If you filed an R&D tax credit claim last year or plan to submit a claim this year, there is a good chance you may receive correspondence from Revenue in the form of an R&D aspect query or enquiry. These aspect queries are necessary given the cost of the tax credit scheme to the exchequer, with R&D tax credits of over €600M being given out in 2019 alone.
While a Revenue intervention is not likely to occur every year, it is a normal part of claiming R&D tax credits, so it is important that you are ready to respond to Revenue in a timely and comprehensive manner. If you are not sure of where to begin in preparing the response, the below is some practical guidance on how to proceed.
1. Understand exactly what Revenue are asking for
A Revenue aspect query is a short, targeted intervention designed to investigate a particular area. When an aspect query letter is received in respect of R&D tax credit claims, this will typically consist of approximately 23 questions focussed on the scientific, technical, and financial aspects of your claim. Within such a query, Revenue can request a range of information on all aspects of your R&D activity, including:
- A breakdown of your R&D expenditure,
- Information on how you calculated the R&D tax credit figure,
- The location of the R&D activity,
- Information on staff working on the R&D project(s),
- Details on R&D activity, including project names, project start and end dates, scientific / technical merits of the activity, etc.
This information can be requested in respect of a single claim period, or it may specify multiple claim periods.
2. Determine the timelines for response/information submission
Revenue will usually include a deadline for when they would expect to receive a response. This could be specified as a date or a time range to respond within (e.g. it might say to reply within 30 days of receipt of the letter).
If you need more time to prepare your response, for example due to key staff absences or other business commitments, then this should be communicated to Revenue as soon as possible. Revenue are typically understanding in this regard and an extended timeline can usually be agreed.
However, in our experience it is always beneficial to be prepared to respond with the requested information within the originally requested timelines.
3. Establish what information you have to hand
If you have worked with BDO or another R&D Tax Credit services provider, then you probably have most, if not all of the required information ready to send back to Revenue. If you do, you should carry out a final review of this information and send it in to Revenue.
R&D tax credit claims can however be complex, and the interpretation of same is changeable so it is useful to revisit the information and identify any potential areas where such a change might be present. If you come across anything that you feel may not be appropriate in the claim, then you typically have the opportunity to make a disclosure to Revenue.
If you find that on review there is some information missing to support your R&D tax credit claim, then it is important to take the time to assemble this as soon as possible. This could require input from either your R&D team, your finance team, or both in combination depending on what information is missing.
4. Send in your response
You should find instructions on the Revenue correspondence on how to share your aspect query response. Typically, this is done electronically via Revenue’s MyEnquiries service. If you do require any assistance with sharing your response, you should have details of the Revenue official dealing with your case set out in the aspect query letter and should be able to contact them for assistance.
5. I need more help
If you are not confident that the information you have available will answer all of Revenue’s queries, or you would like assistance in preparing a response, then please reach out to us. Our team have over a decade of experience helping clients through Revenue R&D tax credit aspect queries and audits. We are happy to offer any level of assistance that you would like, whether this is a review of the information you have, assistance with compilation of your claim documentation, or assistance with the Revenue enquiry.
If you have any queries related to the information above, please contact Mark O’Sullivan at mosullivan@bdo.ie or click here to see how our R&D team can help you.
Subscribe to receive the latest BDO News and Insights
Please fill out the following form to access the download.