1. Research & Development
September 2017
Research & Development
Tax Credits
Are you missing out?
pkffpm.com
Jim Fitzsimons

2. What is R&D?

3. Incentivise companies to undertake R&D Plan R&D Project
Administrative burden
Tax benefits

4. What is R&D? Advancement in Science and Technology Innovation
Uncertainties and resolution of uncertainty
Appreciable improvements
Not always about Blue Sky Research
R&D Relief available to companies
R&D tax savings

5. New product development
R&D is NOT
Routine improvements
Solving problems
Knowledge transfer
New product development

6. How to Identify R&D in your Business

7. Qualifying R&D Activities
Systematic, Investigative and Experimental
Basic Research
Applied Research
Experimental Development

8. The Science Test What is R&D? Scientific or technological advancement
Advancement in knowledge or capability
Resolution of Scientific or technological uncertainties
Innovation to create new products or processes
Appreciable improvements to existing products
Duplicating existing products or services in a new way
Not just ‘white coat’ scientific research

9. Examples of R&D in the Food Industry.
Increasing shelf life
“Clean labels” - elimination of allergens and additives
Novel / new ingredients – function & behaviour
Reducing Food Waste
Packaging Innovations
Cooking Techniques & Production Processes
Product Development, eg., Healthy Convenience

10. R&D Tax Credits

11. Science Test Accounting Test Qualifying R&D Claim
A valid R&D claim must satisfy two tests:
Accounting Test
Science Test

12. Qualifying Expenditure
The Accounting Test
R&D Period
Project Plan
Progress made
Personnel
Location
Qualifying Expenditure
Record keeping

13. R&D Claim Period Starts When uncertainty exists Ends
Uncertainty resolved/ unresolved
Time Limit
12 months

14. R&D Tax Credit 25% of qualifying R&D revenue and capital costs
Overall 37.5% tax saving
For every €100 spent on R&D get €25 tax back

15. R&D Tax Credit Result in a tax refund if company has paid tax.
If the company has not paid sufficient tax to cover the R&D tax credit:
Offset against CY tax
Offset against PY tax
Carried forward indefinitely and offset against future tax liabilities OR
Repayable tax credit – 3 instalments over a 3 year period

16. What Costs qualifies for the R&D Relief?
Revenue Costs
Labour costs
Consumables
Sub-contractor costs
Consultants
Capital Costs
Capital items specifically used in R&D process
R&D facility

17. Grant Assistance
Receive a grant – deducted from the qualifying R&D costs
Tax credit calculated on the non-subsidised expenditure

18. Revenue Commissioner’s Concession
Revenue Commissioner’s have agreed not to challenge the science test if:
IDA/Enterprise Ireland R&D grant has been approved.
R&D tax credit claimed is <€50,000.
Project is in a prescribed field of science.
Company is a micro or small sized enterprise.

19. Revenue Advance Opinion
What if I am unsure if my company’s project is actually R&D?
Activities have commenced within 12 months
Apply to Revenue for an advanced opinion:
- R&D activities
- Field of science
- Advancement
- Uncertainty
- Systematic investigation
- R&D team skillset
Apply anytime before the first R&D claim

22. Increase shelf-life of a product range for export to China
Food
Production
Company
R&D TEAM
Increase shelf-life of a product range for export to China .
R&D Costs:
Labour - €160,000
Consumables - €30,000
TOTAL - €190,000
CT liability = €240,000
Tax Credit – 25% = €47,500
R&D Costs: €190,000
R&D tax refund €47,500

24. Grant Aid Assistance - €100,000
R&D TEAM
LOSS MAKING
R&D costs €298,000
Grant Aid Assistance - €100,000
Repayable over 3 year period in equal instalments – Y/E 31 August 2016 repayments due (Not before):
€16,500 – 21 May 2017
€16,500 – 21 May 2018()
€16,500 – 21 May 2019()
 Repayable if can’t be offset against a tax liability
R&D tax credit €198,000 x 25%
Refund = €49,500

25. Knowledge Development Box
Profits derived from patented technology
Attract 6.25% tax rate
R&D and KDB linked
R&D must be undertaken to generate the qualifying asset

26. What Do We Do? Understand your business Explore R&D opportunities
Consider all years
Tax and commercial aspects
Team of experts
Identify qualifying projects & costs
Prepare claim
Assist with Revenue Commissioner’s Audits

27. Questions?
pkffpm.com

28. Helix Innovation Partnerships Limited
Newry Office
PKF-FPM
Dromalane Mill
The Quays
Newry
Co. Down
BT35 8QS T: F:
Belfast Office
1 – 3 Arthur Street
Belfast
Co. Antrim
BT1 4GA T: F:
Dundalk Office
PKF-FPM Penthouse Suite
Block 5
Quayside Business Park
Dundalk
Co. Louth T: F:
Dungannon Office
Howard House
30 Northland Row
Dungannon
Co. Tyrone
BT71 6AP T: F:
Mallusk Office
Unit 1, Building 10
Central Park
Mallusk Road
Newtownabbey,
BT36 4FS
 T:
F:  
Balbriggan Office
Balbriggan Business Campus Stephenstown Industrial Estate Balbriggan
Co. Dublin
Ireland  T: F:
Helix Innovation Partnerships Limited
Unit 2
Old Gasworks Business Park
Kilmorey Street
Newry
Co. Down
BT34 2DH T:

29. Disclaimer
We have made every effort to ensure that the information provided in this seminar is accurate, but we cannot accept responsibility for the consequences of any action you take in reliance on its contents. If following the seminar you have any matters which you would like to discuss, please contact Siobhan McCreesh at or