RDP Associates
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Structuring Projects As SR&ED

CLIENT

Engineering.com brings the most influential voices in engineering to a worldwide audience of engineers. The company operates at the intersection of technology and media to deliver content across social media, video, Internet destinations and mobile devices.
In 2017, Engineering.com embarked on an ambitious technology-driven R&D project to dramatically increase its membership.

THE SITUATION

  • The company’s 2016 SR&ED claim (prepared in-house) had been pulled into a detailed technical and financial audit. CRA rejected 2 of the 3 projects and cut the claim to less than 50% of what was originally filed.
  • The initial CRA desk review identified that the project descriptions did not clearly identify the technological uncertainties and technological advancements.
  • During the site visit, CRA auditors decided that the claim did not meet their standard for documentation that clearly identified technological uncertainty, technological advancement, and evidence of systematic search or investigation.
  • Given the company’s commitment to increasing its investment in SR&ED in 2017, correcting these issues was critical.

THE CHALLENGE

The key challenge the claimant faced was identifying how to structure and present their internal projects as SR&ED projects in order to maximize their eligible expenditures. Having had a site review in the prior year with 2 of the 3 projects rejected meant that there was a high probability that CRA would scrutinize subsequent SR&ED claims and a proper strategy for minimizing the risk of an audit and subsequent reductions was critical.

THE RESOLUTION

  • RDP helped the client implement the following strategy for their 2017 claim: A stronger focus on the underlying technology and strategic grouping of the company’s internal projects.
  • For the current SR&ED claim, RDP reviewed the company’s entire body of work in the year in which it was carried out. For each project where SR&ED eligible activities were identified, RDP worked with the client to timeline project milestones including due diligence phase(s), applying known optimization techniques, etc. in order to establish the start/end of each SR&ED systematic investigation.
  • The staff did keep monthly time tracking spreadsheets. RDP helped to refine their existing processes in order to better capture both SR&ED and non-SR&ED hours in order to meet CRA requirements. RDP also provided feedback on existing documentation and generated specific suggestions on how to improve their supporting documents without too much additional effort.
  • The 2017 claim was accepted as filed; at a size that was considerably more than what was ultimately accepted in the prior year.

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