The Professional's Guide to R&D Tax Credit, KDB and Related Reliefs
- Chapter 1 R&D Tax Credit
- 1.0 Overview
- 1.1 Background to the R&D tax credit
- 1.2 Department of Finance review of the R&D tax credit
- 1.3 Prior to 2004
- 1.4 A multi-disciplinary approach required to avail of this relief?
- 1.5 Success of the R&D tax credit regime
- 1.6 What are “R&D activities” for tax purposes?
- 1.7 Other R&D incentives
- Chapter 2 How the Regime Works
- 2.0 Overview
- 2.1 Entitlement to claim
- 2.2 Calculating the R&D tax credit due
- 2.2.1 Accounting periods commencing before 1 January 2015
- 2.2.2 Accounting periods commencing on or after 1 January 2015
- 2.2.3 Phasing out of the base year
- 2.2.4 Some points to consider before calculating qualifying (group) expenditure on R&D
- 2.2.5 What is expenditure on R&D (i.e. eligible expenditure)?
- 2.2.6 Defining a “group”
- 2.2.7 The relevant period of the group
- 2.2.8 The threshold amount and threshold group (relevant for account periods commencing before 1 January 2015 only)
- 2.2.9 What happens if a company is a member of a group for only a portion of the relevant period?
- 2.2.10 Calculating qualifying group expenditure on R&D
- 2.2.11 Allocating qualifying group expenditure on R&D to the members of the group
- 2.3 Claiming the tax credit
- 2.4 How can the R&D tax credit be used? What’s the real benefit?
- 2.4.1 Overview
- 2.4.2 Offset against corporation tax and cash refund mechanism
- 2.4.3 Order of offsets
- 2.4.4 “Above the line treatment”
- 2.4.5 “Key Employee” reward mechanism
- 2.4.6 Transfer of a trade – carried forward R&D tax credit (s766 & s766A)
- 2.5 Takeaway points
- Chapter 3 R&D Activities
- 3.0 Overview
- 3.1 How to determine if an activity is qualifying R&D?
- 3.2 Systematic investigative and experimental activities
- 3.3 Field of science and technology
- 3.4 Types of R&D
- 3.5 Scientific or technological advancement
- 3.5.1 The meaning of scientific or technological advancement
- 3.5.2 That you must “seek” to achieve rather than succeeding in achieving advancement
- 3.5.3 What does not constitute scientific or technical advancement?
- 3.5.4 Competent professional working in the field
- 3.6 Scientific or technological uncertainty
- 3.7 Determining when an R&D activity begins and ends
- 3.8 R&D activities — items to consider
- 3.8.1 Commercial project vs. R&D activity
- 3.8.2 Software development
- 3.8.3 Examples and case studies of eligible R&D activities within various industries
- 3.8.4 Activities that are not R&D activities
- 3.9 What sort of documentation/evidence needs to be maintained?
- 3.9.1 What documentation is required?
- 3.9.2 Revenue Guidelines — records required to be maintained to satisfy the “Science Test”
- 3.9.3 Should we maintain additional documentation especially for the R&D tax credit?
- 3.9.4 What about documentation for the base year?
- 3.9.5 What happens if I don’t have documentation?
- 3.10 Takeaway points
- Chapter 4 Eligible Expenditure
- 4.0 Introduction
- 4.1 Overview of eligible revenue expenditure
- 4.2 Revenue expenditure
- 4.2.1 Overhead costs
- 4.2.2 Employee/staff costs
- 4.2.3 Materials used in R&D which are subsequently sold
- 4.2.4 R&D carried on as part of existing trade
- 4.2.5 Apportionment of expenditure
- 4.2.6 Third party costs
- 4.3 Evolution of Revenue practice in relation to overheads
- 4.3.1 ‘Revenue Guidelines for R&D Tax Credit (Updated February 2011)’ published in February 2011
- 4.3.2 ‘Revenue Guidelines for R&D Tax Credit (Updated December 2012)’ published in February 2013
- 4.3.3 ‘R&D Tax Credit Guidelines (Updated January, March, April 2015)’
- 4.4 Ineligible expenditure
- 4.5 Capitalised expenditure
- 4.6 Plant and machinery
- 4.6.1 Qualifying for capital allowances
- 4.6.2 Qualifying for relief under s291A
- 4.6.3 How to claim P&M expenditure?
- 4.7 Outsourced R&D activities
- 4.8 R&D grant assistance
- 4.9 Pre-trading expenditure
- 4.10 Requirements to be met for the “Accounting Test”
- 4.11 Takeaway points
- Chapter 5 Expenditure on Buildings & Structures
- 5.0 Introduction
- 5.1 Summary of the building R&D tax credit
- 5.2 Key definitions
- 5.3 How to claim the R&D building credit
- 5.4 Claim for expenditure incurred over more than one accounting period
- 5.5 Buildings apportionment
- 5.6 Building or structure sold or ceases to be used for R&D activity
- 5.7 Takeaway points
- Chapter 6 How Revenue Audit R&D Tax Credit Claims
- 6.0 Introduction
- 6.1 Is an R&D audit different to other tax audits?
- 6.2 Revenue’s appointed expert
- 6.3 Notable changes in Revenue practice
- 6.4 Types of Revenue review and audit
- 6.5 Notification of Revenue review or audit
- 6.5.1 Informal request
- 6.5.2 Self review letter/Aspect query letter
- 6.5.3 The formal audit letter – “Notification of Revenue audit – R&D”
- 6.6 Audit timelines and statute of limitations
- 6.7 Appeal process
- 6.8 Practical difficulties with R&D audits
- 6.9 Settlements with Revenue, interest, penalties and publication
- 6.10 Takeaway Points
- Chapter 8 Specified Intangible Asset Relief and Allowance for Expenditure Incurred on Scientific Research
- 8.1 Intangible asset relief
- 8.1.1 Introduction
- 8.1.2 What intangible assets qualify for relief
- 8.1.3 Allowance
- 8.1.4 Separate trade
- 8.1.5 Restriction of relief
- 8.1.6 Connected persons
- 8.1.7 Revenue expert
- 8.1.8 Advanced opinion and expression of doubt
- 8.1.9 Acquisition of trade or business
- 8.1.10 Anti-avoidance
- 8.2 Relief for expenditure on scientific research
- 8.2.1 Section 764 trading deduction for revenue expenditure on scientific research
- 8.2.2 Section 765 allowance for capital expenditure on scientific research
- 8.3 Takeaway points
- Chapter 9 What is the Knowledge Development Box (“KDB”)?
- 9.1 Overview
- 9.1.1 What intellectual property qualifies for the KDB?
- 9.1.2 Qualifying assets
- 9.1.3 Third category of assets for Small and Medium Enterprises (“SMEs”)
- 9.1.4 Qualifying asset resulting from R&D activity
- 9.1.5 Family of assets
- 9.1.6 Derivative work or adaptations
- 9.1.7 Location of intellectual property
- 9.2 Calculating KDB relief
- 9.2.1 Nexus fraction
- 9.2.2 “Qualifying expenditure on qualifying asset”
- 9.2.3 “Uplift expenditure”
- 9.2.4 “Overall expenditure on qualifying asset”
- 9.2.5 “Profit of specified trade”
- 9.2.6 Notional royalty
- 9.2.7 “Qualifying profit”
- 9.2.8 Examples of “nexus fraction”
- 9.3 Making a claim
- 9.4 Transitional measures
- 9.5 Audits
- 9.6 Anti-avoidance
- 9.7 Documentation
- 9.8 KDB and the R&D tax credit
- 9.9 Takeaway points