Why consulting engineers shouldn’t fear claiming R&D Tax Credits By Darragh Gaffney, Head of R&D Incentives, Leyton Ireland
In this blog, I will look to address two key concerns across the sector:
· That consulting engineering firms are not doing qualifying R&D activity
· Submitting an R&D tax claim will act as a beachhead for Revenue into your business
At this year’s ACEI conference, President Tim Murnane suggested that every consulting engineering company in Ireland should be claiming R&D Tax Credits. And yet, many still believe that their work is simply ‘business as usual’ and therefore not eligible for R&D relief. But the truth is that if you’re solving technical problems, testing design alternatives, or developing tools your competitors don’t have, you very likely are doing R&D, and that means you’re completely entitled to make a claim. It’s all too common to think of lab work and white coats when hearing the words ‘research and development’, but the R&D Tax Credit isn’t just for scientists conducting test tube experiments. It’s also for engineering professionals who solve real-world problems.
Engineers drive innovation. Whether by finding a new way to integrate low-carbon materials, developing proprietary analysis tools, or designing an innovative structural system to meet a complex brief, engineers are constantly breaking new ground in a way that’s very likely to qualify as R&D.
It’s important to stress that R&D Tax Credits can be hugely valuable, allowing companies to claim up to 30% of qualifying expenditure (rising to 35% next year). Eligible projects can receive a tax credit on things like staff costs, overheads, raw materials and other expenses that are directly linked to your R&D activity. It all adds up, and in a challenging cost environment, can lead to a significant financial benefit. What about Revenue enquiries?
Another barrier to claiming is when companies fear the level of scrutiny they may face. To paraphrase a few conversations that I’ve had recently: ‘If we make a claim, aren’t we basically just inviting Revenue to crack open the books on our whole business?’
Let’s clear this up right now: that’s a complete myth. On the rare occasion that Revenue has raised an enquiry, Revenue will ask to see the
technical information that relates specifically to your R&D claim. As long as everything is properly documented and substantiated, then the enquiry is closed.
We know this from experience. At Leyton Ireland, we’ve supported 180 clients (including more than 25 ACEI member firms), helping them to prepare and submit their R&D Tax Credit claims. Around 120 of these companies are now in their second or third year of claiming, which just goes to show how accessible the scheme is. So, if you’re worried about an enquiry, the best advice is to speak to the experts.
Since launching in Ireland, we’ve supported more than 450 claims, and only six of these have resulted in a Level 1 enquiry (that’s just 1.3%). When this happens, we assist our clients by defending claims to make sure that they stand up to all scrutiny. Every single enquiry we’ve defended was positively resolved without any adjustment to what had originally been claimed. That’s a testament to the rigour of our technical team and our collaborative process.
We embed ourselves within organisations, speaking to key R&D project members such as design leads, directors, project engineers or anyone else who was directly involved in the effort. We do this so that we can build a clear narrative for Revenue that’s both compliant and defensible from the start.
Don’t just take it from me. One of our longstanding clients, EDC Consulting Engineers, recently shared:
“After every claim, we feel we’re a little bit wiser about the claims process, thanks to Leyton’s guidance. Over our time working together, Leyton has helped us better understand how to identify R&D projects and what is needed to prepare successful R&D Tax Credit claims.
We do very little of the work ourselves. Leyton handles most of the claim preparation process, which saves us a lot of time and hassle.”
Not sure if your work qualifies as R&D?
To be eligible for relief, there needs to have been systematic investigation in the face of a scientific or technological uncertainty. Most engineering projects that seek to make an advancement have a good chance of qualifying, but sometimes the technical jargon needs to be translated into a language that Revenue understands. That’s where we can help.
As a strategic partner of the ACEI, we work with engineering firms to uncover qualifying projects, before helping them to submit their claims with complete confidence.
We know that there’s huge pressure on the sector to deliver sustainable, efficient and digitally enabled solutions, but that’s exactly what’s driving innovation, much of which
qualifies for relief. And if you’re not claiming for that R&D, you’re leaving money on the table.
Yes, Revenue’s process is robust, but with the right guidance you can claim confidently (and compliantly) with a clear return to show for your hard work.
If you’re still not sure whether your work qualifies, we’ll be more than happy to have an initial conversation to discuss your eligibility for claiming. You’ve got nothing to lose, and nothing to fear.
— Darragh Gaffney is Head of R&D Incentives at Leyton Ireland. He leads a multidisciplinary team that has helped builders, engineers and innovators unlock over €300 million worth of R&D Tax Credits annually.
More information can be found here: Leyton Ireland | Boost Your Business Growth with our R&D Tax Credits services