Audit Update & Revised Guidance IRDG Cork Seminar 2 September 2014 Brian Boyle Incentives & Financial Services Branch
Relief is given… In respect of • Qualifying expenditure, • On Qualifying activity, by a • Qualifying Company
Qualifying Company Qualifying is not Rocket Science • Trading or 51% sub of trading co. • Carries out R&D • Maintains a record
Qualifying Activity Qualifying is not Rocket Science • Scientific or Technological Advancement • Resolution of Uncertainty • Systematic Approach
Qualifying Expenditure S.766 (1)(a) … means expenditure … incurred by the company wholly and exclusively in the carrying on by it of research and development activities
Those Key Words • In the carrying on – Not before, after or ancillary to • By it – Except for limited outsourcing/subcontracting • Of R&D activity – And only of R&D
Revenue Interventions • Aspect Queries Correspondence • Audits Desk or on-site Code of Practice
Aspect Query Letter • 23 Points of interest • May resolve all questions • May lead on to audit • Note AQ is not an audit • Adjustments treated as “Unprompted”
Some of those Questions Qualifying is not Rocket Science • The number of projects undertaken • A summary of the research and development activities in relation to each project. • The date each project commenced. • The date each project ceased if applicable. • Outline the specific scientific or technological advancement, which the company sought to achieve at the start of each project.
The Audit Process • Code of Practice – 21 Days Notice – Disclosure period • Use of Experts • Findings • Settlement • Appeals and disputes
What can go Wrong? • Science Test • Accounting Test • Poor Records • Non Qualifying Activity • If in doubt – Ask!
The Science Test Qualifying activity Systematic Scientific or technological uncertainty Panel of Experts Right of refusal Confidentiality
Accounting Tests Qualifying is not Rocket Science • Attribution of Costs • Resources (Whole or Part?) • Buildings (Whole or Part?) • Qualifying activity • Carried on by it? • Peripheral/Ancillary Activity • Base year issues
Qualifying Company Qualifying is not Rocket Science • Trading and • Maintains a record – Activities – Begin/End – Resources – Times/Dates • Project Governance Disciplines
Guidance Note 2014 Qualifying is not Rocket Science • A much anticipated bestseller • Clarification of issues arising – Successor Company Issues – Base Year Issues – Software Development/Agile Methods – Consumables – Just and Reasonable – Human Resource Accounting/Records – Residual Product – R&D Incidental to Trade – Buildings/Plant & Capital Allowances More and Clearer Examples
Go raibh maith agaibh rdadmin@revenue.ie 17
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