Revenue accelerates payment of R&D credit to help during Covid-19 crisis

Credit allows companies to reclaim 25% of expenditure on R&D

Companies based in the Republic can claim 25 per cent back for every euro they spend on research and development. Photograph: Nick Bradshaw

Companies based in the Republic can claim 25 per cent back for every euro they spend on research and development. Photograph: Nick Bradshaw

 

Revenue will expedite payment of the research and development tax credit in a move that could free up thousands of euro in cash for businesses struggling during the Covid-19 crisis.

The State’s tax collector said in selected cases, it will accelerate payment of instalments of the R&D tax credit due to be paid to companies this year. The tax credit cost the exchequer €448 million in 2017 and €670 million in 2016 according to Revenue figures.

Under the excess R&D tax credit regime, companies based in the Republic can claim 25 per cent back for every euro they spend on research and development. Many companies who don’t have a tax liability in a given year can get a cash refund from Revenue which is paid back over a three-year period in three instalments.

But under the regime, Revenue is only required by law to pay the cash refund after September 23rd each year, the date by which a company’s corporation tax return must be filed. That means that in normal circumstances if companies were to file that return this week, Revenue wouldn’t need to pay the cash refund until after September.

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In a briefing on Wednesday, however, Revenue said it will bring forward the payment in advance of the September date.

Mark O’Sullivan, head of R&D technical services at BDO Ireland, said the concession is a welcome one “to help companies claiming or thinking of claiming R&D tax credits in the midst of the current uncertain climate.”

“Repayable R&D tax credits are not typically available until at least nine months after the end of an accounting period,” Mr O’Sullivan said, adding that this move will allow companies accelerate repayment by at least six months, “thus helping to bolster cash flow now when it is most needed”.

Online system

To avail of the concession, companies must file their corporation tax return through Revenue’s online MyEnquiries system and flag that they’re seeking to expedite payment of the credits.

Mr O’Sullivan noted that most companies would typically be in a position to file their corporation tax return by this month in any event and the effect of Revenue’s decision could see tens of thousands of euro returned to some companies and, in the case of others, millions of euro.

“Companies could be getting three payments in this claim period so it will be substantial. And getting it now as opposed to six months down the road could make a huge difference,” Mr O’Sullivan said.