If you are already intent on claiming SR&ED for some project work, and know this from the outset, you would be well advised, from a SR&ED perspective, to adopt more SR&ED-friendly payment terms, such as time-and-materials, with which the risk is clearly yours.
When you think about it, the ability to claim SR&ED is itself a form of risk mitigation, because it allows you to offset the costs of technology pain points, barriers and obstacles that have gone beyond routine engineering and development. Effective project management is another form of risk mitigation, as is the “due diligence” work that enables you to clarify the precise nature of the technical risks you are facing.
When you think about it, even a fixed price arrangement may fail to deliver the desired results. New vendors and suppliers may be sought, and alternative approaches considered. Lawsuits may blossom – and lawyers aren’t cheap either. Fixed price arrangements do not cure all ills, or mitigate all risks, no matter how persuasively that argument is made.
Finally, if you clearly and comprehensively understand the technological risks inherent in your project work, you may well choose to offload some of that risk, knowing that in doing so you may impair your SR&ED prospects. It’s your business, and your choice. You would be doing that on purpose, as an informed business decision, and not as an unintended consequence.
Bruce Madole