How I Helped a Client Resolve an IRA Tax issues

A Senior Tax Advisor’s Story: Navigating a Complex Tax Issue

Last week, one of my clients—a fast-growing tech startup—reached out in a panic. They had just received a notice from the Inland Revenue Authority (IRA), questioning their eligibility for a research and development (R&D) tax incentive they had claimed. If not resolved quickly, this could result in penalties and derail their cash flow.

The Challenge: Clarifying R&D Incentive Compliance
After reviewing their financials and incentive filings, I discovered the issue: IRA was concerned about how certain costs were allocated between core R&D activities and general business expenses. The key was to ensure we provided documentation that met both the entity’s tax regulations and the OECD’s R&D guidelines.

Step 1: Reclassifying Eligible Costs
I worked closely with the client’s finance team to reallocate certain expenses, ensuring they fit within the definition of eligible R&D costs. We compiled technical reports, invoices, and payroll breakdowns to create a clear audit trail.

Step 2: Collaborating with IRA
I then connected directly with the IRA officer handling the case to explain our revised position. By proactively clarifying the nature of the R&D work and showing our adjustments, we gained their cooperation and avoided further investigation.

Outcome: Problem Solved & Client Back on Track
The client’s incentive claim was accepted with no penalties, and they got their much-needed tax refund just in time for a product launch. Their CFO was relieved, and the relationship with IRA remained strong.

🎯 Need Help with Tax Issues?
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