The research and development (R&D) tax credit provides a 25% tax credit for all qualifying R&D expenditure. To make a claim for the research and development (R&D) tax credit a company enters the amount spent on qualifying research and development (which covers the entire spectrum from pure research to experimental development) in their self-assessed tax return.
Revenue have taken a number of steps have in recent years to assist companies with making claims for the R&D tax credit.
In 2019, Revenue published updated guidance on the operation of the R&D tax credit and the expected level of records to support a research and development tax credit claim, for all companies, which is designed to assist in providing clarity for companies as to Revenue’s view on certain aspects of their claim before submitting a claim. Following on from the publication of that guidance Revenue have presented at conferences around the country (such as IRDG conferences which are attended by companies, advisors and educators) building awareness of the R&D tax credit and the common issues that arise.
In February 2017, Revenue issued guidance aimed specifically at micro and small companies, to reduce the administrative burden on SMEs while also ensuring that the credit is granted to bona fide R&D activity. The aim of this guidance was to give these smaller companies greater clarity on how they could demonstrate to Revenue that their R&D tax credit claim satisfied the “science test”. Where a company spends €200,000 or less on activities which Enterprise Ireland or other such bodies have looked at and confirmed as R&D, then in most cases Revenue will accept that those activities pass the science test.
Revenue’s statistical information in respect of the Research & Development (R&D) credit, for all years up to 2017, is available at the following link https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx
It may be of interest to the Deputy that out of a total of 1,505 claimant companies, 88% of the number of claims in 2017 (1,325 claims out of 1,505) were made by companies dealt with outside Revenue's Large Cases Division, which can be used as a proxy for SMEs.
In general, any amendments to tax measures are considered as part of the annual Budgetary and Finance Bill process. As is normal, the Deputy will appreciate that I cannot comment on any possible changes in advance of the 2020 Budget.