Revenue has announced several measures to combat the effect of the COVID-19 crisis on businesses in Ireland. One such measure is the accelerated payment of the R&D credit which could free up thousands of euro for many businesses currently struggling with cash-flow and operating capital during this crisis.
Normal Revenue Rules
The credit currently operates by giving businesses up to 25% of their R&D expenditure in a tax credit or in cash, subject to certain conditions being met. The 25% credit is available in addition to the 12.5% corporation tax deduction at the standard rate. The relief is generally available for R&D activities carried out in a wide variety of science and technology areas such as software development, engineering, food and beverage production, medical devices, pharmaceuticals, financial services, agriculture and horticulture.
Where a company doesn’t have a tax liability in the current or immediate prior period, it can claim a repayment in cash of R&D tax credits in three equal installments over a three-year cycle. Based on normal rules, Revenue is only required to pay any cash refund after the date by which a company’s corporation tax return must be filed. Where a company’s year-end is December, the cash refund would not be repayable to the company before 23 September – the date by which a company’s corporation tax return must be filed.
New Revenue Measures – Accelerated Repayment
Under the new measures introduced, Revenue is allowing companies to avail of their R&D cash installments earlier than the September date. For example:
Company X tax return for year end 31 December 2019 is due to be filed on or before 23 September 2020. The company files the return early in July 2020 with an excess R&D refund due of €199,750 – made up of R&D credits from the last three years (the 3rd installment that was due from 2017, the 2nd installment due from 2018 and the 1st installment from 2019).
Following the introduction of the new measures, Revenue will now process the refund due of €199,750 immediately following filing, subject to Revenue checks, instead of waiting until after 23 September 2020. Where R&D refunds are outstanding for previous periods, this could also be an opportunity to engage with Revenue to expedite these refunds too given the current economic climate.
To accelerate your repayments of any 2020 R&D tax credit installment your company must:
Make a request to expedite the excess R&D tax installments through MyEnquiries.
Have filed the Form CT1 (corporation tax return) for the accounting period ending in 2019 at the time of request.
To ensure timely processing of requests, they should be tagged appropriately within MyEnquiries: as enquiry relates to “Corporation Tax” more specifically “R&D installments payable in 2020”
There are many different questions and concerns that people have with the R&D programme. Braithwaite has outlined below some FAQ’s that are important to understand.
Why would I use a third party to file? Can’t I do the claim on my own?
Yes, every company is able to file a claim on their own but you are potentially putting the claim at risk. Braithwaite will become your R&D tax credit partner and will mitigate that risk on your behalf.
How can I File for the Expedited Repayment NOW?
Braithwaite Technology Consultants Ltd can assist you in obtaining Accelerated repayment of your Tax Credits or Refund from REVENUE for your Innovations and R&D activities well ahead of the Sept 23rd Deadline (for Dec31st Year-end).
Contact Braithwaite Ireland NOW or contact Tony Waldron immediately for a FREE 30 minute R&D Tax Credit Eligibility Assessment or email [email protected]
Whether your work involves basic research, applied research, or experimental development, Braithwaite can take the uncertainty out of the R&D Tax Credit and Refund filing process and get you the credit you deserve for your innovations now!