Firstly, at the start of a new year, we at Scimet R&D extend our warmest wishes to our R&D Tax Credit clients and to all of Ireland’s R&D performing companies, for a year filled with innovation, breakthroughs, and unparalleled success.
2024 has gotten off to a barnstorming start with exciting announcements like the €100m investment by APC and VLE Therapeutics to establish “The Medicine Accelerator Campus” in Dublin. In addition to creating 300 new jobs, the accelerator has the potential to enhance the lives of millions by transforming how medicines are researched, digitised and manufactured.
On the R&D Tax Credit front, 2024 sees the introduction of a number of significant changes:
- All companies (i.e. whether profit or loss making) must claim under the three-year fixed payment schedule for expenditure incurred in accounting periods commencing on or after 1st January 2023.
- R&D expenditure incurred in accounting periods commencing on or after 1 January 2024 benefits from the increase in the R&D Tax Credit Rate to 30% (previously 25%)
- The first instalment threshold amount for R&D Tax Credits arising on expenditure incurred in accounting periods commencing on or after 1 January 2024 increases to €50,000 (previously €25,000) i.e. the first instalment available to companies will be the greater of A) €50,000 (or if lower, the amount of the credit claimed), or B) 50% of the amount of the credit claimed.
- A company submitting an R&D Tax Credit claim for an accounting period commencing on or after 1st January 2024 that has not claimed an R&D Tax Credit before or not claimed in the previous 3 years, will have to comply with Revenue’s new pre-notification requirements. Under these new rules, a company will have to submit certain information to Revenue at least 90 days before submitting its claim.
- The OECD’s Pillar Two rules are now operational for some large companies. These companies need to take account of how their R&D Tax Credit is impacted by the Pillar Two rules e.g. the inclusion of the R&D Tax Credit as taxable income.
In addition to the above changes, there are a couple of R&D Tax Credit housekeeping tips that we would like to share at the beginning of a new year:
Subcontractor Notification Requirements – unfortunately we still encounter companies that miss out on valuable R&D Tax Credits on subcontractor costs due to not issuing the required notifications. For such costs to qualify, a company must issue written notification on or before making payment to the subcontractors, confirming certain details.
While some exceptions to this notification requirement apply, careful analysis is required to ensure that an exception can be availed of.
Supporting Documentation – and finally, we turn to perennial issue of supporting documentation. While many R&D companies now have robust systems in place for identifying and capturing documentation to support their R&D Tax Credit claims, we do still encounter some companies that could significantly reduce the risk associated with their claims with some simple enhancements.
The start of a new year is a perfect time to review existing processes and to make the necessary optimisations to better support the Accounting Test and Science Test aspects of your R&D Tax Credit claims.
If you have any question regarding the above or would like to discuss your R&D Tax Credit claims in 2024, please get in touch at 0877582744, email eoinbrennan@scimetrnd.com or complete our contact form here