Cash in: Find out about tax breaks and credits

Companies can halve the cost of doing research and development by taking advantage of tax breaks and credits. Many companies ignore this potential source of support assuming that they would not qualify, says Ian Collins, head of R&D tax services with EY.

"One of the most common mistakes we hear companies make is disregarding potential eligibility for R&D activities," says Collins. Companies may be picturing researchers in white coats but in fact research expenditure that is considered valid for the Irish tax regime can be much broader than people think.

It is well worth investigating because it can mean being able to claim back half of the research cost, he says. It includes tax relief of up to 37.5 per cent so €37.50 in every €100 spent, Collins says. There is also grant aid so the net cost of research can be reduced significantly.

The tax credits on offer can be applied to developing new, or improving existing, products, devices, processes, materials, systems and services. Data intensive activities are included, adoption of new technologies and modification to existing processes or systems, Collins says.

"This is something a lot of companies tend to overlook and, as a result, are missing out on valuable cash refunds, " he says. "It is important that you do not automatically rule out claiming for this benefit until you have fully explored the activities within your business."

There are pitfalls, the primary one being underclaiming R&D benefits. But Revenue has to be satisfied the claims are real and will require adequate documentation. Companies must also ensure that the claim is in compliance with the relevant tax legislation.

DICK AHLSTROM