CIR: case law on the importance of precise, rigorous time tracking

June 14, 2024

CIR: judges confirm the importance of exhaustive R&D time tracking

The personnel expenses represent a major item in the Research Tax Credit (CIR) and are at the root of a major dispute. In this respect, the administrative courts often take a stand on the subject.

Against this backdrop, the judges of the Montpellier Administrative Court (Administrative Court of Montpellier - 2nd Chamber, April 22, 2024 / n° 2202761) have issued a ruling on the subject, and more specifically on the CIR eligibility rate for employees assigned to research.

In support of its claim, the company "produced a table entitled 'time tracking' and 'personnel expenses' 'breakdown by project'."

In connection with the aforementioned painting, the judges stated that "The document, which simply lists the number of days devoted to each project for each employee, is inadequate because of its summary nature, dates, locations and tasks not specified. ".

Administrative authorities and judges insist on the importance of precise, rigorous time trackingand specify the information they consider essential to provide in order to justify the proportion of employees' time actually spent on research (dates, locations and tasks).

A number of legal precedents support the need for detailed R&D time tracking to justify the CIR.

However, the judges point out that the administration does not make the use of a time and attendance database mandatory. ("the administration has mentioned the use of a software tool to improve the rigorous management of human resources assigned to research, without making it compulsory.) despite the expected level of detail.

This decision is in line with in line with other jurisprudence, which has already indicated the indispensability of precise, rigorous time tracking.

For example, the Nantes Administrative Court of Appeal (1st chamber, November 28, 2023, no. 22NT02905) recently ruled that the files presented by the company were not sufficiently detailed and did not enable the company to understand the tasks actually performed by researchers and technicians.

The Ministry of Education and Research pointed out that the lack of precise, rigorous monitoring was problematic all the more so since the tasks performed seemed to be They are "regarded as research work".

The company therefore found itself particularly penalized, even though the research nature of its work was not called into question. : "While the expert considered that the shares could be considered as research work, he noted two difficulties, one concerning the absence of detailed records of the hours actually devoted to development, and the other concerning the impossibility of determining whether these shares were specific to the company".

In the same vein, the judges of the Paris Administrative Court of Appeal (2nd chamber, December 13, 2023 (no. 22pa01220) ruled that the the information provided by the company was not sufficiently precise to justify valuing its employees for the CIR.

Conclusion and advice from our tax experts on the challenges of tracking R&D time to secure your CIR.

Jurisprudence is therefore with the tax authorities on the subject and it is therefore the taxpayer is required to keep precise and meticulous track of the time valorized in their CIR.

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