Research and Development, R&D Tax Credit, Corporation Tax. Revenue Audits

The Research and Development Tax Credit provides a 30% tax credit for all qualifying R&D expenditure.  It increased from 25% to 30% for accounting periods commencing on or after 1^st January 2024.  There is expected to be a further increase in Budget 2026.  It’s important to keep in mind that this tax credit is available in addition to the corporation tax deduction available for expenditure incurred on R&D.  Therefore, this can result in an effective tax saving of 42½%; being a 12½% corporation tax deduction plus a 30% R&D tax credit.

So, what is Research and Development (R&D)?

The Revenue Commissioners have outlined criteria, in their guidelines, to enable companies determine whether their activities qualify for the tax credit.

According to Revenue’s most recent guidance material, “to qualify for the R&D Tax Credit, a company’s R&D activities must:

1. involve systematic, investigative or experimental activities

2. be in the field of science or technology

3. involve one, or more, of the following categories of R&D:

• basic research
• applied research
• experimental development

4. seek to make scientific or technological advancement and

5. involve the resolution of scientific or technological uncertainty.”

For further information please click https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-29/29-02-03.pdf

Qualifying R&D expenditure includes:

• qualifying operational R&D costs and

• qualifying R&D plant and equipment costs

• There is also a separate R&D tax credit in relation to buildings and structures.

Recent Amendments

• On 13^th January 2025, Revenue updated their guidance material. Section 766C TCA 1997 was amended to increase the first instalment threshold amount from €50,000 to €75,000, in relation to accounting periods commencing on/after 1^st January 2025.

• On 7^th July 2025, Revenue released a four part video, providing guidance on how to complete the R&D panels in the 2024 CT1 Form.

R&D Video Guidance

Did you know that the Revenue Commissioners have released a four part guideline video on the completion of the Research & Development (R&D) panels on the Form CT1 2024?

The videos focus on:

1. Part 1 shows you how to correctly complete the sections for grants and subcontractor costs.

2. Part 2 shows you how to complete the relevant panels on the Form CT1 in relation to instalments from 2022 and 2023. It also covers how to claim for carried forward amounts under section 766(4B) TCA 1997.

3. Part 3 shows you how to make claims under section 766C TCA 1997.

4. Part 4 shows you how to claim group relief. It also outlines some of the common errors in the R&D panels that may arise when completing the 2024 Form CT1.

Please click link: https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/research-and-development-rd-tax-credit/how-to-videos.aspx

Based on our professional experience, in recent years, the Revenue Commissioners are increasingly carrying out audits in relation to a R&D tax credit claims.  Accounts Advice Centre provides a full and comprehensive audit support service.  For further information, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.