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Talk To the Hand

Talk To the Hand

You’ve probably heard the adolescent expression “Talk to the hand, cause these ears aren’t listening.” In recent months, I’ve seen and heard similar comments from a few Canada Revenue Agency (CRA) Research and Technology Advisors (RTAs). Their own version of this expression was “I’m just following policies – if you disagree, take it up with Ottawa.”

The disturbing aspect of such statements is not the refusal of an RTA to acknowledge that they are actively interpreting the law whenever they make a decision about whether a taxpayer’s claimed work met the technical criteria for SRED. The determination made by an RTA is always ultimately expressed in terms of whether the claimed work “met the requirements of the Act”.

An RTA who expresses disinterest in the law and an unwillingness to explain their decision making in the context of the law and CRA policies is about as credible as a fish denying that it gets wet. And … they are also violating CRA’s own policy guidance on dealing with taxpayers on a technical review. CRA’s Technical Review Manual states that a taxpayer should be clearly informed about the nature of an RTA’s concerns, and the rationale for those concerns, by the end of a technical review meeting. There should be no surprises! There needs to be a healthy, respectful and well informed dialogue between the RTA and the taxpayer about the nature of the work. Such a dialogue is consistent with the model of an interaction in which the RTA is, in some measure, providing guidance and some level of “coaching” and mentoring to the taxpayer, assisting them toward a greater level of what CRA describes as “self-compliance”. That is an ideal, not always realized in practice.

It is not the proper role of the RTA merely to arrive at a taxpayer’s place of business with the attitude (or the intent) that “I’m here to deny your claim and no level of documentary or verbal evidence will persuade me otherwise.”

Such RTAs are quick to provide the taxpayer with the documents about recourse to the appeals mechanism, which they are required to do even when going through the motions. Or especially when going through the motions, because even the most inexperience claimant can begin to tell when an RTA is just stringing them along.

Going through the motions?

You can tell an RTA is only going through the motions when:

  1. they only record or take note of your comments about “business level” activities
    (which is another reason why you should always ensure that your discussions remain strictly focused at a technology level)
  2. they fail to take notes, or ask clarifying questions, when your technical resources are describing the work they did, or attempting to respond to technical queries from an RTA. (A disinterest in the technology details and work performed is never consistent with an interest in reaching a clearer understanding of the SRED, but it does clearly signal a closed mind and decision already made.)
  3. If a Request for Information (RFI) or summarizing memo contains no record of (or acknowledgement) of evidence and facts supplied during previous meetings, you have been “talking to the hand”. (Hint: Always have someone assigned to take detailed and careful meeting notes during a technical review session or meeting. Summarize and review the status of the progress to date, issues raised, responses provided, and any outstanding action items remaining on either part. If these details then fail to appear in official correspondence about the status and progress of your claim, you will have the grounds to escalate your concerns.)

The entire SRED program and the technical review process are founded in law, even before the application of scientific or technical knowledge; without the law, there is no basis for the technical dialogue. And there is a manual (portions available on CRA website) that governs most aspects of the interaction that constitutes a technical review. So it is somewhat incomprehensible that individual RTAs would communicate, in any sense, a disinterest in the legal foundations of what they do. And such attitudes are not at all consistent with the messaging, attitudes and behaviour of CRA leadership.

I personally believe that CRA leadership are actively listening. We need to continue to focus on creating well-founded, well-supported, and clearly eligible claims. If necessary, we will engage in a civil dialogue where necessary to help clarify and defend the work.

A wise man in this field once pointed out to me that the first and best step to a successful claim is to assemble a package that can pass the initial desk review without triggering a technical review. This also means having the evidence, and answering the necessary questions up front. Having your claim “accepted as filed” is a whole universe ahead of trying to have a policy discussion with an RTA who may very well not be inclined to listen. Avoiding the argument is the best approach to winning it.

- Bruce Madole

Sep 23, 2013 1:55 by
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