R&D Tax Credits webinar

Alex Cornelius, R+D Tax Solutions

It was the final tranche that they were receiving. And simply we deducted, you deduct the grant funding from your total qualifying expenditure and that then gives you your net qualifying spend. That then is the amount that qualifies for the credits of 30% and they got €80, 000 back that otherwise would have been left on the table.

Alex Cornelius, R+D Tax Solutions

We're now working with them over a continued basis tracking their qualifying time and expenditure. And actually they've, they've utilised that money that they received last year in order to in order to hire 2 new developers. So it's a really good example of a slight misconception actually.

Alex Cornelius, R+D Tax Solutions

It's resulted in a significant cash influx to the business and then they've utilised that to further invest in their R&D spend. So just like to move on to our next poll here before we start to delve into R&D tax credits themselves, please. The question here is do you currently claim R&D tax credits?

Alex Cornelius, R+D Tax Solutions

So just to get a bit of an idea as to where the audience sits from an investment perspective and where you guys are on your, your R&D tax credit journey, really just give that a few more seconds. But it's looking like the vast majority haven't claimed before. There's a few who are very few who are reasonably contented in their their current claims and record keeping.

Alex Cornelius, R+D Tax Solutions

But looks like the vast majority, it's either looking to claim in the future or not sure if what we do currently qualifies or not. So I'll just end the poll there. OK, so yeah, a few, let me show you the result. There's a few few companies here that who are already claiming, looking to get a bit more information.

Alex Cornelius, R+D Tax Solutions

And then the vast majority haven't claimed before. So I will try and tailor the rest of the webinar accordingly getting some information in, in regard to revenue inquiries for for those who have already claimed towards the end of the webinar and then for those who haven't claimed before, I will go into some detail around what doesn't doesn't qualify.

Alex Cornelius, R+D Tax Solutions

OK Is the next slide coming through there, Donna? Yeah, it is perfect. OK, aren't any tax credits. So what are they? How have they come into being established back in in 2004? So they have been around for for a substantial amount of time. Initially it was based on incremental spending, but that has changed in recent years to be refundable credits.

Alex Cornelius, R+D Tax Solutions

So actual cash amounts repayable to companies. It's been expanded and simplified over time. Based on some of my recent experience with revenue, I, I might disagree on that, on that comment, but the, the Irish scheme is highly competitive against the European market in in fact, I would say it is the most beneficial research and development tax credit scheme in, in Europe.

Alex Cornelius, R+D Tax Solutions

And it's certainly very attractive to small to medium enterprises who are investing heavily in, in R&D. Big changes on the horizon. I guess we shall soon see what Mr. Harris brings in, in the, in the upcoming budget. But based on the Innovation Compass that was released earlier this year, we are anticipating increased changes.

Alex Cornelius, R+D Tax Solutions

So this year for example, the credit went up to 35% from the 1st of January 26 transfer payments. So the amount that you can, the minimum amount that you can get payable is 87 1/2 thousand. But with that increased benefits also brings greater revenue scrutiny and inquiry.

Alex Cornelius, R+D Tax Solutions

And we'll run through how to kind of avoid some of the areas that that the revenue often pick up on as you're putting together your R&D tax credit claims. So what is R&D and what qualifies? So the very simple definition is that R&D takes place when a project seeks to achieve an advance in science or technology through the resolution of scientific or technological uncertainty.

Alex Cornelius, R+D Tax Solutions

And that is the the abbreviated definition that you can find within the OECD Fiscalte manual, which kind of governs European wide research and development, as well as the Irish R&D tax duty manual. Now you're reading that and you're probably thinking what on earth does that mean?

Alex Cornelius, R+D Tax Solutions

So I will go into a bit more detail here. So first area is being able to extend the overall knowledge or capability within a sector. So this is you're looking at a field of science or technology. So it's sector Pacific. So that could be Fintech manufacturing, could be structural engineering, and it does apply equally to successful and unsuccessful projects as well.

Alex Cornelius, R+D Tax Solutions

So you are effectively trying to expand what the current capability and knowledge is within that particular sector. So what? What can that be? It can be a new product, a new process, it could be new knowledge. So you could be looking to develop new proprietary software that doesn't currently exist.

Alex Cornelius, R+D Tax Solutions

It's not open source. You are developing from scratch. You could be developing a new process and we've come across companies in the construction sector who are effectively 3D printing concrete houses now there's there's lots of process LED R&D that can be claimed for.

Alex Cornelius, R+D Tax Solutions

It also could be a product you could be looking to manufacture something new within food and beverage sector. It could be a new drink where you're looking to build in a multitude of different functional ingredients. So there's lots of different areas in which you could be creating something that's that's brand new.

Alex Cornelius, R+D Tax Solutions

You could be looking to make an appreciable improvement. So you're taking something that exists on the markets and you're making it better. So that could be an existing product system. And effectively you're taking that and saying, OK, what is this lacking? What what's it need?

Alex Cornelius, R+D Tax Solutions

How can I make it lighter, faster, stronger, more durable, have greater functionality? The I guess the easiest example of something like that would be every single iteration that you see of the iPhone. That is an appreciable improvement over time without with each new generation.

Alex Cornelius, R+D Tax Solutions

Finally, you could be duplicating the effect of something in a new or improved way. So this makes sure that it's not just those pioneering companies like Apple who are able to make R&D claims. It can be where you have a product that is patented, it is the intellectual property of a company and there is no open source information of how that has been made.

Alex Cornelius, R+D Tax Solutions

So attempting to replicate that capability that's achieved by competitors where often trade secrets that can also qualify for research and development tax credits. The distinction there is whether the information to be able to replicate it is available open source.

Alex Cornelius, R+D Tax Solutions

And if the answer is no, then there's the potential for a research and development tax credit claim. So qualifying expenditure, what can we actually include when we're looking at a research and development tax credit claim? The big one is usually your staff costs.

Alex Cornelius, R+D Tax Solutions

So we're looking at your employees and directors and we're looking at salary that's paid through PAYE. So it's gross salary, your employer PARSI pension contributions and then any additional bonuses and car allowances. Unfortunately you can't include dividend income within that.

Alex Cornelius, R+D Tax Solutions

So it does need to be paid salaries, subcontractors. So if you are outsourcing to third party, as long as you are continuing to control the IP and that sits with the control and direction of the business who is making the claim, then you're able to to claim for your subcontractors who you're bringing in.

Alex Cornelius, R+D Tax Solutions

There are a few nuances. So if you're utilising A subcontractor based in Ireland, you actually need to notify them that you're making a claim so that they don't make a claim on the same R&D. And you're also limited in what you're able to claim with subcontractors.

Alex Cornelius, R+D Tax Solutions

So it's the, it's either the the lower of your internal spend or €100,000. By internal spend, I mean if you have 50, 000 of qualifying costs through payroll for example, you'd only be able to claim 50, 000 of your external spend. So the income is effective, the, the revenue is effectively frank today.

Alex Cornelius, R+D Tax Solutions

So what I would say is, is for those who are about to start on their R&D tax credit journey and are looking at funding options, it's very important to ensure that you are looking at the best way of maximising the 35%. And it can be the difference sometimes between hiring internally and bringing somebody on to payroll versus say utilising a third party contractor based overseas.

Alex Cornelius, R+D Tax Solutions

The other slight nuance is individual contractors. So they sit outside of that subcontractor category where we're limited. These are individuals, usually consultants, so they are not employed through a corporate entity, but they act on their own. They are effectively people that you bring in for a period of up to six months and usually it's an independent expert.

Alex Cornelius, R+D Tax Solutions

So say within you, you want to bring in a specialist developer or CTO for a short period of time on a contract basis. You could look to include them within your research and development tax credit claim because they'd effectively be regarded as an employee for that period of time there with the business consumables then which which do need to be tracked incredibly closely.

Alex Cornelius, R+D Tax Solutions

So say for example, you are trialling a new product, you know that you're going to go through multiple iterations whilst you are developing it and you know that you're going to have to do some test runs as part and parcel of that to ensure that. The, the, the product is up to scratch.

Alex Cornelius, R+D Tax Solutions

It's ready for market. It does what it says on the tin. You're able to claim for all of that wasted material that you're utilising. That can also include your utilities, see kind of your, your water, gas, electric used as part and parcel of the R&D process. Unfortunately you can't claim rent for office space, but there is some ability to claim your rent if you are using something specific for R&D activity.

Alex Cornelius, R+D Tax Solutions

The typical example would be a lab. So we have clients who are based out of Nova UCD, they claim for the, the rent on their laboratory when when we come to do the, the R&D tax credit claim. Finally, software. So this is always a big one for for those who are working within software sector, cloud hosting usually the big ticket item in this, as we most of us know, AWS costs are not cheap and we're also able to claim for development licences as well.

Alex Cornelius, R+D Tax Solutions

So especially when you're utilising licences for tracking And so your G RE, your GitHub, your GitLab, and then for those who are working within, within engineering and developing within engineering, manufacturing all those goods, CAD licences we can look to include as well.

Alex Cornelius, R+D Tax Solutions

So how does it work then? Effectively what we look to do is we gather together all of your qualifying expenditure across those categories that I just ran through with you and that total expenditure is then pooled together and the benefit is generated at 35% for 2026.

Alex Cornelius, R+D Tax Solutions

So for 2025 S, for those of you with December year ends who are looking to make a claim for for last year, your benefit would be a 30%. So in example one, we've got total qualifying expenditure of quarter of a million, benefits of 30% to 75,000. You would receive all of that 75, 000 upfront as part of your tranche one because the tranche one payment for that year is maxed out at 75K.

Alex Cornelius, R+D Tax Solutions

And conversely, then if you had double the spend, you'd get double the benefits. But unfortunately, rather than receiving that full 150, 000 straight up, it would be split into the tranches. Now revenue have done this for the purposes of hedging their debts if if I'm being completely candid.

Alex Cornelius, R+D Tax Solutions

So they're effectively drawing out how the benefit is paid out to you. So tranche 1 is paid immediately. So you would get that 50% or 75, 000 upfront. The final two tranches are then paid over the next two years. So when you come to do your next R&D tax credit claim, you would be paid the tranche 2 from the prior year, which is in this example 45, 000, which is 30% of the remainder.

Alex Cornelius, R+D Tax Solutions

And then in year 3, you would be paid 20% of the remainder. So the the tranches can cause a delay to media immediate cash flow. Now I've been asked this question a lot of times by by my clients. How can I actually fast track my claim? Is there any way of getting access to cash quicker?

Alex Cornelius, R+D Tax Solutions

There is one business that we do work with. I, I just felt it would be quite useful for, for the audience today to, to be able to understand that there is, there is alternatives out there. And this company called ARD ARD Capital that's run by James Doyle out of Dublin.

Alex Cornelius, R+D Tax Solutions

They effectively will give you 80% of your R&D tax credits immediately. And so they advance that they advance the full 80% of your, of your claim upfront. And, and the way in which that they work to do that is they give you the 80% of the credits and then effectively you repay them the full credit that you receive over the next three years.

Alex Cornelius, R+D Tax Solutions

So in essence, what they're doing is advancing you 80%. It's payable within 14 days. So you do get your cash incredibly quickly. Revenue can be quite slow at processing claims. So sometimes this can be quite helpful for, for companies who are in need of, of quick cash flow injection.

Alex Cornelius, R+D Tax Solutions

And in essence, that means that art effectively take 20% of your benefits in the at the end when, when you've repaid them the final tranche. So again, it's just an option that's out there, but I thought it'd be one that's worth flagging because I, I get asked this so many times and again incredibly quick, how they, how quickly these guys fund you.

Alex Cornelius, R+D Tax Solutions

There is another area of R&D tax credits that often gets overlooked and it's one that we have started to get questioned questions about more often, which is really good. But I, I thought it would be worthwhile running through with you, especially for those who haven't claimed before and are looking to invest in capital because sometimes this kind of sit sits outside those kind of core qualifying categories I mentioned earlier and actually can be really beneficial.

Alex Cornelius, R+D Tax Solutions

So there's two sides to this. There's first of all, there is construction and refurbishment. So there is a separate section of the R&D tax credit legislation which is 766 D and this is for claims in relation to construction and refurbishment. Now this is usually for those companies who are either building purpose built buildings for research and development activity.

Alex Cornelius, R+D Tax Solutions

More often than not it's for those who are refurbishing. So I gave the example earlier of of a client who we claim their rent for in for the lab in in UCD. They actually completely repurposed and refurbished that space prior to to utilising it. And all of those good refurbishment costs were claimable for research and development tax credits because they satisfied the tests that that are laid out here.

Alex Cornelius, R+D Tax Solutions

So the area must be utilised 35% of the time for R&D and that needs to be satisfied over a four year. You can still also make capital allowances claims. So you you are actually getting both allowances here and you can't, you can't claim the the purchase of the building or the purchase of of acquiring the land is just the construction or refurbishment costs.

Alex Cornelius, R+D Tax Solutions

If you utilise it for both R&D and non R&D, then you need to make a reasonable apportionment on on how that is utilised. You can decide how and when you want to claim. So you can do it as you're going along or you can do it at the end when the refurbishment is complete.

Alex Cornelius, R+D Tax Solutions

I would say that most tend to do the latter for ease, but you can also do it as you go along. So in this example I have here, we've got a company that spent €1,000, 000 on refurbishing a new lab. 40% of it is being used for R&D over the next four years and they've done that on a adjusted and reasonable basis.

Alex Cornelius, R+D Tax Solutions

Therefore, 40% of that is is eligible as R&D expenditure. That at 30% then is 120,000 back. So there's a nice example for you there. What might be, I appreciate that's a bit of a big ticket item. And I'd note in advance of the webinar that there's quite a few of you who are kind of on the start of your development journey.

Alex Cornelius, R+D Tax Solutions

And so this one might be a little bit more applicable to you. And again, this is often quite overlooked is you can actually make a claim for planter machinery that's used for research and development. Now again, it needs to be on a just and reasonable basis. It needs to be apportioned accordingly based on how much the plant and all machinery is being used for research and development activity.

Alex Cornelius, R+D Tax Solutions

This is more commercial. And again you can either the way in which I would usually account for this is I would claim for it when when the machinery or plant is purchased. So that fits in with the accounting. There is a claw back on this. So if you aren't using it for the amount of time that you think you are over a full 4 year.

Alex Cornelius, R+D Tax Solutions

Revenue technically can claw back. How they would go about getting the records for that I do not know. So a bit of an example here, a company buys a spectrometer for a for €100, 000 and to sit within their within their lab. In 2024, the machine was utilised for 25 hours a week for R&D, 30 for production.

Alex Cornelius, R+D Tax Solutions

A reasonable basis and apportionment then is to do the 25 of the total 55 hours a week, 45 1/2%. And you can see there the calculation you have the total cost of the spectrometer, the R&D proportions we get the 45 1/2 percent of that times are that you're 30% credit.

Alex Cornelius, R+D Tax Solutions

So we're able to claim 13637 back. There's going to be a few people here who are thinking, what about my laptop? I'm, I'm a developer and I use it significantly for R&D. Yes, you can include the likes of your laptops and the specific hardware within your planting machinery claim for research and developments as long as you're meeting the the criteria discussed.

Alex Cornelius, R+D Tax Solutions

OK, so I've given a decent amount of information there around what sits within an R&D tax credit claim in terms of both expenditure and how that is then calculated. I guess the next question is how does it work in terms of both process and when to start actually looking to pull together your information to make your tax credit claim.

Alex Cornelius, R+D Tax Solutions

So I thought I'd give you a bit of a flavour of our process so that you're able to, to get an idea as as to how we look at preparing R&D tax credit claims so that you're able to then implement that yourself. When to start? Genuinely, if you have started on your on your funding journey already and you're not making contemporaneous records, the time to start tracking was yesterday.

Alex Cornelius, R+D Tax Solutions

Revenue are very pedantic when it comes to record keeping and you need to be able to have records that will stand up to scrutiny. So I would ensure that you are tracking as you're going along and seeking advice where needs be as to how you should be tracking. There is an expectation that all costs attract.

Alex Cornelius, R+D Tax Solutions

You should have your invoices in order. If you're not utilising good software for the tracking of your expenses, then please do invest because Sage Zero, QuickBooks, they're they're, they're pretty inexpensive in the grand scheme of things when you're looking at the benefits of an R&D tax credit claim and then contemporaneous record keeping as well.

Alex Cornelius, R+D Tax Solutions

Just keep track of the good work that you're doing. It doesn't need to be particularly onerous. We're not talking tracking every six minutes of time that you're doing. Trust me, I wouldn't want anybody to do that. Having worked in the Big four for long enough, it takes up too much of your time, but there is an expectation that you do keep good records there as you are going along.

Alex Cornelius, R+D Tax Solutions

It can be as basic as a spreadsheet, it can be as as complicated as as doing full full time sheet tracking. For those of you who are working within software, certainly utilising the likes of of, of GitHub for your commits, looking at Atlassia, Nujira and those are really good ways of, of providing Sprint documentation.

Alex Cornelius, R+D Tax Solutions

The revenue look at and is certainly very important should your claim be scrutinised. And I'll go into a bit of that a bit later just to kind of give you a, a flavour as to, to how those have been been looked at and and how that holds up to scrutiny. Our process, we try and take a lot of the legwork away from you.

Alex Cornelius, R+D Tax Solutions

So we would look to try and do a a huge amount of the work so that you don't have to. So you can spend a lot of the time that you need to be physically doing that good R&D to to bring your product to market. So we prepare all of your claims documentation, that is a technical report which outlines exactly why you're you're able to make an R&D claim and the basis on which your projects qualify as well as an expenditure report.

Alex Cornelius, R+D Tax Solutions

So doing all that good financial analysis to show the linear detail as to how you've come up with your qualifying expenditure. We've looked to work harmoniously with accountants to ensure that your your R&D figure is included in your original CT One filing. So for those who aren't aware, the R&D tax credit claim is made through the filing of your corporation tax return on an annual basis.

Alex Cornelius, R+D Tax Solutions

And I'll be completely candid here and say that the CT 1 is not easy to navigate through. So we, we often do have to sit on calls with accountants to ensure that the right figures are in the right place because if they're not in the right place, revenue can issue penalties, which is not particularly fun.

Alex Cornelius, R+D Tax Solutions

Importantly, we work very differently to others in that we, we stand against our work. So we, we always provide full inquiry support and defence. And that's for the full 4 year audit window in which revenue we're able to inquire into a claim. And yes, they do go back the full four years.

Alex Cornelius, R+D Tax Solutions

I had a client who who recently came to us looking for support in an inquiry. We flagged that there was, we've proactively made a disclosure to revenue. There was an issue. They then opened up the inquiry over a full 4 years and fortunately we were able to close it by removing the error and actually minimise the the time that was spent on it significantly.

Alex Cornelius, R+D Tax Solutions

But yeah, it's, it's really important to get things right from the outset because it, it can be very time consuming when you go through a revenue process. So how we maximise your claim, and I've kind of alluded to this at the start of this slide, process is important.

Alex Cornelius, R+D Tax Solutions

So that contemporaneous record keeping, we always ensure because of the inquiry support that we provide, that your claim holds up to scrutiny and opportunity. We'll go through everything with you. We don't want anything to be left on the table. If there are projects you're working on that you're not sure if things are a bit grey, we will review everything and ensure that we've identified all of your qualifying projects in the period and then value.

Alex Cornelius, R+D Tax Solutions

So if you're not spending enough money to make it commercially worthwhile, make doing a claim at the moment will tell you. We won't just do a claim for no reason and it should. And something to note for those who are starting out on their journey is that if you are pre trade, do keep track of all of your good expenditure because you are able to make when you make your first R&D tax credit claim in the year that you start trading and you start earning revenue, you can bring in all of that good pre trade expenditure that you've incurred into your first R&D claim.

Alex Cornelius, R+D Tax Solutions

And that's something that often does get missed as well. Pre trade expenditure absolutely can be brought brought into that first R&D claim you're making. And actually looking at things proactively can help ensure that commercially you're making your claim at the right time for you.

Alex Cornelius, R+D Tax Solutions

So our process, I thought I'd just give you a bit of an idea as to how we, we look at this. So if you were to come to us, we would look at we, we'd undertake a discovery phase of assessment and we would tell you whether what you're doing qualifies or not. And that's looking against the work that you're doing as part of an initial meeting against the legislation.

Alex Cornelius, R+D Tax Solutions

And we can tell you there. And then whether the work that you're doing qualifies data gathering, we help work either with your internal finance contact or with your accountants to do all of the data gathering for you. And that's ensuring that we look to try and do that proactively.

Alex Cornelius, R+D Tax Solutions

So ensuring that things are being allocated correctly to R&D, that you're keeping good track of your time, that you've got those contemporaneous records in place as well case study discussions. So we'd look to try and speak to those working at the coalface, so to speak.

Alex Cornelius, R+D Tax Solutions

So we would liaise directly with your developers. If you're a software business, we would work with your engineers. If you're saying in manufacturing or if you're a construction business on sites, we'd we'd look to speak to your structural, your structural engineers and we would get the information that we need to ascertain what, whether what you do qualifies and gather the right technical detail that we require.

Alex Cornelius, R+D Tax Solutions

Again, we'd look at that kind of backing documentation as part and parcel of that. So if you're a software company, we'd look at those, we'd, we'd look at those, those records, those commits, those tickets within JIRA and we would pull together your case study projects.

Alex Cornelius, R+D Tax Solutions

So we would do the writing for you. We wouldn't put the onus upon the company to do that. After understanding the the relevant qualifying activity, we would then work with you to assess how much cost can be associated with that activity. Now as part and parcel of that, we would look at methodology for ensuring that costs and apportionments are correct and reasonable.

Alex Cornelius, R+D Tax Solutions

We would also ensure that you are keeping good record keeping for the purpose of revenue scrutiny if they were to question how those proportions and percentages have been included. Finally, we deliver that expenditure and the narrative reports and that is what we then provide to revenue as part of your CT1 submission when when making the claim.

Alex Cornelius, R+D Tax Solutions

So just go through another poll here quickly. So I thought this would be quite an interesting 1. So as I was preparing for this webinar and I rat as as Donna mentioned, we we did 1-6 months ago for for further, I looked at the 2023 statistics and 2024 stats came out recently end of August.

Alex Cornelius, R+D Tax Solutions

That not a full breakdown yet but high level. And I thought I'd ask you guys how many companies you think claimed during 2024. So these are these are new stats. We've yet to get complete breakdown, but I just thought I'd give you a bit of a flavour here. OK. So I'll close that poll there.

Alex Cornelius, R+D Tax Solutions

It looks like most of you have pretty much got it bang on 2024. Only 2165 R&D tax credit claims were made that made-up 1.26 billion to the exchequer, which is a 20% increase on 20/23 and most of you I think got that between the over 1000, but the less than 5. Interestingly, quite a few of you did think that the numbers were were low, but but yeah, it's a really interesting stat and it just goes to show that actually it is the big boys who are still claiming here.

Alex Cornelius, R+D Tax Solutions

Those large corporates are the ones who make up the bulk of R&D tax credit claims. If you look at the stats, they're 1. 26 billion, You're looking at an average claim size of 580 K, which really goes to show that small to medium sized enterprises are not benefiting from the R&D tax credit claim at present.

Alex Cornelius, R+D Tax Solutions

And there is a lot more companies that can and should be claiming and that perhaps it felt that they can't avail from these because what they're doing doesn't qualify. And that's a bit of a myth that that we're looking to to try and breakthrough, especially by doing webinars and working with their working with their institutions and networks like Irish BICs.

Alex Cornelius, R+D Tax Solutions

OK, so just to wrap up here. And, and this one is probably a little bit of, for those who haven't claimed before, how you can avoid the, the shortfalls of getting them stuck with it with an inquiry. And then for those who have joined the webinar who have or are already claiming, I thought it'd be quite useful to give you an idea as to what we've learned kind of in the last six months or so with revenue inquiries and how those are developing.

Alex Cornelius, R+D Tax Solutions

This isn't a kind of a scare tactic. This is more just to ensure that everybody is happy with the requirements that are needed. I'll, I'll say it quite straight. You shouldn't have anything to fear when it comes to a revenue inquiry. There are a lot of accountants out there who will say we don't want to do your R&D tax credit claim because we don't want to bother from revenue.

Alex Cornelius, R+D Tax Solutions

And what I would say is that that that is leaving good cash on the table. Do not let the fear factor stop you from making a claim. They are a pain, I'll be honest, but they are. They can be worked through quite successfully and there are means and ways of doing that.

Alex Cornelius, R+D Tax Solutions

So I thought I'd give you some learnings and things to watch out for and what we've learnt from a few recent enquiries. So I closed 3 enquiries in the last month or so where we had to go to independent experts and there are a few areas that's that really do need to watch out for when it comes to tracking for your research and development tax credit claim.

Alex Cornelius, R+D Tax Solutions

So there is an inconsistent interpretation across divisional offices which can be a bit frustrating. And that is because there is no kind of formal set framework in which case workers are following. If there is genuine technical disagreements, just utilise the independent expert process.

Alex Cornelius, R+D Tax Solutions

We had one claim that was denied in full by the caseworker because they didn't feel that software development qualified, which was insane. So we just went straight to independence experts and they approved the claim in full and said it absolutely did meet the criteria.

Alex Cornelius, R+D Tax Solutions

So there are methods in which you can continue forwards despite push back from a case worker. And it is all about the knowledge of of when to do that and and how to do it. Process drift, that can change quite a bit depending on the case work you've got. So I'd always keep revenue on their toes, making sure they stick to to Charter and make sure they stick to scope as well.

Alex Cornelius, R+D Tax Solutions

Technical merit alone isn't enough. And I've kind of mentioned a few times about record keeping. I would say the good record keeping is key to making sure that your R&D tax credit claim stands up to scrutiny. Our learnings from from this have been just hold the process to account.

Alex Cornelius, R+D Tax Solutions

It's fine to challenge revenue and if you have genuine belief that they're they're not being held accountable. Evidence beats volume. There's no need for war and peace, you just need very clear record keeping. If you need to escalate it's not failure either. It is fine to use the CS4 complaints process if needs be to move things along.

Alex Cornelius, R+D Tax Solutions

There is no need to be afraid of the process. The process is there to protect the taxpayer and should be utilised accordingly and just make sure you're preparing in advance. So you want to prepare in a in a way that you are preparing for the technical experts. If they think that your claim holds to account, it will be processed, it will be approved in full and you just need to make sure that your technical documentation holds up to scrutiny and that you've got your good record keeping there and you've got your relevant financial backup, you've got your invoices, it holds up to the accounting test.

Alex Cornelius, R+D Tax Solutions

So the best defence, robust evidence, professional engagements and a willingness to challenge where necessary for those who are already claiming. I just thought it would be useful just to kind of get a bit of our interpretation as to why I would always look to utilise a professional advisor.

Alex Cornelius, R+D Tax Solutions

Now it doesn't necessarily need to be us, but I would say that doing a claim yourself can open you up to scrutiny and it is it is a time suck. Currently revenue interpretation is based on the tax duty manual and that is interpretation as it's not the legislative basis.

Alex Cornelius, R+D Tax Solutions

And they they will agree that there is a limited practical guidance for them. There's very few kind of worked examples and case studies that they can lean on and that's why it's important where there's uncertainty on the science tests or you've got complex technology, complex software and that you go straight to that independent experts because sometimes we can get a lot of inconsistency.

Alex Cornelius, R+D Tax Solutions

Independent experts, third parties that are brought in by revenue, they pay for the privilege of utilising that independent experts. They are somebody who you approve in advance so you get copies of their CV so you can ensure that they are an independent expert within your field of science or technology.

Alex Cornelius, R+D Tax Solutions

We've had some great interactions with the independent experts to date. They, they know their audience and if there is an independent expert that's proposed where you don't believe that they have relevant experience in your area, you can push back until, until you get 1.

Alex Cornelius, R+D Tax Solutions

Conversely, if you get an independent expert allocated that you believe might be a competitor, you can absolutely say no. And there's been a few examples of those where it's been quite hard to get the right independent expert for fear of of crossover on IP administrative complexity as well.

Alex Cornelius, R+D Tax Solutions

It does help to utilise somebody who knows what they're doing from a professional tax advice perspective because the CT 1 is not easy. There is quite complex interaction between tax credits, corporation tax, your refunds. So I would always ensure that you have good clarity on how you're getting your cash back out of the R&D tax credit claim.

Alex Cornelius, R+D Tax Solutions

I'm hoping to see you in the next budget, some kind of further framework and examples. And we we did have the Innovation Compass that came out earlier this year that proposed that we would be getting additional clarity on on certain areas. Now we need to see that come into practise and action so that it makes the taxpayers, your lives a lot easier when you come to make a research and development tax credit claim.

Alex Cornelius, R+D Tax Solutions

So key takeaways, the R&D scheme is complex, still evolving. Clear framework is in in the pipeline. Do use an experienced advisor, tax advisor or accountants. Keep you keep your your records in good check. And I would always ensure that you're getting inquiry assurance as part of your scope of services because that can be that can take a long amount of time sometimes and you don't want to be left in the lurch.