Audit support for R&D tax credit claims
The Gi3 team works closely with Deloitte Ireland’s dedicated Tax Controversy team, which assists taxpayers, companies or individuals who are dealing with historic tax issues, or who are seeking to ensure they are fully compliant with their tax obligations. The team can also help develop processes to ensure taxpayers meet their tax obligations going forward.
Revenue interventions
The number of R&D Tax Credit claims that have been subject to retrospective Revenue interventions has significantly increased in recent years, as evidenced in the table below. Interventions can be stressful and time-consuming, and may result in tax credits being significantly reduced, with the potential for interest and penalties to be charged. Deloitte’s Gi3 along with our Tax Controversy team can help companies to navigate the intervention process by preparing a strong defence of both the financial and technical aspects of their claims.
There is no pre-approval of R&D tax credit claims before submission, and some aspects of the legislation are open to interpretation. Therefore, if Revenue investigates a claim, there is the possibility that it will not agree with the position taken by the claimant company on the eligibility of activities or expenditure. Revenue has a four-year window, starting from the end of the accounting period in which the return is filed, to initiate an intervention into the claim. In the event that Revenue disagrees with the claimed activities and/or expenditure, or forms the opinion that there is insufficient or no relevant supporting documentation, it can reduce the tax credits accordingly. It may also charge interest and/or penalties.
How can we help?
Deloitte’s Gi3 team has proven experience in supporting companies through Revenue audits. We support existing clients as well as companies that have prepared their R&D tax credit claims in-house or with the assistance of third parties. Deloitte Ireland also has a dedicated Tax Controversy team that assists taxpayers, companies or individuals, that are dealing with historic tax issues, or who are seeking to ensure they are fully compliant with their tax obligations. The team can also help develop processes to ensure taxpayers meet their tax obligations going forward. For further details, visit our Tax Controversy webpage.
Gi3 offers a tailored approach, with a varied range of services depending on the type of revenue intervention and your individual company requirements. This includes, but is not limited to:
- Systems and controls evaluation
- Contemporaneous documentation reviews
- Financial calculation reviews
- Technical report reviews
- Mock audit sessions
- Audit presentation preparation
- Technical/financial staff coaching
- Attendance at audit meetings
Types and numbers of interventions
Revenue interventions can take a number of forms:
- Audits (including risk-selected audits, random audits and repeat audits)
- Investigations
- Non-audit interventions
- Profile interviews
- Assurance checks (including Aspect queries)
- Site visits
- Joint Investigation Units visits involving other government agencies
An intervention may be specific to a company’s R&D tax credit claim or may include the R&D tax credit as part of a wider examination of the company’s tax affairs, and it may examine the claim for a single year or for multiple years.
The following table provides statistics about the number of interventions undertaken by Revenue in the period 2012–2016 and the yields to revenue that resulted from these interventions (i.e. monies repaid to Revenue by claimant companies):
Year | Number of claims | Number of interventions | Number of inventions resulting in a yield | Total yield from interventions (€’000) | Average yield from intervention (€‘000) |
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2012 | 1,543 | 49 | 25 | 5,413 | 111 |
2013 | 1,576 | 105 | 46 | 14,483 | 138 |
2014 | 1,570 | 162 | 75 | 10,106 | 62 |
2015 | 1,536 | 178 | 81 | 13,542 | 76 |
2016 | N/A | 276 | 100 | 13,714 | 50 |
As can be seen from these figures, the number of interventions has increased substantially over the past few years.
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