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The unprecedented economic impacts of COVID-19 are now starting to bite. Up and down the Republic of Ireland, businesses are tightening their belts and pushing the limits of their cash flow. However, there’s still time for your company to receive a much-needed financial injection in the form of R&D Tax Credits.
The excess R&D Tax Credit system is a mechanism by which companies in the Irish Republic can receive 25% back for every €1 they spend on research and development. Those which don’t have a Corporation Tax liability can benefit from a cash refund from Revenue instead, received in three payments over a three-year period.
We’ve looked in more detail at R&D Tax Credits later in this blog, and you can also find out more on our R&D Tax Credits webpage.
In April, the Irish Revenue announced that they are expediting R&D Tax Credit payments to bring about thousands of euros in cash for Irish businesses during the COVID-19 pandemic. The new measures essentially mean companies are able to receive their R&D money earlier and not have to wait until September as usual.
A company that has a year end of the 31st December 2019 is due to file its tax return by the 23rd September 2020. However, it files early (in April 2020) with an excess R&D refund due of ‘X amount’. This amount is broken down into R&D Tax Credits from the previous three years (the 3rd instalment that was due from 2017, the 2nd instalment due from 2018 and the 1st instalment from 2019). However, under these new measures refunds will be administered immediately once filing is complete. So - subject to Revenue checks - there’s no need for them to wait until the 23rd September 2020.
These changes are very unusual, as Revenue is only legally required to pay cash refunds up to nine months after an accounting period draws to a close. Additionally, for businesses that qualify, this speeding up of payments will provide an essential cash injection right now.
To request for Revenue to expedite any 2020 instalments of excess R&D Tax Credits, you will need to log on to MyEnquiries. It’s a secure online service which allows you to send and receive correspondence to and from Revenue. Furthermore, your Corporation Tax return form (CT1) for the accounting period ending in 2019 will need to have been filed already.
To help speed up your request further, it should be appropriately tagged within MyEnquiries. To be clear, your enquiry relates to “Corporation Tax”, and “R&D instalments payable in 2020”.
At Myriad Associates we know that getting to grips with R&D Tax Credits can be tricky. So we’ve put together a quick guide of the essentials:
The R&D Tax Credits scheme was unveiled in the early 2000s to encourage companies to innovate through research and development. It’s calculated at 25% of eligible expenditure and is used to reduce a company's Corporation Tax bill. Claims should be submitted within 12 months from the end of the accounting period in which the R&D was undertaken.
Latest figures published in 2018 indicate the Irish Government provided businesses with direct R&D incentives to the tune of €751 million that year alone. However, many businesses still don’t know they’re eligible, or are not fully maximising their claim.
Has your company embarked on any innovative work of late? Then there’s every chance R&D Tax Credits are claimable, especially if there were uncertainties in the project’s outcome from the start.
If you can demonstrate that your R&D went far beyond any technologies already in existence, then a claim is likely. This is particularly the case if you can answer ‘yes’ to these three questions:
The important point of note is that even the smallest R&D projects can enhance overall knowledge in your field, and it’s this that will attract R&D Tax Credits.
Why not calculate your own savings and discover more using the R&D Tax Credits Calculator.
A company should use the Revenue Online Service (ROS) to claim using their tax return - and this is where the R&D accountants and advisors at Myriad Associates come in.
We strongly advise you don’t make a DIY claim for R&D Tax Credits yourself. This is because the criteria set out by Revenue is very strict but there are also many grey areas and mistakes are common. Also, the application involves multiple parts, including relevant figures and a correctly compiled narrative. This is where we will guide you.
Our specialised knowledge on R&D Tax Credits also means we’ll identify additional areas in your project that should be included in your claim. This means your claim will be maximised and you’ll receive all the money you’re entitled to. Please do get in touch using the details at the bottom.
Successful claims can result in a significant non-repayable cash injection, seriously benefitting your business during these difficult times. Plus, once the COVID-19 crisis is over it provides businesses of all sizes with the collateral needed to champion innovation and explore new development opportunities that wouldn’t otherwise be possible.
It is estimated that for every €1 spent on R&D Tax Credits, approximately €2.40 in investment is generated for the Irish economy.
As soon as you possibly can, to get nearer the front of Revenue’s queue and receive your money more quickly!
Something in this article you’d like to discuss? Call the Dublin-based Myriad Associates team for advice on +353 1 566 2001 or use our contact form. We're working as usual during the COVID-19 outbreak and are happy to help. Why not also read our recent blog: How R&D Tax Credits Can Help Irish Businesses During COVID-19