Revenue checks R&D credit claims through its general compliance framework, the Code of Practice for Revenue Compliance Interventions, with one feature specific to the credit: Revenue may appoint an independent expert to assess whether the activities pass the science test. Because the credit is now paid in instalments regardless of tax liability, Revenue treats it as a repayment risk and reviews a meaningful share of claims. This page covers how a review starts, what it asks, how to respond and what follows; the Revenue audits page looks at the audit itself in more detail.
How reviews start
The Code of Practice sets three levels of intervention:
- Level 1, compliance support: a profile interview, a request to self-review or a letter asking the company to check a point. A qualifying disclosure with full penalty mitigation remains available.
- Level 2, a risk review or an audit: Revenue examines specific risks or the return as a whole, usually by letter followed by a meeting. A prompted qualifying disclosure is still possible before the review begins, with reduced mitigation.
- Level 3, an investigation, where Revenue suspects serious tax evasion. No qualifying disclosure is possible.
Revenue selects claims for compliance interventions on a risk basis. The notification letter states the level, the periods and the matters under review.
What is requested
| Area | Typical requests | What satisfies them |
|---|---|---|
| The science test | For each project: the field, the state of knowledge, the advancement sought, the uncertainty, the systematic investigation and the results; the competent persons involved | Contemporaneous technical records and the project file; a technical meeting, possibly with Revenue's expert |
| The accounting test | Reconciliation of the claim to the accounts and payroll; staff time apportionment; subcontractor and third level invoices, contracts and notifications; plant and machinery use; grants | Timesheets, payroll, ledger, contracts, grant agreements |
| Exclusions | Why activities are not excluded by the Regulations; when the uncertainty was resolved; overseas work | The project timeline and the Regulations analysis |
| Instalments and elections | The computation of the first instalment and the elections made | The CT1 workings |
| Key employee surrender | The employees, their time and the 23% floor | Timesheets and the employees' returns |
Where Revenue appoints an expert, it must tell the company in advance. Expert reviews are the stage at which most science test disputes are decided.
Responding to a review
- Consider a disclosure first. If the claim contains an error, a qualifying disclosure before the intervention begins reduces penalties substantially and avoids publication.
- Answer project by project. Revenue and its expert assess each project separately. Give each a file in the order of the science test.
- Put the competent persons forward. The expert wants to hear from the scientist or engineer. An adviser can structure the meeting but should not answer for them.
- Reconcile before the meeting. The claim to the accounts, the payroll and the invoices, with the grant exclusion shown.
- Concede what cannot be supported. Agreeing adjustments during the intervention keeps the matter at the cooperation end of the penalty table.
- Keep the file. Appeals go on the record.
Outcomes, penalties and appeals
Amendment. Where Revenue disallows some or all of the claim it amends the assessment, recovers instalments already paid and charges interest from the date of repayment. The company can also be required to repay with a clawback where it ceases to meet conditions.
Penalties. Tax-geared penalties under section 1077E depend on behaviour and cooperation: broadly 20% of the underpayment for careless behaviour without significant consequences, 40% for careless behaviour with significant consequences and 100% for deliberate behaviour, each reduced for qualifying disclosure and cooperation. Settlements above the publication threshold where no qualifying disclosure was made are published in the quarterly list of tax defaulters.
Appeals. A company that disagrees with an amended assessment appeals to the Tax Appeals Commission within 30 days of the notice of assessment; the Commission's determinations can be appealed to the High Court on a point of law. Commission determinations on the credit have turned on whether the evidence showed scientific or technological uncertainty rather than commercial difficulty, and on whether the records were contemporaneous.
Illustrative example
Illustrative example. Suir Engineering Limited, a hypothetical company, receives a Level 2 audit letter covering its 2024 and 2025 R&D credit claims of €210,000. Revenue appoints an expert for the science test. Three of four projects pass on the strength of the design iteration records and the chief engineer's explanation. The fourth, a customer-specified gantry, shows no uncertainty beyond ordinary engineering, and Suir agrees its removal, reducing the credit by €45,000; the first instalment already paid on that amount is repaid with interest. Because Suir cooperated and the error was careless without significant consequences, the penalty is at the lowest band with mitigation. A deliberate overclaim defended to the end would have attracted a 100% penalty and publication.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.