Claim Review Manual Highlights: SR&ED On-Site Visits

April 24, 2015 SRED

Reference Article (>5 Years Old)

Please note that the information herein may be outdated, links could be inactive, and policies discussed may have evolved. For the most current data, consult our latest publications. If you would like us to refresh this article as it is of interest to you, please contact us.

Avoid feeling out of the loop — know what to expect *from* and what to prepare *for* SR&ED On-Site Visits

Our current four part series brings you highlights from the Claim Review Manual (CRM) for Research and Technology Advisors (RTAs). RTAs at the Canada Revenue Agency (CRA) use the CRM when conducting SR&ED claim reviews. We’ll be showcasing key excerpts from the CRM, including dispute resolution procedures, what to expect from on-site visits, and more.

Last week, we looked at mutual expectations for professionalism and respectfulness in interactions between claimants and RTAs as outlined in the Claim Review Manual (CRM) for Research and Technology Advisors. This week, we’re looking at an important setting in which to exercise these expectations — on-site visits.

We’ll be highlighting important sections from Appendix 3: Agenda for an On-Site Visit (Samples) and Appendix 9: Considerations During the On-Site Visit.

For ease of reference, we have formatted the CRM into a single page, available here: Claim Review Manual for RTAs.

Sample Agenda: On-Site Visit for an SR&ED Claim Review

As noted in last week’s SR&ED Claimant and CRA Expectations post, RTA’s should provide the following information to the claimant heading into an on-site visit:

Identify, prior to the on-site visit, issues that they plan to address and their approach for addressing the issues;

Identify, prior to the on-site visit, what they need during the visit, whether it is information or supporting evidence to see or people to speak to, so that the claimant can be prepared for the review¹ [emphasis added]

A sample agenda is one such piece of information that should be provided to the claimant. The CRM breaks these visits down into six steps:

Introductions of CRA review team and claimant group
Overview of claimant business and SR&ED projects (by claimant)
Introduction to the SR&ED Program, claimant services, and the review process (led by CRA)
Tour of business premises and project sites including inspection of supporting evidence, laboratories, equipment, prototypes, scraps, etc.(led by claimant)
Review session on a project-by-project basis (led by CRA)
Concluding the on-site visit² [emphasis added]

During the individual project reviews, RTAs will speak about — and provide a list of — specific issues identified during the initial project review. An individual project review may look something like this example provided in the CRM:

Project 1

Project description, activities within fiscal year FY, and supporting documentation [Presentation by the claimant]

Eligibility and expenditure issues – discussion and resolution, covering the issues listed in the initial claimant contact letter, though this list may change as new information becomes available [Led by the CRA]

Issue 1….; Issue 2….

Interview of other project personnel, as needed [By the CRA]

Outstanding issues, if any – listing of additional documentation and evidence to be further provided by the claimant [Led by the CRA]³

Considerations During an On-Site SR&ED Claim Review Visit

After conducting an interview with the claimant and any relevant personnel, the CRM recommends that RTAs summarize what was discussed and pose a series of questions both to the CRA review team and to the claimant. These questions and considerations are designed to ensure that the claimant has a full grasp on issues raised during the on-site visit and that content or expenses in the claim are fully supported.

Some of these questions include:

Is any of the review information unclear or inconsistent with other information obtained before or during the interview?
Are the claimed labour, materials, capital equipment, supplies and other SR&ED costs realistic and reasonable for the activities claimed in the project?
For the type and scale of projects of this claim, what kind of evidence would be reasonably expected to be present and would be useful towards establishing the project eligibility and work undertaken by the claimant?
Can the information obtained by way of the interview(s) be substantiated by the actual evidence and supporting documentation provided by the claimant? Is the evidence consistent?
Did each of the individuals claimed as involved in each project make a direct contribution to the SR&ED? What was the nature and extent of their contributions (for example, directly engaged, technical support, service support, general labour, clerical)?
Has each project been claimed at the appropriate level? That is, does each project as claimed reasonably represent work required to resolve a clearly defined Scientific or Technological (S / T) uncertainty and to seek a related and clearly defined Scientific or Technological Advancement (S / TA) by way of a systematic experimental and / or analytical investigation?
What field of science or technology is the SR&ED claimed in? Is it a multi-disciplinary area of science or technology? Is it in an excluded field? Is the SR&ED in the identified field?
Does the RTA think that the Scientific or Technological Uncertainty (S / TU) provided by the claimant is correctly and accurately identified, rather than being a business or other uncertainty?
- If given as the latter, does the claimant’s stated uncertainty have a direct link to an apparent or identifiable underlying S / TU (that is, identifiable by the RTA)?
- If this is the case, did the interview bring out the important relationship(s) between the technological development goals and specific S / T research objectives?
Is there a clear relationship between the claimed S / TU and the claimed S / TA? When the S / TU and the S / TA are about different issues or topics, it is possible that the project as claimed is too broad, or includes work that lies outside the goals of a specific SR&ED project.⁴ [emphasis added]

It is also interesting to note that the list of questions includes a useful distinction between technological uncertainties and technical uncertainties:

Note that there is a distinction between a technological uncertainty, which relates to a technological obstacle or barrier, and a technical uncertainty, which relates to questions as to the results or outcome of the work, such as the commercial objectives.⁵ [emphasis added]

Final Thoughts On Expectations from Claimants and RTAs

As we will continue to assert, claimants should familiarize themselves with the entirety of the CRM for RTAs. Knowing what information should be provided to you ahead of an on-site visit — and knowing to ask for this information — can not only ease the review process by removing uncertainty, but can also ensure that you are not caught off-guard by any questions or requests for information.

This article is based on archived CRA policy documents available at the date of publication. Please consult the CRA website for the most recent versions of these documents.