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Though it's not mandatory, when handling your R&D Tax Credits claim, we always include a technical evidence report alongside the relevant calculations. Whilst some companies who use their regular accountants to submit their claim, often do so without including any supporting evidence, this can actually sabotage its success.
In this article we look at why including a technical report is so important, and pass on some tips to make it the very best it can be.
The purpose of your technical report is to give Revenue an overview of the project you’ve undertaken and to justify your costs. It’s your chance to explain the details of your work, and why you believe it should be eligible for R&D Tax Credits in the first place. We will work with you to complete your report by discussing your projects and sub-projects with you at length. This will then give us an idea about the type of R&D your company undertook, and how much time commitment your technical staff put in. If you were to merely submit a load of figures, how can Revenue be expected to tease out what the scientific/technological uncertainties were and how they were addressed?
A strong R&D technical report can also make it less likely that Revenue will ask any questions - or worse, raise an enquiry. The fact is, if a Revenue inspector has to work hard to get their head around your claim, then it stands more chance of being rejected. They don’t have unlimited time and resource, so your technical report is a great way of making them understand quickly and easily.
As with all tax affairs, Revenue is within its rights to re-assess returns for up to four years after a claim has been made - however in certain circumstances they can go even further back. If you haven’t supplied a decent technical report, how are you supposed to be able to remember all the details of your project many years later? Also, in the event of Revenue questions after a significant period has passed, you may find that certain key staff have left the organisation, or data has been thrown away or misplaced. Even if you were able to get everything you needed together to answer Revenue, it’s a big job to sort out, especially when there’s usually a tight deadline. Sounds stressful!
So think of your technical report also as an insurance policy should any issues arise later.
Revenue doesn’t lay out any specific guidance on how your report should be formatted. But we recommend a good place to start is with a background of your company, so you can explain the context and parameters of your R&D project.
Revenue will also expect you to give a short summary of a few other projects your business has carried out, to help substantiate your claim. Ideally you’re looking for three or four case studies if possible, but go for quality over quantity.
Again (and we can’t stress this enough!) make sure that your claim is well prepared and clear so that Revenue officers can see what the R&D work was exactly. It should also be very obvious that the outcome of the project wasn’t certain from the start, and that there was no guarantee the work was going to be successful. Although you don’t want to leave any costs out, be careful not to include ones that aren’t eligible - this is something we can guide you through.
Ready to get started? Take a look at our quick-fire tips on making sure your technical narrative really hits the Revenue spot.
1. Be technical, not managerial
Try not to focus on the process too much - only really concentrate on the technical complexity of it. The scientific or technological uncertainty being addressed should not be easily solvable by someone working in your field, so make this clear.
The best technical narratives simply tell Revenue what they need to know, and nothing more. If it’s too long and waffly, there’s more chance for Revenue to raise questions and you’ll more likely need to further justify your facts and figures.
Revenue aren’t really interested in the commercial side of your project, so try and just talk about the underlying technological and/or scientific advancements.
OK so you don’t want to be too simplistic, but at the end of the day someone at Revenue who doesn’t work in your field needs to understand your R&D work clearly. So make it easy for them by using plain English wherever possible and keeping jargon to a minimum.
The R&D technical narrative should clearly demonstrate:
Stick to these main points and you won’t go far wrong.
Because at Myriad Associates we’re not another team of general accountants. We’re a specialist mix of R&D consultants and advisors (and yes, some accountants) who work only in the complex area of R&D tax claims and nothing else. Thanks to our many years in business we’re uniquely placed to qualify your R&D expenditure in the greatest of detail, and to assist you in submitting a well-evidenced, maximised claim.
We will do this firstly by identifying all the costs within your R&D project that are eligible (and some may be well hidden). Then we will craft the most accurate and comprehensive technical report that ticks all of Revenue’s boxes - so you can sit back, relax and wait for the money to roll in!
Why not call our friendly Dublin-based team on +353 1 566 2001 or use our contact form and we'll be pleased to call you back.