Purpose, scope and background (part 1)
Updated 19 December 2024
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Purpose and scope
These Guidelines for Compliance (GfC) expand on HMRC’s view of the guidelines on the meaning of R&D for tax purposes. Those guidelines are provided by the Department for Science, Innovation and Technology (DSIT).
This guidance should be read alongside DSIT guidelines. Continue to refer to the 2004 BIS guidelines alongside these GfC when preparing claims for accounting periods which begin before 1 April 2023.
HMRC’s detailed guidance for R&D claims tells you about the DSIT guidelines and further requirements for R&D expenditure to qualify as part of a claim.
Unfortunately, we continue to see many misunderstandings of what is and is not research and development under the DSIT guidelines. These GfC expand on our existing guidance on the DSIT guidelines but do not change our view of the law.
Background
To claim R&D reliefs, Generally Accepted Accounting Practice (GAAP) must treat your activities as R&D. They should also qualify as R&D under the DSIT guidelines and tax law.
When making R&D claims, some companies confuse the general meaning of R&D with what qualifies under the DSIT guidelines. HMRC also see some common mistakes in identifying the beginning and end of an R&D project for tax purposes.
We want to help you to avoid common mistakes in R&D claims by aiding you to:
- understand HMRC expectations of claimants
- identify who is a competent professional, able to judge if a project is seeking an advance in science or technology for the purposes of an R&D claim
- find out if your work qualifies as R&D for tax purposes
- understand the meaning of ‘scientific or technological advance’ for the purposes of R&D claims
- identify the scientific or technological uncertainty that the project is seeking to resolve
- decide where the project begins and ends for the purposes of an R&D claim
- understand the evidence of a qualifying project HMRC may expect to see if we check your claim
We want to help you make a correct claim, avoiding the penalty we charge if carelessness leads to an inaccurately high claim. Getting your claim right is your responsibility, even if you use a tax advisor. These GfC should also help you to complete the additional information form (see the expectations section) which you must submit to support your R&D claim.