The next step after an R&D challenge depends on what has actually happened. A request for information, a preliminary view, a formal activity finding and a tax assessment are different events. Before deciding how to respond, identify the document, the decision-maker and the deadline. Treating every adverse letter as the same kind of rejection can lead to the wrong process being pursued.
Establish the procedural position
Read the complete correspondence, including attachments and review-rights information. Record when it was received and what action it calls for. Have an adviser identify the available response or review route promptly. Do not assume that continuing informal discussions preserves a formal deadline or that one agency can reverse a decision made through another process.
Departmental guidance describes internal review for reviewable activity decisions and potential external review in the Administrative Review Tribunal. ATO decisions involve their own correction and dispute processes. [R12] [R13] Eligibility findings can affect the tax claim, so advice should consider the interaction rather than examine the correspondence in isolation. The applicable route depends on the particular decision.
Understand the reasons
Break the concerns into factual, evidentiary and legal questions. Does the reviewer say the experiment was not established, the activity falls within an exclusion, or the expenditure lacks sufficient support? Identify the precise proposition being challenged. Repeating the original application at greater length may not address the reason the reviewer reached a different view.
Prepare an issue table linking each reason to the relevant facts, evidence and advice. Distinguish material already supplied from information that has not yet been considered. If the business disagrees with a finding, explain why with reference to the actual work and records. Avoid overstating what a document proves or treating disagreement itself as evidence of error.
Assess the available choices
The appropriate response may involve further submissions, seeking review, correcting an error or narrowing the matters in dispute. Consider the strength of the position, the amount involved, the cost and time required, and any implications for other years. Those choices should follow a realistic assessment rather than an assumption that every disputed issue must be contested to the end.
For a hypothetical claim with several activities, one issue may be well supported while another has a significant evidence gap. The strategy should recognise that difference. A focused approach can help the business understand which matters justify further work and which require a different response, without promising that any particular outcome will follow.
Coordinate the consequences
Involve the accountant and relevant technical personnel as well as the adviser handling the dispute. Identify any tax-return, cash-flow or reporting implications requiring separate attention. Ask specifically about the effect of a review on any payment obligations or other deadlines; do not assume they are suspended. Preserve the complete record of submissions and communications throughout the process.
Ardian Law assists businesses and advisers with R&D reviews and disputes. Call 02 8111 7700 with the decision or correspondence and its date so the available steps and immediate priorities can be assessed.