Game Developers Limited began conducting R&D into new games platforms in the year ended 31/12/2010. The company had once developed a new rendering application in 2003, which was also considered R&D. No other R&D work was ever undertaken by Game Developers Ltd.
Game Developers Ltd calculated its R&D tax credit for the year ended 31/12/2010 as follows:
|R&D plant & machinery*
|Less R&D grant
|Less base year spend (2003)
|25% R&D tax credit
If Game Developers Ltd had a corporation tax liability of €100,000 in the year ended 31/12/2010, it should be able to offset its R&D tax credit as follows:
|Corporation tax liability
|Less R&D tax credit
|Corporation tax due
If Game Developers Ltd did not pay corporation tax in the year ended 31/12/2010, it should receive an R&D tax credit in the form of cash payments from Revenue over the next 3 years as follows (on the basis that the company is also not paying corporation tax for the years ended 31/12/2011 and 31/12/2012, and assuming its pay roll tax liabilities for 2010 was at least equal to the €75,000 R&D tax credit):
|Year ended 2010
|Year ended 2011
|Year ended 2012
|Total cash benefit
Please note that the above example is for illustrative purposes only, and professional advice should be sought prior to submitting a claim.
You can try KPMG’s free online R&D tax credit assessor to help determine whether your company may be eligible for the tax credit.