, or it could be software upgrade work that the company simply did not consider or may have previously been overlooked as part of their R&D. An experienced consultant will be able to identify all related activities and innovations that fall under the qualifying criteria and to potentially increase your claim significantly.
Gregory Molev, Ph.D.
Sr. Science Advisor