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General Overview of Research and Development Tax Credit available in Ireland as of March 2012.

(1)  It is available to Companies only

(2)  Activities that qualify – in addition to the generally assumed white coat brigade activities like pharmaceuticals – the following areas could qualify – software development / food production / engineering / health and agriculture / natural sciences. 

(3)  So what is an R & D activity that qualifies – to quote Revenue : must be systematic in a field of science or technology involving research and seeking to achieve a scientific or technological advancement and involving the resolution of a scientific or technical uncertainty. In particular activities aimed at producing new or improved materials / products / devices / process systems or services can qualify – e.g. designing and implementing a new waste management system / adapting or improving equipment added to a processing line that greatly improves and streamlines the process / developing a new product – all could qualify for relief. 

(4)  How Credit works – (a) in general excess of expenditure in any year over the base year (2003 as set) will attract an additional 25% tax credit i.e. over and above normal CT relief of 12.5% e.g. R & D spend 2010 €125,000 – base year 2003 was say €50,000 – relief of €75,000 x 25% now due = €15,000 (this is in excess of normal deduction anyway for 2010 of €125,000 x 12.5%. Of course if 2003 was NIL or company is relatively new all expenditure will qualify. 

(5)  No CT liability? – from 2009 a claim can be made for a cash refund where say trading losses were incurred – in this case the refund is spread over 3 years  

(6)  Budget 2012 amendment – a volume based approach has been implemented for €100,000 of expenditure i.e. first €100,000 of R & D expenditure in 2012 will qualify for the extra 25% relief irrespective of 2003 base year expenditure – only excess over this limit will need to refer to 2003 – this is a boost for SMEs where level of expenditure in any year may not exceed 2003 level and can result in extra €25,000 tax credit being available. 

(7)  What expenditure qualifies – it can be either Capital or Revenue i.e. on buildings / machinery / salaries / overheads etc. attributable to R & D. 

(8)  In house or sub contracted expenditure – if sub contractors used this area of claim cannot exceed 10% of in house expenditure – however under Budget 2012 this is recognised as a restriction on small companies lacking internal expertise and accordingly the greater of €100,000 or 10% now applies subject to the fact that such claim cannot exceed in house expenditure.


These are guidance notes and professional advice should be obtained before commencing any R & D project or making a claim to Revenue.

Contact Paul Farrell or Tony Mallon on 041 9836707 or to enquire if you are elligible for this Credit.

Check out for information on this and other supports available to you.

McGrory & Co took part in the recent Irish Furniture & Home Accessories Fair 2011 at the RDS. We were there as resident Experts providing Accounting and Business Management advice and assistance to all those attending the Fair. Our theme was Managing Your Business in Uncertain Times. Here are some pictures of our stand over the 4 days. Also congratulations to those who won the Blackberry Curve phones each day in our competition.

Key questions which came up over the 4 days included R&D tax credits, manufacturing tax reliefs, getting credit facilities with banks, and managing a business in a recession. A very useful and enjoyable event. More on the way.