Independent R&D Tax Credit Claim Reviews
Independent assessment of the evidence, value and risk behind an R&D tax credit claim.
An expected or outstanding R&D tax credit claim can represent a significant financial asset for a Canadian business.
It may also form part of a financing arrangement, cash-flow forecast, transaction or other important commercial decision.
But the amount claimed, or expected to be claimed, isn't necessarily the amount the authorities will ultimately allow. The strength of the claim depends on the eligibility of the underlying work, the expenditures claimed, the supporting evidence and the status of any review.
A claim can be commercially significant without being free of uncertainty. Understanding the nature and extent of that uncertainty is essential when money or business decisions depend on it.
We provide independent, evidence-based assessments of R&D tax credit claims to help financiers, investors, business owners and their professional advisers understand the associated risks.
When might you need an independent review?
You're considering financing an SR&ED claim.
A financing institution or other lender may be advancing funds against an expected R&D tax credit refund.
Before committing capital, it may want an independent assessment of the claim, the supporting evidence and the factors that could affect the amount ultimately realised.
You're evaluating a business or investment.
An investor, lender or prospective acquirer may need to understand the assumptions underlying a receivable or projected refund.
We can examine whether those assumptions are supported and identify technical, financial or procedural issues that warrant further investigation.
You want an independent second opinion.
A business may wish to assess a claim prepared internally or by another adviser, particularly where the claim is substantial, technically complex or based on uncertain interpretations of eligibility.
An independent review can help identify weaknesses, omissions and areas where additional documentation may be useful.
What do we assess?
Every engagement is different, but our review can address several important questions.
Eligibility of the work
Does the available information support the treatment of the activities as eligible? Have the uncertainties, investigations and advancements been adequately identified and explained?
We examine the substance of the underlying work rather than relying solely on the descriptions submitted in the claim.
Support for claimed expenditures
Are the various claimed expenditures consistent with the activities performed and the applicable requirements?
We examine the available financial records, allocation methodologies and connections between the expenditures and the relevant work.
Quality of supporting evidence
What contemporary technical and financial records exist? Do they support the principal assertions in the claim? Are there gaps, inconsistencies or unresolved questions?
The presence of documentation alone does not establish eligibility. What matters is what that documentation demonstrates.
Review and procedural risks
Has the claim been filed? Is it under review? Have any concerns been raised by the authorities? Are relevant reporting, objection or appeal deadlines approaching?
We take the claim's current procedural status into account when evaluating the potential exposure.
An evidence-based report
The objective of our work is to provide an independent assessment that can inform a financial or commercial decision.
Depending on the agreed scope, our report may include:
The claims, periods and amounts examined.
The documentation and information reviewed.
An assessment of the technical and financial support for the claim.
Significant risk factors, limitations and unresolved questions.
Our conclusions and recommendations for further investigation or risk mitigation.
Where appropriate, we can distinguish between aspects of a claim that appear well supported, those that depend on additional information, and those that present material concerns.
We cannot and therefore do not guarantee claim acceptance or predict an assessment with certainty. Our role is to explain what the evidence supports, what remains uncertain and why those distinctions matter.
What does the first engagement look like?
We begin by understanding the proposed transaction or decision, the claims involved and the purpose for which our assessment will be used.
We then agree on the scope of work, access to information, confidentiality arrangements and the form of reporting required.
Ordinarily, we examine the relevant claim documents, supporting technical and financial records, and any correspondence with the CRA.
Where possible and appropriate, we also meet with the claimant's technical or financial personnel to clarify the underlying work, expenditures and supporting evidence.
Our findings are presented in a written report, with the level of detail and recommendations determined by the engagement.